- Payments processor Stripe plans to make a one-time, $20,000 payment to employees who choose to move from San Francisco, New York or Seattle by the end of the year, but the company would also cut their base salary by as much as 10%, Bloomberg reported Tuesday, citing an anonymous source.
- The coronavirus pandemic has prompted employers and workers alike to weigh the benefits and disadvantages of tethering oneself to a big city. With employees working remotely, companies are finding the price tag of (mostly empty) office real estate to be a drag on their financials. Many employees, too, have fled more densely populated cities for sparser areas where the risk of infection may be lower. Those locales also often carry with them a lower cost of living.
- Stripe is not the first company to enforce localized compensation. Software maker VMware last week said it is adopting that approach. For example, an employee who moves from the company's Silicon Valley headquarters to Denver must take an 18% pay cut, Bloomberg reported, citing anonymous sources. Moving to Los Angeles or San Diego would cost the worker 8%, the wire service reported.
Stripe relied on remote work even before the pandemic. It created a remote engineering hub last year to go along with its 14 offices worldwide, and vowed to hire 100 new remote engineers and other workers, according to Bloomberg.
The payments processor is based in San Francisco, the metropolitan area with the nation's highest rent and cost for goods and services, according to the Bureau of Economic Analysis (BEA).
Valued at $36 billion as of April, the company wouldn't appear, on its face, to be economically struggling. But it also wouldn't be the only well-heeled Northern California company to localize compensation. Facebook told employees in May that those who leave the area face salary cuts depending on where they're living as of Jan. 1, 2021.
Rich Lang, VMware's senior vice president of human resources, told Bloomberg the company adjusts salary based on the "cost of labor" in various markets and analyzes salary points among companies that compete for employees.
Such competition often meant offering higher salaries to attract top talent with the expectation that that talent would move to a high-cost city with an office. But the pandemic and the resulting remote-work policies add flexibility to where employees are based.
With that in mind, Lang said, those moving to a higher-cost area may be in line for a salary bump.
"We want our employees to be able to make whatever life choices they feel are best for them without barriers," a Stripe spokesperson told CNN.
Users of the anonymous professional workplace forum Blind appear split on the trade-offs of localized compensation, with 49% of more than 6,000 voters saying they wouldn't take a pay cut for doing the same work. Meanwhile, 44% said they'd agree to less pay in exchange for better work-life balance and a lower cost of living.
Software maker ServiceNow said it also was considering adjusting the pay of workers who leave the Bay Area starting next year.
"I don't believe we should have an environment where management is not involved with those determinations, because what you could get into here is a situation where employees then become the decision-maker in working literally from anywhere, and you would have a hard time organizing and holding together a culture if that was the case," CEO Bill McDermott told Bloomberg.
Lang said VMware is asking for transparency because taxes are paid based on where employees work.
Employees are already saving on at least one cost related to working in an office. Workers who once commuted by car but now are based at home are saving $758 million per day, freelancing platform Upwork found, according to CNN.
Those who are moving may not be going far. In July, Marin County, outside of San Francisco, saw a 77% increase over last year in new contracts for single-family homes, Compass found.