OT: For you SPS Business Leaders

[horshack.sixpack]

You have a business with employees nationwide who are mostly technical white collar.

Even though you've always had some work from home, COVID has proven that working from an office is not really necessary for many/any employees.

Pre-COVID, you might pay a Sr. Developer $100k if he lived in Alabama, but $125k if he lived in DC.

Post-COVID, you are completely reevaluating why you would pay more for the same work just because of someone's location preference and are considering curtailing or ending this practice.

What's fair/right? I mean, obviously you can't set salary based on, say, Tunica, MS averages.

 

[Shmuley]

Imagine employees being required to earn their salary by producing value .... imagine ....

 

[dorndawg]

You have a business with employees nationwide who are mostly technical white collar.

Even though you've always had some work from home, COVID has proven that working from an office is not really necessary for many/any employees.

Pre-COVID, you might pay a Sr. Developer $100k if he lived in Alabama, but $125k if he lived in DC.

Post-COVID, you are completely reevaluating why you would pay more for the same work just because of someone's location preference and are considering curtailing or ending this practice.

What's fair/right? I mean, obviously you can't set salary based on, say, Tunica, MS averages.

I think it's a really interesting question. My wife works for an outfit where everyone works from home and has since before pandemic. They still pay based on location (I'm not sure what their formula is and I don't think there is a huge salary range for a given job).

On one hand, it definitely makes people who live in the "paid less" geography grouse. On the other, it gives you a mechanism for recruiting workers who live in expensive areas.

 

[DesotoCountyDawg]

It would have to be based on what Shmuley said, if they bring value to your company and they’re worth the extra salary then you pay them their worth. It really incentivizes employees doing a good job to me.

 

[horshack.sixpack]

If you only knew how many battles I fought because I gave my teams achievable (sometimes stretch) goals and held them to it, but did not oversee any "clock in" / "clock out" mentality.

Peer leaders: "Well MY guys are still here at 6:30 every evening".

Me: "It's not my fault if your guys aren't efficient. We hit our schedule and budget requirements, or exceed, on every project."

 

[johnson86-1]

You have a business with employees nationwide who are mostly technical white collar.

Even though you've always had some work from home, COVID has proven that working from an office is not really necessary for many/any employees.

Pre-COVID, you might pay a Sr. Developer $100k if he lived in Alabama, but $125k if he lived in DC.

Post-COVID, you are completely reevaluating why you would pay more for the same work just because of someone's location preference and are considering curtailing or ending this practice.

What's fair/right? I mean, obviously you can't set salary based on, say, Tunica, MS averages.

If you are starting from scratch and you really don't care about location, you just offer compensation and you get the workforce you get. If you are not getting the workforce you want, you raise compensation. If you have individuals targeted that demand more because they live in an expensive area, you don't pay them based on the area, you pay them based on whether you want to keep them or not.

When you already have different pay in different locations, I'd say you don't change it, you just equalize it over time. You'll probably lose some employees in higher priced areas when you offer them smaller annual raises, which is fine if you don't have a problem replacing them. You offer new employees at the lowest geographical rate, and if you can't get good employees that way, raise your starting offer and the pay of the people iwth the lowest geographical rate because it's going to be expensive if you lose them.

But I really doubt that many places have zero interest in where people live. There are still going to be times where you want/need face to face, and you probably don't want your employees in Tampa if most of your customer base is in the north west.

 

[Xenomorph]

Is it fair to pay women less than men simply because someone believes it should cost them less to survive? Why should it be ok to pay less wages to people in the south?

 

[Shmuley]

Somebody's feewings might get hurt, though ....

 

[sandwolf.sixpack]

If you can offer Tunica averages and get the same quality of work, then you absolutely can and should use that as your basis for determining pay. Obviously you shouldn't run out and cut all of your employees' salaries, but for new hires you should base pay on the market rate. And if you can target markets with lower rates, then it would be bad business not to do so.

