The Price Tag of Going Remote, by the Numbers
Stripe will cut salaries for employees who move to less expensive cities, but will soften the blow with a one-time bonus
$20,000: That’s how much Stripe, the San Francisco-based payments processing company, is offering employees as a one-time bonus if they choose to relocate outside the Bay Area, New York City, or Seattle and take a cut in their base pay of up to 10%, according to Bloomberg.
Ever since the pandemic spurred mass remote-work policies, white-collar workers have started fleeing the expensive cities their employers are based in. A recent survey commissioned by the Manhattan Institute found that 44% of NYC residents earning six figures or more have considered leaving the city since the pandemic began, and 37% said it was at least somewhat likely they would not be living in the city in the next two years. Many have already moved: An August report from Zillow indicated that home values in Manhattan and San Francisco dropped by 4.2% and 4.9% relative to last year, with both markets flooded with new listings.
When the pandemic hit, Facebook was among the first companies to encourage its employees to work remotely, even stating in May that it planned to more actively hire remote workers. But shortly thereafter came the catch: Come January 2021, employees would see their salaries adjusted depending on their geographic location. This kicked off a furious debate, with the likes of Basecamp co-founder (and remote work evangelist) David Heinemeier Hansson denouncing the salary-by-location policy as “barbaric,” and Facebook countering criticism by arguing that this was simply an extension of its existing market-based pay practices. (Never mind that since these announcements, Facebook has moved aggressively to scoop up office space for itself, agreeing to lease all 730,000 square feet at the former USPS building in Manhattan and buying what was to be REI’s new HQ in Seattle for $367 million.)
Other companies have followed Facebook’s lead. Slack decided on a similar policy in June, and now Stripe, which appears to be trying to soften the blow of a location-based salary cut with a one-time moving bonus. We may never know what calculations Stripe’s HR team did to get to the $20,000 figure, but if other companies start offering similar bonuses, expect to see those Manhattan and San Francisco home values drop even further.
Here’s a free product idea: A calculator that helps employees weigh the trade-offs of permanently going remote.