As firms implement policies to allow some jobs to work remotely long-term, a segment of workers is using this opportunity to move to lower cost-of-living locations. This trend has sparked discussion on whether remote workers living in lower-cost areas should face a salary adjustment to align with labor costs at their new location.
I asked readers of the Talent Edge Weekly Newsletter: If an employee relocates to a geographic location with a lower cost-of-living, should their salary be reduced accordingly?
Based on 117 responses, 42 percent of the respondents say that it will depend on the job, 37 percent say salary should not be adjusted, and 20 percent say it should. (*numbers are rounded.)
These mixed results reinforce how the relationship between pay and location is complex and affected by multiple factors.
Still, since the majority of respondents (42%) believe that this decision will vary depending on the job, firms can consider actions such as:
- Identify which jobs would not receive a salary reduction if they were moved to a different location. These jobs might include specialized roles with a shortage of talent.
- Begin to develop a pipeline of diverse talent for these jobs since they are location-agnostic, resulting in a broader talent pool.
- Consider how this decision will influence the perception of fairness within job segments whose role is subject to a salary reduction. Firms can partially address this challenge with a clear compensation/talent philosophy.