building a better bay area

Will remote workers outside California still get paid Bay Area money? Companies grappling with that question

ByDavid Louie KGO logo

Saturday, September 12, 2020

Will remote workers outside CA still make Bay Area money?

A Bay Area salary can help you live like royalty pretty much anywhere else in the country, but companies are realizing that too. Some are starting to look at reducing salaries for remote workers outside California.

SILICON VALLEY, Calif. (KGO) -- As more Bay Area companies expand the remote work force amid the COVID-19 pandemic, the pay scales for Bay Area workers are also undergoing changes.

Silicon Valley tech companies such as Google, Facebook, and Twitter announced early on that they would allow many employees work from home permanently.

That prompted an exodus of tech workers from the Bay Area, with many choosing to go to more affordable parts of California and to states where the cost of living was lower.

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But with many workers leaving the Bay Area, companies are reevaluating the salaries of remote workers and often times reducing their compensation to be more in line with the cost of living for where they have chosen to live.

While this is new for some, other companies have been doing this calculus for years.

San Francisco's GitLab is a perfect example.

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It bills itself as the world's largest all remote company with no offices but more than 1100 people working from 65 countries.

Four years ago, GitLab developed a compensation calculator that factors in pay variations depending where the employee is working.

"We target at or above market rates in local markets, and then we also collect data based on candidate feedback and team member feedback to be able to make data driven iterations to the outputs of our calculator," explains Brittany Rohde.

The calculator is public so applicants and current employees can see how pay is determined.

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GitLab's calculator requires periodic review to reflect the job market. Its model is being studied by others.

"As part of this movement to remote work that they do become best practices and companies can start seeing what's successful, what's working," explained Rohde. "What's not working and be able to implement based on that for their own organizations."

Another San Francisco company, Mode Analytics, says the motivation behind employees working remotely is not to save money in a lower cost city.

"Generally people aren't choosing where they want to live based exclusively on saving money," says Bailey Douglass of Mode Analytics. "They're picking where do I have a community? Where am I going to be closer to my family?"

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However, compensation will reflect the availability of qualified applicants in a specific job category in a city, not the cost of living.

Leaving San Francisco, for example, could mean a pay cut.

"With the people who have asked us about changes to compensation with remote work, every single person who asked has still chosen to relocate," says Douglass. "So you know, it actually ends up being better for them."

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