Many employees at Silicon Valley tech companies have recently moved to cheaper residences to work remotely amidst the coronavirus pandemic. Big Tech has responded by slashing salaries using “cost-of-living” reductions as a reason. This has increased tensions between employers and their workers. One tech CEO in the midwest called Silicon Valley’s salary cuts “hypocritical.”
The Wall Street Journal reports that tech workers leaving the San Francisco Bay Area to work remotely amidst the global pandemic have found themselves facing unexpected pay cuts. As many tech firms move to entirely remote working situations, employees are finding it less desirable to live in the expensive San Francisco area. However, moving further away is resulting in some employees’ salaries cut by as much as 15 percent.
Tech firms are highlighting the fact that changing pay based on the local cost of living is common practice for many companies. But Silicon Valley firms have spent years going above and beyond standard salary practices in order to attract the best talent in the world.
Jason Fried, the chief executive of Basecamp, a Chicago-based maker of workplace software that has a remote workforce, commented on the situation. He stated, “if anyone should be standing up for high pay, equal pay and great talent, it should be these companies—I find it to be pretty hypocritical.” Fried added that tech firms are so profitable that they could easily afford to maintain employee salaries. “You’re hiring a person and the skills they bring,” he said.
In May, tech giant Facebook announced that it would be moving towards a substantially remote workforce and that location would affect compensation. Twitter also stated that it would allow employees to work remotely permanently, but has a “competitive approach” to pay based on location. Microsoft has since announced plans to allow employees to work from home on a permanent basis.
As remote working becomes more common, some hiring consultants are recommending that employees resist taking salary reductions due to their living locations.