Remote work salaries
“By the time you send the contract, we’ll be good.” My boss reassured me.
I was living in rural San Diego in 2016, working from home, trying to build a “100-article-a-week capacity” editorial team in an office in Chinatown in downtown NYC. This was not easy. I couldn’t be there for interviews, remote work was not really a thing yet, and we were on a startup budget so I was limiting myself to travel there.
Every time we met someone offer-worthy, I’d throw out the number and my boss would ask, “don’t you think they would take less?”
I became a broken record, repeating “This is New York” over and over again, half expecting to bust out into an Alicia Keys song.
Eventually, they got it, when I made an offer to someone in Tennessee for 30% less, and a much stronger candidate, than the folks we were meeting in New York. And for her, it was a huge bump from the role she was coming from.
But we could only hire in New York and California at the time.
It was easy to contact our payroll provider to upgrade to include all 50 states, but competition between all-in-one payroll SaaS companies had not yet heated up, it would be 4 years later until the pandemic really fueled this. So at the time, it felt new and exciting.
I made the offer, she accepted, and my “remote work” pilot program had begun. We continued to build a hybrid team in the office, when we could, and around the country and the world, when the talent emerged in those places.
We experienced every growing pain you can think of trying to do this in a hybrid format with few role models to look up to, but that’s for another day.
Now, working from home, a coffee shop, or a beach – remote work has become a new norm for many. With the increase in remote work opportunities, there has been a significant shift in how salaries are determined.
The question that remains is: how do remote work salaries differ from in-office rates, and what should you watch out for? In this article, we will explore these questions, examine how geography impacts the salary of remote workers, and provide concrete tips on how to effectively argue for more.
Differences between remote work salaries and in-office rates
When it comes to determining remote work salaries, various factors such as job level, industry, company size, employee experience, geography, and cost of living, can impact salaries. Understand that remote work salaries are often determined differently than traditional office salaries.
Geography and High vs. low cost of living areas
As you can imagine, living in San Francisco is not the same as living in Columbus, Ohio.
Remote workers in high-cost-of-living areas may need to earn more to balance income and expenses. Employers may adjust salaries based on the cost of living in the area where the employee lives, rather than where the company is located. This can vary from city to city and even region to region. This can be beneficial for remote workers who live in low-cost areas, but it can also be a challenge for those in high-cost areas because every penny counts. It might also mean that if you move to a lower-cost area, you might be in for a negotiation.
Does remote work automatically mean a lower salary?
Not necessarily. Beyond geography, it might be very important for someone to be able to go into the office to perform key roles like interviewing. But if someone’s value is in working from home and coding for three days straight to get the product launch out on time, that person may be much more valuable at home than in the office. This all depends on your role, the value you deliver, and what you negotiate.
How should you set salaries for remote roles?
The best way to set these rates is to empower your HR team to access data on global geographic rates for career levels, and using this “compensation framework” to determine which employees are above or below the target from the average rate.
Your company needs to officially decide, what is our target from the average?
For example, we always pay 10% above the average salary for all roles.
If the industry average for a Senior Marketing Manager in New York City is $110,000, you are committing as a company to make sure that everyone who is performing well in that role title will be adjusted to $121,000.
How do you find out the average pay?
Remote.com recommends that you use other frameworks like Gitlab and Buffer. Buffer is a great role model in this area – they’ve published their company’s salaries for years and made their calculator public.
Buffer’s salary formula takes into account the role, and the cost of living (represented by a number between 0 and 1 where 1 is the most expensive area, San Francisco), and multiplies these together to determine a salary. So if Columbus was a 0.8, the salary would be 80% of the San Francisco rate.
Your role x Cost of living = Your salary
Other tools like Glassdoor’s salary index are great to get a snapshot, but remember that a lot of the data is self-reported by users so might not represent every average perfectly. Be prepared to get pushback on this as a source, but still bring it anyway because it’s an indicator!
What… happened during the pandemic?
Since the pandemic we’ve been on a rollercoaster of employment and salary trends. Because certain industries were put on pause and certain others were blowing up with new covid-era trends, we saw some strange pendulum swings:
A bunch of people got pre-maturely laid off, as businesses recoiled with fear about what would happen during the pandemic.
Things closed suddenly, and everything from restaurants to hospitality to entertainment, travel and culture suffered. Job losses were swift and sudden.
Some industries blew up, like toilet paper and online virtual events, and a lot of tech companies and domestic products and service companies needed “essential workers” to be present, and the tech teams to build those sites. Now all of a sudden people were struggling to staff.
Waves of job losses continued amongst “IRL businesses” as businesses used the last of their reserves to keep layoffs at bay.
People made a mass-exodus from the cities out to cheaper rural and suburban areas, but not everyone told their employer. This happened so fast, it was hard for employers to track where everyone was going.
As the economy recovered from the pandemic, fueled by retail growth while government stipends were being handed out, some companies needed to hire, fast. They promised the same San Francisco rate if you lived in a rural area, because they knew they needed people. VC money was also pouring into the tech space. Between hospitality and tech, companies couldn’t hire fast enough.
Companies finally felt the impact of paying San Francisco rates for people to live in cabins in southern Oregon, and they scrambled to adjust. Things came to head once people started coming up for performance reviews or switching jobs after moving.
Is everything normal now? No. As of this writing, a new wave of 2023 tech layoffs are still in the headlines, with giants like Meta, Oracle, Amazon, and on and on, making huge swaths of cuts. Likely, cutting all the inflation they created to try to fix their own mistake. Insert “you played yourself” gif here.
Other industries and companies that are shored up and growing during this post-inflation-constant-recession-threat time are still hiring, so you’ll still see headlines about that too.
How to effectively argue for more
If you’re arguing for a higher salary as a remote worker, come prepared.
Conduct research on industry standards and use this information to establish a personal value proposition.
Know your worth and articulate it clearly to your employer.
Be able to summarize your top 5 quantitative contributions to the company.
Be able to articulate your goals for yourself within the company, how this ties back to the company goals, and how you provide value to the business.
It’s up to both of us
As managers, we’re equally responsible for looking out for our teams as we are for ourselves. Employees must learn to ask, yes, but as a person in a position of power, you have a responsibility to take care of them and not take advantage of them.
Use these same tactics to ask for more for your team. Bring your own research, write evaluations and pitches on how each employee is excelling in ways that can’t necessarily be seen easily. This engenders so much loyalty amongst your team when they know you’re going to bat for them.
What to watch out for
Lack of Transparency. Clearly ask your employer about your compensation and how it will be calculated. Make sure that you fully understand your compensation structure and the potential for bonuses or additional compensation.
Unfair Treatment. Remote workers may sometimes feel that they are not being treated fairly when it comes to compensation. Make sure that your employer is not taking advantage of the remote work situation to pay you less than your in-office counterparts. Be aware of your industry standards and use this information to advocate for yourself.
Isolation. On remote teams, it can be easy to feel disconnection and a lack of engagement. Communicate regularly with your team and employer, participate in virtual meetings, and establish relationships with colleagues to avoid feeling disconnected.
Are you being paid fairly?
Remote work offers many benefits, including flexibility and work-life balance. However, when it comes to salaries, there are many factors to consider, including geography and cost of living. Be aware of potential pitfalls and to advocate for yourself when it comes to compensation. By understanding the differences between remote work salaries and in-office rates, and how to ask for more, remote workers can ensure that they are fairly compensated for their work.
