Imagine you had two software developers, functionally equal in education, skills and experience. They’re even the same on some points that shouldn’t matter, but do: age, race and gender. But one makes nearly twice as much in compensation as the other. Hmm, why?
Now, for the purposes of this exercise, it’s not because one was really great at salary negotiation and the other sucked at it.
Y’see, one developer is in Kitchener-Waterloo, and the other is in Silicon Valley. In Silicon Valley, the cost of living is ridiculously high and the market for desirable workers is fiercely competitive.
So compensation has risen accordingly (and, arguably, to ludicrous heights) to enable these desirable workers to actually live there, and their employers to give them some incentive to stick around.
The software developer in Waterloo isn’t less valuable, really. They’re just in a different place where the culture and business landscape have not developed to such an extreme degree.
OK, so imagine you scooped up both software developers and put them somewhere to live and work where geography wasn’t influential. Like… the International Space Station. Is there any reason now to pay one of them almost twice as much as the other? Location-based cost of living and market competitiveness don’t apply any more for either worker. So… how much DO you pay them, and based on what criteria, exactly?
It is quite likely that a lot of tech companies are going to have to figure out an answer to that question relatively soon. A lot of workers, particularly in tech, have been attempting to work from home since March. Some big tech companies have said their offices will remain closed until 2021 and possibly longer.
Even for tech companies that eventually re-open their offices, they won’t be able to fit nearly as many people safely in the same space due to distancing requirements. For the foreseeable future, remote work will be a necessity.
Early on, when work-from-home orders came down, I heard of companies subsidizing staff’s home office upgrades. I haven’t heard anything yet about companies trying to adjust salaries to reflect all-remote working.
Shopify has said it will be a remote-first company from here on in, despite substantial investment in office space in several cities, including here in Uptown Waterloo. Per their CEO’s tweet, “Office centricity is over.”
I have not seen anything to date regarding how this may affect compensation, but he did also note that they hadn’t yet figured out everything about these changes.
Facebook, on the other hand, has said that remote working would affect compensation, insofar as only those still living and working in Silicon Valley will likely retain Silicon Valley salaries. This change wouldn’t just affect new hires, but existing employees who choose to move to less inflated markets.
But if companies can’t safely accommodate workers in their offices, and possibly won’t be able to for years, is it fair to dock salaries for those doing the same work from home because of where the homes are?
Also, given the mind-boggling market cap of some of these companies, such policy doesn’t look anything but petty.
Yes, perhaps it sounds hopelessly naive to reference “fairness” with regards to the gears of capitalism, so let’s sound more grown up and wonder about the legalities of it all.
If such measures are implemented, it sounds like they’d affect new hires first, but there’s little reason to believe that it wouldn’t spread. I can’t imagine a lot of people who signed contracts with specific numbers on them are going to be happy about potentially losing out on thousands of dollars because they choose to live somewhere more affordable.
This would play out less dramatically in Canada, I think, but let’s not delude ourselves that living in Vancouver could ever be classified as “affordable,” as an example.
Could Facebook or any other company prove beyond a shadow of a doubt that the potentially vast compensation disparities of the future are the precise and sole result of adjusting for cost of living and market competitiveness, and are not discriminatory?
I dunno; American culture being what it is, I just can’t see this not ending up as a drawn-out stew of lawyers at some point. To be sure, it’s a conundrum born of substantial privilege, but a fascinating one to consider nonetheless for the future of labour.
Issues like currency fluctuations throw another wrench in the works. These days it’s entirely possible for the company you work for – or their headquarters, at least – to be in a different country from where you live.
Do they pay you in the company’s local currency and you sort out conversions and taxes and whatnot yourself? Do they pay you in your local currency and then have to deal with that for every remote and foreign employee?
Automattic has been a remote-only company for some time, with employees all over the place, and their CEO acknowledges that these aren’t small issues with one-time fixes.
Given vast disparities in the cost (and standard) of living among various regions of the world, trying to determine a “global market norm” for compensation would be no small feat. I have difficulty even trying to conceive of how you’d calculate regional compensation norms without risking discrimination.
Of course, there’s also the fundamental issue that there are plenty of people who just don’t want to work remotely. Not now, not in the future. Some people just prefer the atmosphere and camaraderie of an office. Some people don’t have great options for productive work space or time at home.
There are a lot of businesses, unfortunately, that have already shuttered because of the pandemic, and I suspect plenty more will do so in the rebuilding phase because the requirements to do business just don’t make it viable.
Some of these businesses will likely be childcare providers. This is the opposite of what working parents need, given that even pre-pandemic there weren’t nearly enough good quality available childcare options, and you were going to pay through the nose for pretty much any of it.
The current situation is not sustainable long-term, whether people continue to work from home or go back to offices. And when there aren’t solutions available that meet families’ needs, too often it means one parent has to give up working to make life work. That parent is still most often a woman. Tech hasn’t innovated that problem into the history books yet.
Fixing this issue should not be entirely left on the shoulders of employees. While there are still plenty of companies who pretend otherwise, work and life don’t exist in two entirely separate spheres. These are issues just as important as salary numbers.
Companies want employee productivity? Make caring for employees and their families part of the company’s DNA. Clear the barriers. Companies that can’t or won’t? Well, talented workers can vote with their feet. (Though I don’t know that the International Space Station is actively hiring software developers...)
Perhaps companies that aren’t going to get out of their office leases any time soon would be wise to get creative with the space. Invest in creating subsidized on-site daycare, both to enable staff to be more productive, but also, quite likely, as a competitive draw.
Who knows, even companies that are committing to remote-first models could follow suit. The parents can remain at home working and the kids can head to the office for daycare. Just maybe remove the coffee machine first.
M-Theory is an opinion column by Melanie Baker. Opinions expressed are those of the author and do not necessarily reflect the views of Communitech. Melle can be reached on Twitter at @melle or by email at me@melle.ca.
