What to Know Before Accepting a Location-Based Salary Cut


For many office workers, the pandemic has led to greater flexibility when it comes to where and how they work. While some companies have decided to allow employees to work remotely permanently, other companies have taken a more case-by-case approach to deciding who will work outside the office.

Several major tech companies, including Meta and Google, have announced that workers who move to cities with a lower cost of living would receive a pay cut. For example, Google employees who move to cheaper cities or outside the office center can see a reduction of up to 25% in their compensation.

However, location-based pay is not a new workplace policy. “Most companies have always had geographic pay scales,” said Jason Walker, managing partner and founder of Thrive HR Consulting.

But before the pandemic, it wasn’t so common for employees to work remotely either. Two years after the pandemic, many white-collar workers are still working remotely full-time. Gallup reported that about 41% of white-collar workers worked exclusively from home in September, and 91% of employees hope to be able to work remotely to some degree in the future. And since the pandemic started, many workers have moved to places with lower costs of living.

If you’re one of the many employees who have moved permanently, you may be wondering what to do when your company announces plans to adjust your pay. Here’s what you need to know:

Understand the value of your skills

Many experts warn against location-based pay cuts for employees, as this can demotivate current employees and lead to increased turnover. But that hasn’t stopped this practice at some companies. “In the past, companies had the upper hand somewhat,” Walker says. “They had more control over the job market and more people were available to hire from the workforce.” But that has changed during the pandemic. Employees are quitting en masse and the workforce is shrinking.

This has helped to put power back in the hands of the workers. With a rising demand for talents, the value of certain skills, especially STEM skills, increases. Therefore, if you want to have a conversation with your boss about your pay, assess the value of your skills and how in-demand they are.

“Now…workers say I have valuable skills, and this skill should be worth $180,000 whether I work in Ohio or San Francisco,” Walker said. †[Employers] will have a hard time filling this job anyway. I shouldn’t be penalized for having the required skills because I’m going elsewhere.”

Investigate the tax difference

Before entering into a conversation about salary negotiation, find out how much of your salary is realistically affected. There are currently eight states with no income taxes. So if you move from California (which has the highest income tax in the country), to a state like Texas, you might not get a pay cut at all, and take advantage of Texas’s lower cost of living.

Always negotiate your salary

Employees are often reluctant to negotiate their salary, with 59% accepting the salary they received when they were hired. If you are told that your salary will be adjusted due to your move, use this as an opportunity to talk to your manager about your compensation.

The best strategy is to have this conversation when you request to move to another region. Make an appointment with your manager, Walker says. List the reasons why you want to move and discuss why you don’t want your salary to be affected by explaining what you bring to the company.

The start of the conversation might look like this:

“I’ve really thought about this. I would like to move to Houston to be closer to my family. I believe I can continue to add value to this company, and I would like your support in this step.”

As with promotion and raise negotiations, some guidelines remain the same:

Leave your emotions off the table: Come prepared, sober, with confidence and a professional attitude. That way you get your point across better. Focus on yourself: Don’t compare yourself to others. The conversation should be built around you. Even if you know that another employee was able to keep their original pay when they moved, don’t bring it up at the meeting. Talk about your achievements: Be sure to highlight projects you’ve gone above and beyond, but also focus on the future. What can the company expect from you?

Walker explains that what matters is how good you are as an employee. If your employer wants you, they will work with you so as not to lose you. “Explain that… you shouldn’t be penalized for the value you add to the job because you’re moving,” Walker says.

Address concerns. Can you still work the same hours? Can you still lead certain projects?

Be prepared for the word ‘no’

“No” might be the last thing you want to hear, but sometimes it happens. If it does happen, you may be tempted to negotiate other benefits, such as tuition reimbursement or extra time off. But Walker suggests that if you hear “no” from your manager, it should be a moment of further reflection. The question becomes: are they interested in you in the long run?

“I’m sure if someone is really good and comes up and says, ‘I’m moving, you need me and I don’t want my salary adjusted,’ most companies would say, ‘You’re right. don’t adjust your pay, what else can we do for you?” he says, “My belief is that if you’re told ‘no,’ chances are you’re probably not really into their future plans.”

In those cases, you will have the opportunity to re-evaluate your position within the organization. If this company does not appreciate your skills and is not afraid of losing you, then you should consider looking for another job.


This post What to Know Before Accepting a Location-Based Salary Cut was original published at “https://www.fastcompany.com/90736465/4-things-you-should-know-before-accepting-a-location-based-salary-cut?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss”

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