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Your Remote-Work Salary Might Surprise You

Most workers expect they will be paid based on the work they do, their seniority, and their qualifications. But with a growing number of people working remotely, people are gaining greater control over how their wages relate to their cost of living.

Living in a major city is often more expensive than living in a small town. Some remote jobs allow you to be employed in one country but live in a completely different one. With the world at your doorstep, you’re free to choose a home where it’s inexpensive to live. If you choose Vietnam, for example, you can enjoy a nice middle-class lifestyle in its 2 largest and most expensive cities for a fraction of what you would pay in Canada.

Debate has intensified about whether where you live should determine how much you earn. Some experts and companies think location should matter, while others think the opposite. Employers on both sides of the debate are making important recruitment and pay-scale decisions that impact remote workers.

Some employers say yes, location does matter

As early as 2020, some large corporations began paying remote workers less if they moved to less expensive cities or towns. Some prominent Silicon Valley start-ups famously announced that people living outside major cities would earn less for the same work as their big-city colleagues. Here in Canada, 40% of employers are planning to anchor a new employee’s pay to their location.

Employers in favour of paying people according to where they live have made some interesting arguments. Here are 3 common ones:

1. Standard pay is inefficient

When everyone makes a big-city wage, companies cannot afford to hire as many workers. This decreases productivity and innovation. Meanwhile, if a company pays everyone the lowest rate, workers will look elsewhere. Employers who make this argument say the cost of living matters and tying workers’ pay to their location makes the company more productive.

2. Employers face higher costs outside their home community

Scouting for distant talent, complying with different tax and labour laws, bringing teams together for special events—all of this comes at a cost to businesses. Some employers argue that they need a financial incentive if they are going to embrace a true work-from-anywhere approach. Tying salaries to the cost of living provides that incentive. If employers know they can recruit and retain good workers in other regions at a lower cost, they are more likely to take on the added burden of looking beyond their local area for new recruits.

3. Paying workers differently is nothing new

Companies have adapted pay structures to local labour markets for many years. Electrical engineers are paid very differently in Alberta than they are in Nova Scotia, for example. As well, many organizations offer a northern allowance for jobs that require people to work in Canada’s northern communities. Employers who’ve already built this approach into their company structure argue that there’s no reason for it to become a major debate just because the number of people working remotely has increased.

Other employers say no, location does not matter

The main argument against paying people based on geography is that only skills and results should matter in determining what workers earn. If you are working in a small town and providing the same value as someone working in a big city, you should get the same pay.

Some experts and companies say this is the only fair way to compensate people. They argue that paying people according to geography could be bad for morale, bad for business, and bad for the broader economy. Here are 3 common arguments against location-based pay:

1. Location is just one factor

With the rise of remote work, communication is happening over email and chat instead of in real time, meetings are becoming less frequent and many employees are deciding their own hours and style of work. A clear trend is emerging: the workplace is in a state of flux and there are a growing number of factors that affect how people get their work done.

Therefore, some employers argue, workers should be paid only according to the work they complete—not according to how or where they complete it.

Further, this school of thought asks why a worker’s local cost of living should be considered more important than other factors. These employers argue that, if they begin paying according to a worker’s location, they open a Pandora’s box of other factors to consider, none of which have any bearing on how valuable the worker is to the company’s success. Employers making this argument suggest that it’s simpler and more effective to focus on rewarding workers for the value they bring.

2. How do you accommodate digital nomads?

For some people, location is fluid. They may work in coffee shops, co-working spaces or public libraries in their hometowns. They may go back and forth between rural and urban homes. At other times, they may travel the world, working in whatever appropriate space they can find.

As a digital nomad, you can work from wherever you wish to, as long as you have access to a reliable internet connection. With the advent of affordable, high-speed satellite internet, this can increasingly mean almost anywhere.

Employers looking to attract digital nomads often find that location-based pay raises more questions than it answers. If someone’s location is continuously changing, how often should their rate of pay be updated? How do you determine where they’re based when they may have no fixed address? Does location-based pay undermine the corporate culture that led them to recruit digital nomads in the first place?

3. Standard pay keeps work in the country

Employers and governments often find themselves asking this question: should companies keep work in their own countries or is it better to look abroad or “offshore” for employees? Large differences in location-based pay made this sort of offshoring increasingly common in the early 2000s. As it gets easier to perform different types of work remotely, even more jobs could potentially shift offshore.

Many employers see the value in remote work but consider offshoring to be an exploitive business model. They argue that companies that pay people only according to their value, and not on the basis of where they live, are less likely to offshore their work. If this approach is important to your work values, you may want to seek out employers who take this position.

How location could affect you

Rising real estate prices in smaller Canadian cities seem to show that remote work is allowing more people than ever to live where they want. This increased demand translates to a higher cost of living in previously inexpensive areas.

Regardless, living in rural communities tends to be less expensive than living in major cities like Edmonton or Calgary. If you choose a smaller city or town, you may earn less than some of your colleagues.

Learn about your employer’s policy

No matter the company you work for, pay generally varies among Canada’s regions. According to the Canada Job Bank, the top pay for truck drivers is typically higher in Alberta’s Wood Buffalo – Cold Lake region than it is in Edmonton. And truck drivers in Alberta typically earn much more than those in Prince Edward Island. It’s worth doing the research for your occupation.

Even within a region, different employers have different pay policies. These policies can shift over time. Some large employers have said they’ll pay workers less depending on where they live. Others have welcomed location flexibility as a benefit for employees and an important way to attract and retain top talent.

With more remote workers deciding to relocate, companies are playing catch-up on their pay policies. Only once solid policies are in place will you be able to make informed choices about where to live—knowing in advance what impact it may have on your salary.

Do your research. Ask your network, read the employer’s recruitment website, and ask employers if your pay would be affected if you were to change locations.

Before you decide to move your current job to a less expensive community, you’ll need to consider both the salary you’ll make and the quality of life you want. If you love big cities and are moving only for financial reasons, taking a pay hit could make your move seem pointless. If you prefer a small community lifestyle, you may decide to make a move no matter the pay.

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