How do you feel about different salary range based on location?

Anonymous

February 10,2023 at 12:06PM UTC

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How do you feel about different salary range based on location?

I work for a global corporation that employs remote workers. I work in a team with people from different nationalities, but although performing the same job, I am paid much less than my peers since, in accordance with company policy, I am from a third world nation where living costs are lower.

While some things are cheaper in my country (food and rent), I'm feeling the gap because with my salary range I can't buy the same things as my co-workers in other countries (globalized things that are as expensive in my country as in every other place, such as technology, clothing, travelling). Additionally, the company encourages the digital nomad lifestyle, yet whereas my coworkers may live anywhere in the globe on that wage, it is practically impossible for me to do the same (or very hard to achieve).

I considered discussing this with my manager, but I want to make sure I'm not overlooking anything over there. Do you believe it is just to be paid less for performing the same activities as everyone else only because of where you live? Do you know of any research on this topic or a site where I can read more about it? Do you experience it?

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AnonymousFebruary 10,2023 at 1:34PM UTC
I think that no matter where live we should be paid the same salary for the same job. I have seen this trend with remote work as I am looking for my next role and I don't agree to pay based on physical address....because due to the flexibility of remote I could be continuously traveling (which as long as I get my work done is none of their business) so should I (I am in the USA) have a resident address in California which is much more expensive so the company will pay me more? It makes no sense and when I read this in job postings it doesn't reflect well. I don't believe there is any harm in asking because it is a valid question.
AnonymousFebruary 13,2023 at 12:52PM UTC
This opens yourself up to being paid less, who chooses then what is fair. Companies aren't able to control cost of living rates state to state. Most companies aren't looking to undercut someone so that they struggle, I believe that, skill set, education, it's hard to make it a level playing field. Also, some states have employment laws in regards to rollover pto policies, paid out pto, paid sick time required, etc. You have to be able to have a home base to where your taxes are sent and applied to. No harming to ask to revisit wage, agree. Expectations and understanding the state to state employment laws will serve them well, even country to country.
AnonymousFebruary 10,2023 at 1:43PM UTC
I work in a global company that has different pay scales. as well, and I think there are also additional factors such as benefits. (Not sure if this is the case for you, just something I've noted.) For example, in one country, while the salaries may be lower, managers at certain levels are allocated company cars. Or the medical benefits are different, because in the US, we have to pay towards our health insurance whereas in countries with national health systems, they do not.
While I understand the frustration when you know that others are getting a higher salary, I do also understand the attention to equity rather than equality. I know - this doesn't really answer your question though....
Bonnie CoventryFebruary 10,2023 at 1:55PM UTC
GREAT question and should be addressed. The pay discrepancies in the US often have other factors and at any given time a wage change can come from a state to change. It's difficult, I'm sure, to police those. As mentioned, cost of living can vary, etc. The skill sets, even with same positions, can often play a role on compensation. If the company has any currency conversions to pay in a different currency can that be a factor? THAT I have never approached to look at. What I would think is to look at your country or state and see what your position's average pay range is and speak to that with your leader. Allowing hybrid and remote positions already saves the employees money, clothing costs, transportation, often times child care, gas, etc. That is something that is a win win for them et al. So many things to look at and to take into consideration. Do your research and be prepared. Good luck.
AnonymousFebruary 10,2023 at 1:59PM UTC
Fast Company has a well-written piece on this topic...https://www.fastcompany.com/90758618/company-leaders-weighed-in-on-location-based-salaries-here-are-the-pros-and-cons. I am still trying to sort out my own opinion in the matter...attracting top talent can be so challenging, and what if pay was based on HQ location, and there's always the discrepancy of burying the excuses for pay difference on job responsibility, experience, seniority, performance, blah, blah, blah. If you feel undervalued, you owe it to yourself to say something as it's likely to breed resentment. Best of luck to you.
AnonymousFebruary 11,2023 at 12:05AM UTC
I also love this question! Thank you for asking it. I also work for a global organization who uses similar pay scale practices based on location and job function. We're also considered a "hybrid" company for context.
Hmmm... I struggle with this because I totally believe in pay transparency and pay equity but the location-based thing trips me up. I don't always follow the justification.