 

[Russ Wheeler]

If you are starting from scratch and you really don't care about location, you just offer compensation and you get the workforce you get. If you are not getting the workforce you want, you raise compensation. If you have individuals targeted that demand more because they live in an expensive area, you don't pay them based on the area, you pay them based on whether you want to keep them or not.

When you already have different pay in different locations, I'd say you don't change it, you just equalize it over time. You'll probably lose some employees in higher priced areas when you offer them smaller annual raises, which is fine if you don't have a problem replacing them. You offer new employees at the lowest geographical rate, and if you can't get good employees that way, raise your starting offer and the pay of the people iwth the lowest geographical rate because it's going to be expensive if you lose them.

But I really doubt that many places have zero interest in where people live. There are still going to be times where you want/need face to face, and you probably don't want your employees in Tampa if most of your customer base is in the north west.

Agree, face to face contact isn't going away. It's all about how much your business needs.

 

[mstateglfr]

Oh this is a really cool topic. A month or so ago I read about Redfin which opened up the curtains for an interview on this very topic. They are nationwide and interviewed a woman in NY who moved from NYC to around Buffalo, a programmer who moved from Portland and now lives in a van in the Oregon Desert, and another guy who moved from a city to rural Oregon.

They all talked about why they chose to move and how their salaries are impacted. Redfin HR and management discussed in detail their plan to adjust wages to be location specific.



I completely understand the need to pay more in one area of the country than another since you need to incentivize talent to come work for you and if you pay too low, you wont get the talent or even the bodies you need. So from that perspective it makes sense to pay more for location.
At the same time, if I am producing enough value to justify being paid $100K, then whats it matter if I live in Chicago or Tunica? I produce $100K of value either way.



I can see HR splitting up how they handle pay by both region AND skillset. If someone is entry level, their pay isnt going to adjust much even if they live in an expensive area since that talent is more easily replaced. If someone has specialization/certification, then HR would bucket them into a group where pay is going to increase if their cost of living is higher and even if they move to a cheaper place their pay may not drop since they arent as replacable.

 

[Maroon Eagle]

Cue the Brain Drain arguments.

On the other hand though, there are a lot of people who move to the Deep South from places with significant higher expenses. More than one person from my family moved from the San Francisco Bay Area to Mississippi and Georgia in the early 2000s-- one for retirement purposes and the others were job opportunities/promotions. And more recently than that, from California to Texas.

 

[horshack.sixpack]

These are technical doers. The Sales guys, who are customer facing, are on a plane most weeks in normal times to be in front of customers, so it really doesn't matter where they live as long as the cost of air travel from their location isn't prohibitively higher by comparison to other airports/locales. I have known of "nationwide" sales positions that wouldn't allow me to base out of Jackson because air travel was so much higher than Atlanta, for example.

 

[ZombieKissinger]

A lot depends on how easy it is to fill the positions right now and how you expect that to change in coming years. If you can help it, you certainly would want to avoid cutting salaries of current employees living in expensive areas if they're doing good work -- not easy to uproot families, have spouse change jobs, etc. -- but if there's enough supply out there to plug people in to new positions you could look to phase in that approach over time. Could wait until it wouldn't hit as many employees to make it universal and could consider a national average (or some sort of national metric, average might be too high), if that makes sense for your business. Also is really dependent on whether you need people in specific areas/geographies, or if it's truly a remote business.

I haven't looked into this personally because our hiring takes months, positions are hard to fill, and salaries are strictly controlled, but once people join they typically don't leave for years. We're often looking for any addon/benefit outside of base salary that we can come with to entice people to join because they make that up for us quickly and usually don't leave.

It'd be interesting to see what your competitors are doing, industry standard, etc. to help guide the decision.

 

[Mobile Bay]

You have a business with employees nationwide who are mostly technical white collar.

Even though you've always had some work from home, COVID has proven that working from an office is not really necessary for many/any employees.

Pre-COVID, you might pay a Sr. Developer $100k if he lived in Alabama, but $125k if he lived in DC.

