Pay people for what they’re worth, not for where they live

Google appears to be getting ready to cut wages for some employees working from home. This is stupid.

Whatever happened to “Honest pay for honest work?” It’s a concept that, from CEOs to minimum-wage workers, we could once all agree on. Oh, we’d fight like cats and dogs about what it really meant, but we found common ground on the core idea.

Now it looks as if Google may be planning to base employee pay on where workers live as companies worldwide move to a work-from-home economy

That’s nuts. If Joe's earning $80,000 in Mountain View, California, why can’t he make the same coin for the same work in Boise, Idaho? Yes, the cost of living is much less in Idaho—about 50% less, according to NerdWallet. Who cares? Has Joe’s work suddenly become less valuable? I don’t think so.

Google says it’s been doing this all along. “Our compensation packages have always been determined by location, and we always pay at the top of the local market based on where an employee works from.” But that was then; this is now.

Today, many of us have had no choice but to work from home. And it turns out that many people love this new arrangement. God knows it’s healthier than working in an office with others during a pandemic.

Indeed, Google is delaying its full in-house reopening until October because of COVID-19 (as are many other companies). Why should people be punished for following their company’s own recommendations?

Some Google employees—say, someone who usually commutes to the Seattle office from a nearby county—would see a pay cut of approximately 10% for working from home full-time instead, according to Google Work Location Tool estimates.

And Manhattan, New York-based Google employees who used to commute an hour to the office from Stamford, Conn., would see their salaries slashed by 15% if they keep working from home. But if they live inside New York City proper and continue to work from home, their pay wouldn’t be cut.

Google isn’t alone, by the way. Facebook, Twitter, and LinkedIn have all announced similar plans.

Let me repeat. This is nuts. Working from home is the new normal, and that means companies should pay their staffers the same as they did when they were sitting in their cubicle farms.

Besides, it only makes sense. Your company may be only a fraction of the size of Google, but if you embrace working from home, you can drastically cut your office space expenses. Commercial office square footage isn’t cheap even now, but you don’t need to waste money on it today.

In addition, your workers will be happier, healthier, and more productive. I’ve done the Stamford-to-Manhattan commute, and I’ve been stuck on the 101 in Silicon Valley. Each time entailed at least two hours of my life per day—hours I’ll never get back. And those were two tiring hours each day, five days per week, when I could have been doing productive work for my employer.

Old-style business travel is also dying. You don’t need to have your workers near a major airport so they can visit the top-dog in a fancy corporate HQ hive. Zoom and the like have proven to work just fine for those times when you feel you absolutely must see someone face to face. This also saves a lot of money.

I never liked the idea of paying people based on their cost of living. It sounds like a good idea, but it has always seemed to be more about keeping wages down. And now, with many people never returning to old-style offices, it makes less sense than ever. 

An employee who works from home can replace commute time with productivity, and according to surveys, is generally happier. Instead of slashing wages for your work-from-home people, appreciate the savings you’ll get for no longer having to pay for so much office space and travel. Your employees will thank you for it. Considering that, a third of small business owners say they’ve had open positions they haven’t been able to fill for the last three months, which is no small thing.

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