How to negotiate if your employer wants to lower your salary because you’re moving away from a big city

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The good news: Your boss says you can work from home, and you can finally move to the small city or rural town of your dreams. But there’s a catch: Because of your remote status, your paycheck will be smaller.

As remote work morphs from a temporary pandemic measure to a full-blown reality for knowledge workers around the country, some companies are cutting the salaries of employees who live in or move to less expensive areas. Last year, for example, VMware and Facebook said they’d let employees work from anywhere but would adjust their compensation based on the cost of living in their region.

In a red-hot market for job seekers, it’s a short-sighted move. "There’s been a surge in the number of employees quitting and changing jobs, and right now employers are working hard to retain and tempt job seekers," said Andrew Hunter, an economist and cofounder of Adzuna, a job-search engine.

"Smart businesses need to keep this in mind if they’re considering adjusting salaries for workers based on where in the country or world they live," Hunter said.

Experts say you needn’t necessarily accept a pay cut in exchange for the ability to work from home in a lower-cost city — whether you’re gainfully employed and moving or searching for a new remote job.

"As the candidate, you’re in the driver’s seat right now and for the foreseeable future," said Kathleen Quinn Votaw, the founder and CEO of TalenTrust, a staffing firm based in Colorado.

Here’s some advice on how to make sure you’re paid what you’re worth.

Do your due diligence

First things first: Location-based pay adjustments are not always unreasonable. "Pay packages have long been calculated based not only on the role and the candidate — the person’s skills, track record, and experience — but also on location," said Andy Agouridis, the founder and director of CareerHigher, a job-search consultancy focused on mid-career professionals.

In other words, a pay reduction may feel like a personal penalty when in fact it’s just business. Do your due diligence to uncover whether the pay cut will affect your living standard.

Check the cost of housing, transportation, taxes, and food in your new locale and see how far the proposed salary gets you. Consider the additional expenses you’ll incur by working remotely, like the costs of installing and upgrading your internet and other hardware and the higher costs associated with home cooling and heating. Think about your long-term financial goals, too.

"If you’re able to maintain at least the same quality of life or higher, there may be no issue with cutting your premium location weighting," said Agouridis.

However, he said, if you’re offered a significantly lower package, you shouldn’t accept it. "It may mean that your employer is punishing you due to your decision to go remote, which is outright wrong," he said.

Use data to make your case

Next, you need to negotiate. Use salary data based on your job title, industry, expertise, and location — information readily available on Glassdoor and PayScale — to build your business case.

"If you were in the upper range as an office-based employee in California and you’re planning to go remote to live in Texas, you should remain in the respective upper range," Agouridis said. "If this isn’t what’s on the table, ask your employer why its offer is lower, highlight relevant salary data, and request a reevaluation."

Data on your job performance is also worth noting, according to Kevin Rizer, the author of "Always Wear Pants: And 99 Other Tips for Surviving and Thriving While You Work From Home."

Prove your worth, Rizer said. Demonstrate how you’ve cultivated client relationships, won new business, and achieved productivity gains all while working remotely. You have even greater leverage if you work in a high-demand, specialized field.

"Stats sway people," he said.

Leverage the value of remote work

As with any negotiation, psychological dynamics are at play. If you feel indebted to the organization, it may affect how you approach the situation, said Andres Lares, a managing partner at Shapiro Negotiations Institute, a training and consulting company in Baltimore.

"You may feel compelled to trade for that perk due to the laws of reciprocity and obligation," he said. "Most people feel an urge to give in order to get."

To fight it, consider other ways your remote status is valuable to the organization. "For example, remote workers decrease a company’s footprint, allowing it to downsize office space, which reduces costs," he said. "Remote work has also been proven to increase retention, which is a priority for all organizations."

Replacing an employee can cost six to nine months of that worker’s salary — not to mention the costs associated with lost productivity and lower employee morale. Remote work, meanwhile, can improve worker engagement, leading to fewer missed days and less turnover, research from the jobs site FlexJobs suggests. These data points can help you make a compelling case.

If the organization isn’t willing to budge and you’re not in the mood to compromise, you can always walk away. More companies are embracing remote work, and many aren’t adjusting pay rates — Spotify and Reddit have both said they’ll pay New York and San Francisco salaries to all workers, regardless of their location.

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Rebecca Knight August 5, 2021 at 08:51PM

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