Post-COVID, you are completely reevaluating why you would pay more for the same work just because of someone's location preference and are considering curtailing or ending this practice.

What's fair/right? I mean, obviously you can't set salary based on, say, Tunica, MS averages.

My employer solved this by requiring all work from home to be within one hours drive of the office. In case our supervisor needs us for something we can come in. Lord knows if I could I would live where my work is instead of where my office is.

 

[Jeffreauxdawg]

I would pay based on replacement cost. What would it cost me to hire (including training/ramp up) someone as good or better. In your world I would account for the fact that there might be someone now available in rural Arkansas capable of what someone in San Francisco is doing... It's not your responsibility to support the lifestyle choices of your employees.

If that's the state of the world, we would all live on a beach in Maui... But our employers would go broke paying for the cost of living adjustment. It sucks for existing employees that the game has changed, but it has.

I think to make it fair you cap increases on current employees until their pay lines up with what you want your new average to be based on geography. If they don't like it, let em walk if they are not worth the extra cost.

Rural workers have been subsidizing the lifestyle of urban workers for 80 years... Finally the worm has turned a little... Not going to cry about their situation.

 

[horshack.sixpack]

OT from the OT, but if you really want to understand the gap beyond a headline, I'd recommend:

https://www.huffpost.com/entry/women-paid-less-men_n_56f16a22e4b03a640a6bbdc6

https://www.weforum.org/agenda/2019/03/an-economist-explains-why-women-get-paid-less/

https://www.forbes.com/sites/evange...ths-about-the-gender-pay-gap/?sh=bbf890646fac

 

[Russ Wheeler]

My employer solved this by requiring all work from home to be within one hours drive of the office. In case our supervisor needs us for something we can come in. Lord knows if I could I would live where my work is instead of where my office is.

This is something every business is going to have to figure out. And I don't really want to move or look for other jobs until I find out what the future holds for this. It should be settled in a year or so, I mean let's face it, the internet can't get much faster than it is now, and neither can transportation.....the trends we see starting now will probably be around for a while.

 

[Russ Wheeler]

Cue the Brain Drain arguments.

On the other hand though, there are a lot of people who move to the Deep South from places with significant higher expenses. More than one person from my family moved from the San Francisco Bay Area to Mississippi and Georgia in the early 2000s-- one for retirement purposes and the others were job opportunities/promotions. And more recently than that, from California to Texas.

I've seen a lot of people talk about chasing income. Basically you move to these expensive areas because you have more going to 401K, housing, etc.....then you move out of there to a cheaper location you can do a lot more. Sure it's a sacrifice for a while but if you do it right, you can really get ahead. Just a side note to all of this 'cheaper cost of living' talk.

Honestly, what I think you'll see is a movement back to the lower levels. These higher salaries in high COL areas will go away, simply because companies need to cut costs and the value of living in a big city is diminished.

 

[mstateglfr]

Is it fair to pay women less than men simply because someone believes it should cost them less to survive? Why should it be ok to pay less wages to people in the south?

Is that why some women are paid less than men- because the person in charge thinks it should cost a woman less to survive?
I havent heard that as a reason before. Typically, the cited reason Ive seen is 'because they can get away with it'.

 

[horshack.sixpack]

Skillset works and honestly if you dump on senior talent, the market will soon tell you if that is a feasible plan.

And how micro can you go? I mean if I choose to live in a van do you pay me less because I don't have a house? What if I move to the priciest neighborhood in the area, can I get a raise? This is interesting because I don't think that the macro translates to the micro. I'm a fan of always trying to distill a problem to it's simplest, smallest closest representation and seeing if it tells me anything. This issue defies that approach.

 

[Maroon Eagle]

That's certainly a huge part of it but there are other factors such as lack of support for women when compared to men in the same fields by employers.

For example, Doctors: Link.

 

[Russ Wheeler]

Skillset works and honestly if you dump on senior talent, the market will soon tell you if that is a feasible plan.

