Relocating During the Pandemic Can Hurt Your Wallet
Back in July, we wrote an article speculating how remote work will affect salaries. We discussed how relocating during the pandemic to the suburbs or more rural locations could potentially impact your salary while working remotely. Software company VMware is one of the first real indicators of this phenomenon. A new report from Bloomberg reveals that they are allowing some of their staff to work from home permanently. However, there is a catch: if they relocate from their headquarters in Palo Alto, CA, they must accept a pay reduction to compensate for a lower cost of living. So, how will relocating during the pandemic hurt your wallet?
How much will a relocation affect your salary?
In this same report from Bloomberg, they spoke to anonymous workers from VMware. They reported that if they were to leave from Silicon Valley to Denver, they would take an 18% salary cut. And if they just moved to nearby San Diego or LA, their annual salary would take an 8% hit. And although the cost of living in these locations is cheaper, those are considerable decreases in an employee’s annual salary.
Other companies, mostly large tech firms, are considering similar approaches to relocations for remote employees. Twitter is considering a “competitive” approach to localizing compensation, while Facebook blatantly said it might cut their employees’ salaries, depending on where they relocate.
Other companies are taking a different approach
Another report indicates that Stripe, a financial services and software company, is handling remote relocations a little differently. It is rumored that Stripe is offering a $20,000 “relocation” bonus for those relocating from the Bay Area, NY, or Seattle, but is requiring a pay decrease up to 10%. This seems like a more promising approach to receiving a pay cut due to a cheaper cost of living.
There may be other relocation agreements with workers and their employers; however, we may start to see salaries decrease in bigger markets as a result.
What will be the long-term effect?
So, this begs the question: what will the long-term effect be of remote workers relocating? Would you take a pay cut to move to another location with a better cost of living and a smaller population? If you are considering relocating to a cheaper area or to one less densely populated to avoid the virus, here are some of the best places to restart your career after the pandemic.