Should workers accept pay cuts in exchange for working remotely?

Photo: @CassMcD via Twenty20
Jul 17, 2020
Tom Ryan

A recent survey of 600 U.S. adults found 66 percent willing to take a pay cut for the flexibility of working remotely.

To what degree varied, however.

  • Fourteen percent would take a one to four percent cut;
  • Twenty-nine percent would take a five-to-14 percent cut;
  • Seventeen percent would take a 15-to-24 percent cut;
  • Seven percent would take a 25 percent or more cut;
  • Thirty-four percent would not take a lower salary for flexible remote work.

The survey, taken from July 5 through 7 from Fast, a start-up specializing in online checkout, found COVID-19 safety concerns part of the current appeal of remote working. Thirty-nine percent were less comfortable returning to their physical office compared to 30 days before. However, 65 percent preferred a workplace that gives employees the flexibility to choose where and when they work remotely.

With many Americans now working from their homes, a number of other recent surveys have likewise found a majority of workers open to receiving less pay to be able to work remotely some or all of the time.

According to the latest survey from Dice, the job search site, the benefits of remote work include being more productive, having more flexibility or control of schedule and the time, cost-savings and the environmental benefits of avoiding a commute. A more relaxed workplace, including more comfortable attire, was also cited.

For employers, Global Workplace Analytics has estimated “based on conservative assumptions” that a typical employer can save an average of $11,000 per half-time telecommuter per year. The primary savings are the result of increased productivity, lower real estate costs, reduced absenteeism and turnover and better disaster preparedness.

The concept of “localized compensation” or paying someone less for the same work because of where they live is being hotly debated in human resources circles. In May, Facebook drew some backlash after announcing that employees choosing to permanently work remotely will receive salary cuts if they move to less expensive areas.

A recent survey of tech workers from employment platform Hired found 40 percent supported “cost of living” adjustments while the same percentage were against it.

DISCUSSION QUESTIONS: What are your views on scaling down remote worker pay based on their local cost of living? What complications might companies face should they look to employ local compensation pay structures as they increase the numbers of remote workers?

Please practice The RetailWire Golden Rule when submitting your comments.
"I think this is a tough argument for an HR department to support, even if it has more leverage during a period of high unemployment."
"No, WFH employees should receive equal pay for equal work. With a stipend to equip their home office with the technology needed to do the job."
"So, let me get this straight — companies save money by not having corporate offices, then we should also be okay with taking a pay cut for working remotely?"

Join the Discussion!

22 Comments on "Should workers accept pay cuts in exchange for working remotely?"

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Suresh Chaganti

In the consulting world, it’s always been “hoteling” concept where consultants would check in once a week. The offices are sized for that level of utilization. It is a win-win since less office space is required, and no salary sacrifices are required.

If the corporates are able to scale down the facilities and get savings in real terms, there is no reason to ask employees to take a pay cut. Employees value flexibility, not mandates or having to make unreasonable choices. If the value of employee was X while working onsite and stayed X while working remote, then it is the company that should rightsize the facilities rather than asking employees to take pay cut.

Dick Seesel

I’m biased, (with adult children whose offices have enabled them to work from home since March), but I don’t see the rationale for lower pay. Most people are still living in the same cities where they commuted to work before, so arguably the only cost savings are the transit costs themselves. But the workloads haven’t changed and in some cases have become more challenging as managers work around others’ furloughs.

Many companies already employ large numbers of work-from-home phone agents in customer service and related areas. What has changed for these employees, in terms of cost of living? I think this is a tough argument for an HR department to support, even if it has more leverage during a period of high unemployment.

Michael Terpkosh

As retailers and corporations have come to grips with the necessity to allow employees to work remotely there has been an “awakening” by many of these companies that their employees are just as productive, if not more productive, working remote. Who knew!? Where I think we need to be careful with compensation metrics is that there are still not enough qualified professionals in this country to fill the needs of business. We must always be mindful of fair, equal pay for a job regardless of the location worked. Many of these “awakened companies” see big opportunities to cut their infrastructure costs by down sizing office spaces, etc. Business executives need to be employee savvy and compensate employees fairly, not use this change in work environment to take advantage of their associates.

David Leibowitz

I’ll answer that question with a question:

“Should employers pay more if they’re not paying for office space?”

Peter Charness

Exactly — share the savings by not having all the costs associated with on premises work. It goes both ways, doesn’t it.

David Naumann

Great point David and Peter! Employers can now significantly reduce their office space expense and since they are saving a ton of money, they should have more funds to cover salaries – not less.

Cathy Hotka

One thing we’ve discovered during the pandemic is that working from home WORKS. Why penalize employees for doing it?

Dave Nixon

Well said, Cathy.

Dave Nixon

So, let me get this straight — companies save money by not having corporate offices, then we should also be okay with taking a pay cut for working remotely?

Work product is work product. You pay me for an agreed upon work product and my expertise (and experience). That contract still gets accomplished in WFH (in fact more work gets done).