And how micro can you go? I mean if I choose to live in a van do you pay me less because I don't have a house? What if I move to the priciest neighborhood in the area, can I get a raise? This is interesting because I don't think that the macro translates to the micro. I'm a fan of always trying to distill a problem to it's simplest, smallest closest representation and seeing if it tells me anything. This issue defies that approach.

Probably need to give an incentive to where you WANT employees to live. If there is such a place.

 

[horshack.sixpack]

Bonus question: If you are telling me work from home is my future, do you offer me some compensation for bandwidth and office space needs at home? I mean you aren't paying commercial lease fees/sqft monthly any more and I'm expected to have enough internet to support all my home stuff plus work related video calls and such. I'd like to be paid for my and such...

 

[Shmuley]

I'd ask: "Which do you prefer? Compensation (possibly taxable) for bandwidth, home office space, etc., or the tax deduction?"

 

[Mobile Bay]

Bonus question: If you are telling me work from home is my future, do you offer me some compensation for bandwidth and office space needs at home? I mean you aren't paying commercial lease fees/sqft monthly any more and I'm expected to have enough internet to support all my home stuff plus work related video calls and such. I'd like to be paid for my and such...

Where I work zero compensation is given for anything like that, and you are expected to use your own personnel devices.

Plus your work from home area is subject to inspection.

On top of that, if you have any dependents they can come check that another caregiver is present, so as not to interfere with your work.

Which is why I am sitting in my office. I don't agree to any of that BS.

 

[horshack.sixpack]

My point in linking 3 articles, and your article confirms, is that this is a complex issue that is far deeper than mean old paternalistic companies intentionally keeping women "in their place". Most assertions to the discrepancy are stated as the former and lacking in proper nuance to even begin to capture the why's. Most of the why's revolve around societal expectations/subsequent behavior of women, particularly when it comes to kids. It is mostly women who will drop out to care for kids. It is mostly men who will walk away from child responsibility, either overtly or practically, and it is rare that a mom will just forgo her children in pursuit of career. Some of that starts very naturally, in that women DO have to recover from childbirth for a brief time, but after that it's just a mix of who takes on what responsibility and why. I know of stay at home dads, just not many. I know of mom's who have walked out of their children's lives to pursue their own interest, just not many. If you flip those statements, I know a bunch.

 

[dorndawg]

Bonus question: If you are telling me work from home is my future, do you offer me some compensation for bandwidth and office space needs at home? I mean you aren't paying commercial lease fees/sqft monthly any more and I'm expected to have enough internet to support all my home stuff plus work related video calls and such. I'd like to be paid for my and such...

Yeah I think this is already coming to a head, especially when you consider folks who live in those very pricey real estate markets tend to have smaller dwellings, and now need to move due to their working from home requiring more space.

 

[ZombieKissinger]

Sounds like you're working for the Soviets

 

[Drebin]

You have a business with employees nationwide who are mostly technical white collar.

Even though you've always had some work from home, COVID has proven that working from an office is not really necessary for many/any employees.

Pre-COVID, you might pay a Sr. Developer $100k if he lived in Alabama, but $125k if he lived in DC.

Post-COVID, you are completely reevaluating why you would pay more for the same work just because of someone's location preference and are considering curtailing or ending this practice.

What's fair/right? I mean, obviously you can't set salary based on, say, Tunica, MS averages.

I see this dynamic almost every day. My approach is that every situation is different. I want to hire local if possible, because eventually there will be a return to the office. But thanks to covid, I can open up nationwide if I can't find the talent I need locally. If I find someone I like, I might have to adjust my offer to get that person. Some roles may require a garden variety sys admin, while others may require something close to a unicorn consisting of the right mix of industry experience and technical experience. Those things tend to impact what I'm willing to pay, too.

 

[horshack.sixpack]

Never heard of people checking on caregivers. Odd. I kinda like seeing a 2 yr old make a cameo appearance in a video meeting. Adds levity and confirms the common ground that we all inhabit.

