How Remote Work Burst the Tech Salary Bubble

By Artur Meyster

This year, tech giants introduced the option for permanent work-from-home setups. Companies previously known for designing and providing home-like workplaces for their employees now are, ironically, moving to the real homes. The move is telling of the large-scale impact of the coronavirus pandemic. 

Leading the permanent work-from-home setup charge is Facebook. During the second half of this year, the tech giant announced two major moves starting next year. First, it will expand its recruitment to remote workers, while also allowing its existing talent to continue working from home indefinitely. 

Second, in relation to its accelerated adoption of a remote workforce, pay will be adjusted contingent to a remote worker’s place of residence. This primarily affects Silicon Valley-based workers who moved out of the high-priced city to cut down on expenses. 

Facebook is not alone. Other tech companies have since announced their adoption of the new policy. Twitter said that its own transition to remote work has been a subject of discussion for over two years now and has only been sped up due to the pandemic. 

Included in its plan is the localization of pay. However, Twitter was quick to underline its “competitive” approach in adopting the policy to the tune of additional days off plus allowance worth $1,000. 

The software company VMware is also offering the same deal to its employees. That is, to incur pay cuts in exchange for being able to work remotely on a permanent basis. Cuts for the annual salary of employees who take the company’s offer are said to vary from eight to 18 percent. 

Lastly, employees of Canadian e-commerce company Shopify are also not expected to return to the office any time soon, if at all. In a tweet by its founder Tobi Lutke, he said Shopify is digital by default and as such should be able to continue its operations albeit the shift to remote work. As he put it, “Office centricity is over.” To boot, Shopify is yet to announce whether it will adopt the pay localization policy.

The scale by which remote work is redefining the tech industry is evident. It’s also clear how tech employees may bear the brunt of these changes. As such, the looming enforcement of the new pay mechanism has been met with mixed reviews. But before we proceed to the response, let’s first take a peek at how much tech professionals earn on average.  

The Tech Salary Bubble 

In the tech industry, earning a six-figure income is the rule, not the exception. Case in point: software engineers in Google earn a median base salary of $120,000 to $318,000. If we account for the bonuses and stock options, this gives us a total compensation package ranging from $179,000 to a staggering $1,350,000. 

Surveilling other fields, front end developers earn some $76,000 per year. In the San Francisco Bay Area, however, the figure jumps up to over $112,000 annually. In Toronto, Canada, the average salary for a front end developer is C$68,000 (around $52,000), according to Glassdoor. Meanwhile, data scientists earn $95,195 on the lower end and $185,500 on the higher end.

Whichever field it is, the pattern stays the same. Those within the tech industry earn higher than most professionals across the job board. And it isn’t surprising why. Since its entry, data has quickly gained traction as a central element to a company’s success. Data, when utilized correctly, grants a competitive edge.

Due to its rising value, the demand for competent tech talent has likewise grown. However, due to the inelastic nature of tech professions, the tech industry has had to spar with a shortage of talent. Put two and two together and we get a high demand in qualified talent but low supply for such. Hence the high remuneration for the roles.

Due to the onset of the virus-induced remote work setup, the paychecks that previously boasted six-figure salaries may soon have to take a hit.

A Mixed Response 

Following the consecutive announcements of pay adjustment, the online workplace community Blind conducted a survey among tech professionals. The question: “Would you willingly take the trade-off (i.e. reduced wages in exchange for a permanent work-from-home setup) in this new Covid-19 future we have?”

Thirty-eight percent of Facebook employee respondents said they would consider relocating despite the cuts. This was seconded by 61 percent of VMWare employees who said they’d willingly relinquish a part of their salary if it means better work-life balance and lesser cost of living. In step with them is 47 percent of Twitter professionals. 

From a bigger perspective, 66 percent of professionals gave an affirmative response to the question. That is, to move out of Seattle, New York, and San Francisco—the top tech hubs—even at a costly price. For them, the return far outstrips the expense. 

On the other hand, however, lay those who opposed the pay adjustment policy. One respondent who works for streaming service provider Hulu said the policy is just another form of labour exploitation. 

The respondent’s answer hinged on the premise that the value of labour is not dependent on one’s location. Whether one is at point A or point B, the quality and quantity of work one produces remain constant. In other words, only the work set-up changed, not the work itself. 

This was followed by the results of a poll conducted via Twitter by research and advisory firm founding partner Jeremiah Owyang. A similar question was raised: Will you accept an offer if it means having the ability to work from home indefinitely but with a 10 percent reduction in pay? Forty-four percent of the respondents answered affirmatively. The majority, on the other hand, said they’ll either continue working at the office or find another job. 

A decade ago, the digital disruption set a new precedent for the jobs market. Legacy roles which, for decades, were considered as the top professions were either replaced or redefined due to tech. Now, a new variable is taking root: remote work. As before, the message is clear: either adapt or lose.

Artur Meyster is the CTO and Founder of CareerKarma.

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