The expenses for commuting, both time and vehicle, not to mention the disconnect from family working in an office were all investments made by the employee in the corporate office for years so, in effect, we already took that pay reduction.

Ricardo Belmar

I find this argument only holds water when we’re talking about one specific scenario – a worker currently living and working in a high cost of living region, say, San Francisco, becomes a remote worker and decides to move to a low cost of living region, say the middle of Nebraska. Most workers aren’t likely to do this – they’ll keep living in the same region as their office, so the math just doesn’t support this. Plus, the employer is likely to benefit from reduced office expenses over time so if their costs are lower, why penalize the employee?

Neil Saunders

Unless your job is directly affected by being unable to work in an office, I don’t think there should be any pay cuts. Companies should remunerate on what people do and what value they add, not where they work. Of course, companies ultimately save money if they need less office space so in, some cases, this can be a win-win for both employer and employee.

Ken Cassar

Remote workers tend to be at a disadvantage when it comes to career advancement, relative to those that work in the office. Now we want to take away pay as well?

Georganne Bender

Absolutely not. Get less pay for doing the exact same job? And working harder because working from home sounds great but it’s no picnic? You disrupt your home space and are always on call. No, WFH employees should receive equal pay for equal work. With a stipend to equip their home office with the technology needed to do the job.

Ralph Jacobson

I think the companies that are having staff work remotely for the first time, as opposed to those that had remote workers prior to the pandemic, should take a look at the overall expense reduction combined with the invariably higher productivity before they move too quickly to cut pay.

Steve Montgomery

What is the economic justification for a company to lower a worker’s wages because they happen to live in a less expensive area than a coworker? To me that is not justifiable. What’s next, lowering the wages of an employee who lives in an expensive area because they share an apartment with a roommate?

Ben Ball

It seems the question we should be asking is “what are employees paid for?” Time in the chair (office or home) or output? If it is the latter then this question of pay cuts based on where we work is moot. Same goes for locale. .

Camille P. Schuster, PhD.

If the employers are saving money when employees are working from home why should the workers take a pay cut? Coming after the previous article, this is just more bad optics and proves the claim that the situation goes beyond retail.

Craig Sundstrom

So remote workers are MORE productive and it actually saves employers money, and we want to pay people LESS to do this: what am I missing?

OK, let’s back up a minute: I don’t really believe the claims presented, and my thought is the whole issue is something of a panic-driven fad. But should it become more prevalent, then my answer is: no, one office one set of compensations; if your (nominal) office is in, say, Manhattan, then you get salary X, whether you work there of from home, not one salary for the office, another for living on the upper West side, another for Brooklyn, for Hoboken….

To try this differentiation is an open invitation to chaos and lawsuits.

Now of course if a company actually wants to open up satellite offices, that another matter: smaller, less expensive cities normally pay less. But it’s independent of whether/not one works from home.

2 months 7 days ago
I am no “expert,” but I can clearly comment on this topic as a constant and thoughtful witness to the distinct peculiarities of it through one who is. My partner, during the entirety of “shelter in place,” has been able to work from home rather successfully. But then it is a matter of how one defines success. As such, he is experiencing the ups and downs of this in two remarkably different ways. Since the confines of time/effort/expectations are now vague — as opposed to the perceived clarity of being monitored by associates and higher-ups in a real time physical space — it is left to the individual how their particular work ethic plays out. To whit, whether a worker will take advantage of additional down-time opportunities and slack some; or increase their output because the typical constraints are no longer in place to properly edit one’s responsibilities. My partner definitely falls in to the latter category, in that he has always done more than had been called for in his executive position; and now,… Read more »
Mel Kleiman

The question that should be asked is not where they live or what hours they work. But what value do they bring? Pay for results.

Allison McGuire

Employees expenses haven’t decreased significantly working from home and I doubt their workload has changed much either. In fact, many have taken on more responsibilities after company layoffs. I see the benefit going to the employer who doesn’t need to provide an office space or other physical benefits to its employees. Just because you’re working from home doesn’t mean you worth goes down, so neither should your paycheck!

Thomas Smith

Workers should absolutely not accept pay cuts for working remotely beginning with the very concept of working from home which has morphed from WFH to sleeping at work. Most of my co-workers work longer hours and that’s just for starters. Employers save tens of thousands of dollars per employee per year with a remote workforce. Imagine the HR nightmare, working through the terms of a pay cut with an employee is a risky proposition. Sure, there are employees that take advantage of WFH most I would argue are not in that category and then where does it end? Employers should carefully consider the options before going down this road, they should also carefully consider their leases and their utilities, that’s where I would start with cuts should they become necessary.

"I think this is a tough argument for an HR department to support, even if it has more leverage during a period of high unemployment."
"No, WFH employees should receive equal pay for equal work. With a stipend to equip their home office with the technology needed to do the job."
"So, let me get this straight — companies save money by not having corporate offices, then we should also be okay with taking a pay cut for working remotely?"

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