We Can Work From Home (But We’ll Be Paid Less): Facebook employees working from home permanently could face pay cuts

June 6, 2020

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3 min read

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What's going on here?

Having successfully adjusted to remote working during the pandemic, Facebook has announced that it will allow employees to work from home permanently, but that it will lower the salaries of those that do if they relocate to a cheaper area.

What does this mean?

Mark Zuckerberg, Facebook’s CEO, estimates that around half of the company’s employees will be working remotely in ten years. An internal company survey found that 75% of Facebook’s employees that are interested in remote working would move to a different city if allowed to work remotely. Facebook’s headquarters are located in San Mateo, America’s sixth-wealthiest county. Employees working remotely would no longer need to live in this expensive area.

Zuckerberg added that the salaries of those that move somewhere cheaper will be adjusted to reflect the cost of living and labour in that area. He claims that this is to bring employees’ salaries in line with market rates: “We pay very well, basically at the top of the market, but we pay a market rate. And that varies by location, so we’re going to continue that principle here”.

What's the big picture effect?

This story highlights how the pandemic has caused a shift in working culture. But how will Facebook’s controversial policy change affect the company, its workforce, and the wider tech industry?

Recruiting remote workers will widen the scope of the talent pool beyond individuals located in San Mateo. Greater geographical flexibility in recruitment should increase the level of talent available to Facebook and lead to a more skilled, qualified and diverse workforce. “When you limit hiring to people who either live in big cities or are willing to move there, that cuts out a lot of people who live in different communities, different backgrounds or may have different perspectives”, explained Zuckerberg. The 36-year-old CEO insists that this is not a cost-cutting move, as added costs such as covering employees’ home working expenses and occasional travel to in-person events mean that company expenses will not necessarily fall. However, it is likely that costs will fall due to reduced spending on salaries and office rental.

More critically, the impact on staff morale and motivation remains to be seen. On one hand, employees may be grateful for the opportunity to work remotely permanently. 60% of Facebook’s employees said they preferred a more flexible approach to work. Remote work is often said to offer personal benefits such as reduced stress and increased family time. Employees will also be free to move to areas with cheaper housing and quieter neighbourhoods; arguably creating a better quality of life for themselves. Conversely, pay differences between equally skilled employees doing the same job could cause undesired tension amongst staff and weaken workforce camaraderie. “It’s a very hard sell to employees. It’s hard to make the case that I should be paid more because I live somewhere”, said Julia Pollak, a labour economist at ZipRecruiter.

Facebook is a hugely powerful and influential player in the tech industry. Consequently, it is possible that this type of policy could become the norm. This could simultaneously cause a drop in salaries across the industry and house prices in big cities as tech workers move out of town. Equally, however, it could help to redistribute wealth away from these areas and spread economic opportunity more broadly. We will have to wait for the effects of the policy to unfold. At this uncertain time, one thing is clear; remote working is here to stay.

Report written by Isobel Deane

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