As long as a remote format has existed, there have been many disputes about how to financially compare it with the office. Either the remote worker saves not going to work or spends money on workplace arranging. Let’s figure out how this market works and what needs to be done not to miscalculate the salary on a remote.
No one is surprised that one office offers a large salary, and the other — a smaller, but with a social package and a convenient location. We are used to comparing offers based on factors that are important to us personally. The main point is that everyone is used to the fact that there is no general recipe here.
When comparing office and remote work, the idea of evaluating proposals for a set of conditions does not change. But still, from time to time, someone tries to find a universal answer to the question, “should a remote worker get less or more for the same work.” Discussions are especially acute now when the pandemic has turned the entire labor market upside down.
Should income be different?
A variety of aspects are mentioned during discussions — from saving on business clothes to reduced rent of the employer’s office space. However, let’s look at the problem only through the eyes of a hired worker (how companies build their economy under these conditions is a separate issue, we considered these matters in an article about why remote work does not fit all companies).
To go to the office, an employee needs to:
- buy clothes following the dress code;
- think about lunch — if the company does not provide food, reserve money on food in a cafe or bring a lunch box;
- spend time and money on the road to work.
The employer will take care of everything else (workplace, equipment).
At home, the costs are completely different:
- You need an area to organize a workplace. Residents of cities are well aware of how much each meter of an apartment costs for rent or sale. The workplace is at least 2 square meters, which used to be occupied by a kitchen table, children’s toys, or a wardrobe with clothes (we don’t mention that it is more comfortable to work behind a closed door). This area should be present. If it is not there, you have to change housing.
- You can dress as you want, but still, no clothes savings. You still need clothes to go outside.
- Lunch must be prepared by yourself or used the same delivery as in the office. Home cooking is cheaper than cafes, but it wastes time and effort. Some people don’t like doing it. We add here all household logistics — from purchasing products to washing dishes. This is the same situation as with containers in the office.
- You don’t have to go anywhere, but you will have to invest in the arrangement of the workplace — a table, a chair, appliances, software, and a stable Internet channel. If you buy from scratch, it is not a small amount of money if the company does not compensate. The advantage is that the purchase does not depend on the employer — once having collected a place, you can use it for years. The downside is that all technical problems have to be solved by yourself in most cases. The power supply burned out? Then run to buy new, the deadlines are on fire.
This economy converges in its own way for everyone. If you have your own home, passion for cooking, and four workstations in the corners, the remote format is a great and cheap solution. If you share a single apartment with two children and have never kept anything at home except an old laptop without the help of an employer, the threshold for entering a home workplace will be very high.
Under these conditions, how to interpret the reports of HR portals that up to a third of Russians are ready to lose 10% of their salary for the sake of switching to remote work? Nohow. This information must be ignored. The data gathering procedure is flawed. Mentioned stats mainly concerns people under 24 years old with a salary of up to 30 thousand rubles, not a word about the market segment stratification. Even if it is IT, then we are talking about the entry-level.
What do public companies think?
IT salaries have risen over the years, fueled by companies’ desire to hire the best developers and testers available in the region. Since the businesses mostly live in large cities, then in the description of vacancies, it is necessary to focus on high local salaries, determined by the standard of living. Now, having gained access to personnel from the regions but not wanting to spend resources on updating the entire team, companies are picking up the rhetoric to explain the decline in salaries. For instance — “remote format is cheaper.”
Geographic issues
In an attempt to find a basis for the reasoning about income declining, companies are proposing to engage in geographic research — pay less for those who live and work in regions with a low standard of living.
The idea was thrown by GitLab, which introduced the ranking of salaries depending on the cost of rent in a location even before the pandemic. The rental rate was taken as a basis not for the proper rent compensation. It attempts to point at some economic indicator that correlates with average wages in the region. This is convenient when there are many people, and there is no way to dig into the situation of everyone. It is enough to ask a new person about his salary expectations and consider them taking into account the “rent index.”
When GitLab introduced this rule, there was a lot of hype. Google was criticized much more when they offered a salary calculator in the summer, according to which remote workers were cut by 5–25%. Later this example inspired Facebook and Twitter.
By the way, formally, the Russian market is protected from these ideas by the new legislation on remote work, where you cannot reduce wages when switching to remote work. But nothing prevents the company from hiring new specialists for less money (for example, for a slightly different position).
One size fits
Everyone who doesn’t like the idea of geographic ranking comes up with other approaches.
Deutsche Bank proposed to introduce a separate tax for remote workers (at the level of 5%) since they do not use transport and public spaces, i.e., contribute less to other sectors of the economy. At the same time, they receive the same salary as their colleagues in the office. This is a kind of variation on tax for the rich. Similar thoughts were expressed in the UK. I wonder how far this initiative will go.
The market dictates laws
The cost of work is determined not by the price of a computer or its depreciation, and not even by the cost of bread in a bakery around the corner of an employee’s house, but by the market. Companies voice their proposals — “3 people for a cement plant with such and such a salary.” People either agree, or they don’t. The money or social package in the offer is raised if no one responds. In theory, salary can decrease if there is a queue of suitable candidates for the vacancy.
In the new remote reality, a person from the same city can respond and a specialist from a region where average salaries and the cost of living are much lower. Companies know this, and someone is even trying to push wages lower, counting on an influx of personnel from the regions. But competition also works the other way around. If a competitor’s vacancy contains a higher salary, more qualified specialists will gladly go there.
In this case, the primary trend of the market movement is determined by the one who is in charge. Here is the main feature of the Russian situation. Google mentioned above and other US companies may dictate their own rules since they work in Silicon Valley — there is a different labor market, an excess of qualified personnel. We still have a market for the applicant. There is no overabundance of personnel that would drop salaries. Only ten years ago, the business successfully pushed the income of remote employees down when there were so few remote offers that specialists from the regions had no choice. Now this “trick” will not work.
At the same time, there is no universal rule that would force to pay a higher salary to remote workers. If you’re a senior developer in a rare language, you can expect to be offered more once you’ve found someone who needs your skills. The distance has nothing to do with it. However, if the competition in your segment is high, and you do not have unique skills or a combination of them, there is nothing to count on (just as it would work in the office).
In other words, wherever the market moves, everything for a specialist personally depends on his demand — it doesn’t matter whether he is remote or not.
Conclusion
No matter how the portals conducting sociological surveys evaluate the prospects for growth or decrease in remote salaries, to a greater extent, everything depends on the skills and experience of a particular person. We have been working remotely for more than five years, focusing on middle and senior specialists — “rare jewels” in the labor market. We see no point in switching to some abstract values, such as the housing rental index or the cost of the consumer basket in the regions. We ask everyone about salary expectations. If we are on our way, but a person has difficulties with a home office, we help to lower the threshold for entering remote work.
Learn and develop. It is the best way to keep your income level, no matter what the big companies that set the fashion in the market think about the remote format.
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