Flee town, maintain your wage? Not so quick say extra employers

It appears like the proper arbitrage alternative: Go away your crowded metropolis for a much bigger place within the ‘burbs, however maintain your huge metropolis wage.

However now, a new study by world advisory agency Willis Towers Watson exhibits that many employers aren’t essentially planning to allow you to maintain your full paycheck when you transfer. The survey of 344 employers in North America confirmed that almost 20% of employers are “setting pay ranges by first figuring out the market worth of an worker’s expertise after which making use of a geographic differential based mostly on the place the worker is situated.” Nonetheless six in 10 employers say they are going to proceed to pay distant workers the identical as in-office workers “regardless of the place they work.”

Whereas Twitter has been on the forefront of decentralizing it’s workforce (and paying them partly based mostly on the place they dwell), different tech corporations have just lately taken an identical path. Facebook made headlines this spring when it introduced that beginning in January 2021, “worker compensation shall be adjusted based mostly on the price of residing within the areas the place employees select to dwell. Facebook will make certain workers are trustworthy about their location by checking the place they log in to inner methods from,” in accordance with the New York Occasions. Bloomberg reported in September that workers at VMWare who selected to maneuver might additionally anticipate pay cuts. “Staff who labored at VMware’s Palo Alto, California, headquarters and go to Denver, for instance, should settle for an 18% wage discount, folks accustomed to the matter mentioned. Leaving Silicon Valley for Los Angeles or San Diego means relinquishing 8% of their annual pay, mentioned the folks, who requested to not be recognized discussing inner insurance policies.”

However the motion in the direction of “pay localization” will be fraught as properly. As an example, what if an organization opened up jobs to employees unfold out across the nation, and girls or candidates of coloration started to be employed at the next price? Would the corporate nonetheless pay its San Francisco-based workers extra, even when they had been disproportionately male or white?

Some additionally query whether or not the narrative about folks “fleeing cities for good” will maintain up as soon as the pandemic is beneath management or there’s a vaccine. Jonathan Miller, who writes a well-liked publication about New York actual property told Fortune‘s John Jeff Roberts this summer that he thinks the flight from huge cities is actual—however it received’t essentially stick. “He likens what’s occurring with COVID-19 to occasions just like the Lehman Brothers collapse in 2008 and the 9/11 assaults. These occasions likewise triggered a flight from New York, however solely a short lived one; a lot of those that left returned in a yr or two. Miller expects an identical phenomenon to happen with the pandemic.”

That could be one purpose many employers are nonetheless grappling with whether or not—and the way a lot—distant work to permit. The Willis Towers Watson survey discovered that 37% of corporations “don’t but have a proper coverage or set of ideas to handle the preparations, though 60% of these at present with out formal insurance policies are planning or contemplating adopting a proper coverage by subsequent yr. Practically two-thirds (64%) of these with insurance policies are planning or contemplating revising them this yr or subsequent to adapt to the altering nature of the place work will get finished.”

Extra must-read finance coverage from Fortune:

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