The website Payscale.com asks: “Should pay be adjusted for remote employees?” The real question isn’t whether it should, the question should be “Is pay adjusted for remote workers?” To which the answer is: “Yes, yes it is.”
This is just reality. When a business is hiring from a local pool of workers, the cost of living and tax climate of the local area dictates what amount of pay workers will be willing to accept. A person in Manhattan or Oahu, where the cost of living is high, will demand a higher salary than a person in Biloxi.
It isn’t just that, however. Labor is a product to be sold, and is thus subject to supply and demand, just like any other product. Expanding the labor pool from the local area to the entire nation increases the supply and thus the value of the labor.
One of the things that COVID and the lockdowns did to the business climate was to show businesses that expensive office space on Park Avenue in Manhattan wasn’t strictly necessary for success. Most office workers are capable of doing their jobs remotely. It won’t be long before businesses begin recruiting employees from places like Des Moines because they will soon realize that the employee pool there doesn’t need to be paid as much as the employees from Manhattan who are having to pay $3500 a month for a studio apartment after paying a quarter of their salary in state and local taxes. Places like Tulsa will soon host remote workers in the same way that India and the Philippines now host call centers.
This is why cities like Nashville and Clearwater Beach are seeing population booms as cities like Chicago and New York City see massive relocations.
The employment reality is changing.