HR Debatable

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The location-based vs. location-agnostic pay debate is nothing new. It has, however, gotten way more attention since 2020 and the massive shift towards hybrid and remote work that we’ve seen since then. As people increasingly decided to move away from big cities to locations with a lower cost of living, sometimes even to entirely different states or countries, companies saw themselves having to deal with the question of what to do with their employees’ salaries. Some organizations chose to adopt a location-agnostic pay model, meaning that employees receive the same salary for the same job, whether they live in New York City or somewhere in the Spanish countryside. Others chose to stick with the more traditional location-based pay models where the salary for, for instance, a software development job in a city like San Francisco is considerably higher than the salary for the same job in a more rural area. The idea behind this approach is that the cost of living in a place like San Francisco is a lot higher and, therefore companies need to pay more to attract and retain talent there than in a more rural area. Naturally, big organizations such as Apple, Meta, Microsoft and the likes jumped on the occasion to let their people know that if they would move out of Silicon Valley - where the cost of living was higher than in other areas people were moving to - they would face pay cuts. That would imply that people’s pay is based on their cost of living rather than on the work they do, wouldn’t it? Is that really what we want? And didn’t a lot of people move to places like Silicon Valley because that was where they could find a job but now, as technology allows many of us to work remotely, they have a choice to move to a place where they can have a better quality of life? Does it seem fair to punish people financially because they choose to move elsewhere? All of this brings me to our third and final statement of today: “Pay should be based on the work people do, not their location.”