Earlier this month, tech firm Google told its employees their pay will be lowered if they switch to working from home permanently and the remote location has lower labor costs than where their former offices are located.
Google will not change employees' pay if they work fully remotely from the same city. But if they previously commuted from a location an hour away with lower costs and now plan to work from home permanently, for instance, their pay would be reduced.
The announcement has reinvigorated debate over the fairness of geographic-based pay for remote workers and the effects such pay policies have on employee hiring, retention, and engagement.
"We know there's been some level of worker migration from high cost-of-living areas to lower-cost markets, yet it appears that the number of companies that are considering changes to an individual's salary as a result is fairly small," said Bill Dixon, managing director at compensation data and advisory firm Pearl Meyer.
The firm's 2021 survey of 349 US companies showed that one-third of respondents currently apply "geographic differentials" to their salary structure.
When asked about reducing workers' cash compensation if they move to a lower-cost geographic area and work from home, just 4.3 percent said they would do so, while 56.5 percent said they would not; the balance were uncertain or would decide on a case-by-case basis.
"At this juncture … it appears there is some hesitancy to disrupt the talent pool," Dixon said.