More people are working remotely than ever before. A Gallup poll showed that as many as 33% of workers are working from home full time. As the pandemic continues, higher cost of living cities such as New York and San Francisco are seeing an exodus of high paying workers moving to lower cost smaller cities across the US in search of a different lifestyle. Benefits such as a slower pace of life, cleaner air and lower home prices are driving this shift.
Lower Salaries Coming for Remote Employees
Employers are taking note of this shift as salaries tend to be lower in smaller cities and rural areas. Many employers who did not make salary adjustments in 2020 are planning to do so in 2021. Why now? As remote work becomes the new norm some employers are making adjustments out of a sense of fairness, or as part of their market rate strategy.
Others have figured out they don’t need workers to work in the office to get work done and are adopting a “work from anywhere” approach. This also means a shift to “hiring from anywhere” approach. Workers who previously competed within tight pre-pandemic labor markets will now need to compete with skilled workers nationwide including new graduates or those newly entering the workforce who tend to be paid entry level wages.
Before you revel in the idea of living like a king, find out what your employers policy is. Are they allowing remote work indefinitely or only as long as local shelter at home requirements are in place? Do they have plans to make cost of living adjustments?
If you do decide to move to another city or state, be upfront with your employer. They have obligations to file tax reports in every state employees are working. You may also have to pay personal income taxes in both states – check with your tax provider to determine the best time to make a move.
In addition, your employer may require you to work local office hours, which may not suit your lifestyle if you move to another city that’s hours away or even on another continent altogether. You may find yourself working longer hours than before.
How to Avoid the Pay Cut – Negotiate it!
Know Your Worth
It’s important that you know your worth before you make the move. Sites such as salary.com provide detailed salary calculators and salary comparisons to help you figure out a competitive rate of pay in any geographical area.
Check out competition in the Local Market
This is a big one! Say you work in a specialized area or industry. Lower rates of pay locally may not be applicable to your job. Chances are your employer is actually trying to hire people out of those markets with the prospect of higher pay in the big city and will realize the cost to replace you is not worth it.
In addition to the cost to replace you, your employer will spend time to find and train your replacement. SHRM reported that on average it costs a company six to nine months of an employee’s salary to replace her or him.
Focus on the Value you Bring
Advocate for yourself. A reduction in salary needn’t be a take-it-or-leave-it situation. You can be sure that your colleagues are lobbying for a smaller pay cut or no cut at all.
Don’t assume your boss is aware of your accomplishments or your value to the
organization. Keep a log of your successes to make a case in demonstrating your value. Everything is negotiable.
What you can do
Counter – extend a counter offer e.g. start with a cut 50% less than suggested and go from there.
Offer to take on more – if you’re in a position to take on more, consider it. Do something your employer has a need for. You could offer to train new hires, mentor the interns or get involved in higher profile projects.
Bonuses – if your annual bonus is calculated as a percentage of pay, ask for a higher percentage to keep you whole.
Even if your company is requiring remote employees to take a salary reduction across the board, consider the real reasons you want or need to make the move out of state in the first place. Are you tired of a long commute? Do you want to buy a home? Or move somewhere within a better school district or cleaner air?
Depending on the reasons for your move, you may find yourself taking the leap and loving it. But, have a back up plan in place. Seek an agreement to get your old salary back for if you decide to return to the office.
This article is part of our Working Remotely series; job search and career advice for your digital work world.
Arche helps people architect, navigate and advance their career path with expert advice and tools to support your job search, interview preparation, professional branding, salary negotiations, and career advancement.