 

[Jeffreauxdawg]

Bonus question: If you are telling me work from home is my future, do you offer me some compensation for bandwidth and office space needs at home? I mean you aren't paying commercial lease fees/sqft monthly any more and I'm expected to have enough internet to support all my home stuff plus work related video calls and such. I'd like to be paid for my and such...

Yes. My wife's entire company started getting $200 per month after lockdowns started. It will drop to $100 once offices open back up for those who choose to stay at home.

 

[Maroon Eagle]

Exactly. No easy answers here or when it comes to most issues for that matter.

 

[johnson86-1]

That's certainly a huge part of it but there are other factors such as lack of support for women when compared to men in the same fields by employers.

For example, Doctors: Link.

That article doesn't provide any evidence for that claim.

I'm sure that some hospitals could do things better, but I suspect the gap is widening for the same reason it does in countries with more generous safety nets. Women on average value different things from men, and when they get paid more (as doctors do) or worry less about having enough (such as in scandinavian countries), it becomes easier for them to trade money for the things they value more (which is typically going to be a work life balance that is better for them).

There are real instances of sex discrimination in pay, but at least every where I've lived, the competition for doctors is intense, and you're not getting to discriminate against women doctors.

 

[Maroon Eagle]

You might have missed the embedded links in the second paragraph.

Click the below hyperlink to the physician compensation report for the evidence:

Medicine has traditionally been one of those imbalanced fields — and the latest physician compensation report from Medscape, a medical news site for healthcare professionals, finds that the situation is getting worse for many doctors.

 

[Mobile Bay]

Sounds like you're working for the Soviets

No, more like Dilbert land. In fact today we all found out that in appreciation for all our sacrifices over the past year, we all get a free hat.

 

[jethreauxdawg]

And maybe a copy of Elton John’s “I’m still standing”?

 

[kired]

How much were you paying them to drive into work every day?

I could have one hell of a home office for what I pay on gas + maintenance on my car, and not even considering the time spend commuting.

 

[SheltonChoked]

You have a business with employees nationwide who are mostly technical white collar.

Even though you've always had some work from home, COVID has proven that working from an office is not really necessary for many/any employees.

Pre-COVID, you might pay a Sr. Developer $100k if he lived in Alabama, but $125k if he lived in DC.

Post-COVID, you are completely reevaluating why you would pay more for the same work just because of someone's location preference and are considering curtailing or ending this practice.

What's fair/right? I mean, obviously you can't set salary based on, say, Tunica, MS averages.

This is an interesting problem from the COVID lockdowns. It was a new development at my employer as they were very rigid on "everyone is in the office 8-5". And in March 2020 figured out that being flexible in hours and WFH meant more productivity (mostly due to people working longer hours).

I read a few months ago that the Tech bay area workers were moving (many to Texas) to lower COL places.

If all you need is high speed internet, selling your median value house in San Francisco ($1.7 million) and moving to Starkville means having a bigger house, on land, and pocketing $1+ million. So they started adjusting salaries based on location. Cuts were as high as 20% of base salary. But bonuses were kept the same.

For the employee, on a median San Fran Tech salary of $180k, sees a cut to $140 for moving to a place where you can buy a nice house for under $500k, still get your big bonus, and be in the top 5% of incomes in the state.

For the employer, he gets to keep $40k a year for the same productivity.

To me that makes it a no brainer for both the employee and the employer.

I get there are complications and you'd have to have limits ( i.e., if you move from Tunica to the hamptons, the upper east side, or Maui, you are not getting a COL adjustment above the value of the position) and there would have to be conditions (you cannot move to somewhere with dial up or 5 hours from the nearest airport)


The biggest issue to me is this: if you can have employees "anywhere" why pay first world wages? How will a guy in Tunica compete with a guy in Chennai?

 

[Maroon Eagle]

Admittedly, the evidence is pretty subtle but women physicians report spending more time on administrative work and paper work when compared to male physicians.

Link: Here.