Sure, the expense of a city should be in alignment with someone's pay so their able to cover general cost of living expenses but then, I look at our global economy. Most people are trying to be financially conscious right now, but their current salary (which pre-dates all this) isn't supporting most of us in this economy.
The other gaping hole is taxes! America's tax system is convoluted, especially, when you breakdown income taxes that some countries don't have to consider. That could be a whole thread on its own but I digress...
The other murky detail I don't understand within my company, or others, is if you move from an expensive city to a inexpensive one but do the same job, will you keep your original pay or will it decrease based on your new location? I'd imagine it would be lowered but is that fair if you and your family have been operating from a higher salary? I also never seem to get straight answers on that. However, if a person moves from an inexpensive city but to a more expensive city, one would expect their salary to change so they can afford the new cost of living expectations. Again, it sounds like the equitable thing to do but is it fair? I dunnno.
This isn't any easy topic nor is there a clear cut answer -- It's all case-by-case the way I see it.
Like someone suggested below, I would definitely inquire it. When's the last time your company conducted a salary/benefits study in your location? It would be good to ask to see what research they used to calculate your current pay scale + benefits and learn how often it is re-calibrated. It doesn't hurt to ask and see if there's room to explore other ways you could be compensated, like maybe in your benefits. For example, maybe it's more flexibility in schedule, more paid time off days, more paid holiday recognition in your country, etc. It's good to get creative with other ways that might help fill the pay gap in case there isn't room to adjust your pay right way. Increased benefits still counts as "total compensation."
AnonymousFebruary 11,2023 at 4:40PM UTC
I am in favor regional salary ranges. That is definitely how it is around the US. This is a constant argument at work where individuals who have only worked for a local company don’t understand that we certainly can’t expect to hire people on CA or NYC at the same salary for the same job as someone in my much lower COL area. To get to one global salary range for a position would take a lot of work to make it work.
AnonymousFebruary 11,2023 at 4:45PM UTC
It’s not just the small organizations that feel that pain. I work for a mid-size organization but occasionally we hire a remote person or an individual not in a state where we currently do business but able to be in the office a few days a week. I have definitely upset the apple cart with payroll, accounting and legal when doing this!
AnonymousFebruary 11,2023 at 6:10PM UTC
It seems the company is missing the mark if they are basing salary on food and rent. Considering you are working remotely and expected to travel, the costs of technology (including options for reliable internet and cell phone connectivity) and travel, at the very least, should be part of the equation used to determine salary equity. Most of the sites that discuss salary ranges only address US regions. I don't know of any that discuss international equity. You might try asking it on LinkedIn if it is available in your area.
AnonymousFebruary 11,2023 at 7:33PM UTC
If someone who is "from" Boston could move to a cheaper place and get the same income as a digital nomad, they definitely need to update their policy!
Some companies resist any kind of change, including changes in society like using digital nomads.
Can you "move" to Paris, set up a mailing address, and then be a digital nomad back at home?
AnonymousFebruary 12,2023 at 1:30AM UTC
Sounds like the issue may be your company not updating ranges on cost of living. I do think it's worth a conversation with your manager to ask when was the last time the company reviewed it's pay ranges. Come to the meeting with data and not anecdotal comments from colleagues. As a manager, I always looked at compensation and equity in my departments, but many don't. It sometimes takes a nudge.
Amortentsia519February 12,2023 at 3:43PM UTC
I work for a mega sized global organization. Pay is different based on where you live (US state and Country). I was hired and worked in CA for 2 years before moving to a state with no income tax. While my pay was not reduced, I was told that future annual increases are unlikely. This didn't bother me, as my lifestyle is significantly improved at my current pay rate in my new location. There is a huge cost of living jump in CA due to income taxes and necessities being more expensive. I also have a coworker that took an international assignment for 2 years to the UK, and her pay went down during that time. I do think companies consider taxes, cost of healthcare, etc. in an effort to make pay EQUITABLE, not EQUAL.
I agree also with another poster who mentioned that different people handle money differently. For example, it is common practice in the US to carry thousands of dollars in credit card debt to maintain a certain lifestyle, while that is very uncommon in other countries. It's also possible that some of those people have savings from family (generational wealth) that has helped them get started in adult life, or maybe they have other income sources.
If you are able to research the salary that your international peers make, as well as their costs like taxes, healthcare, etc., and you still feel there is inequity, then yes I would bring it up with your manager and/or HR. Just keep in mind many of these organizations don't like to share information about pay, and the numbers on the page might have more context than you realize.
CrodicaFebruary 12,2023 at 3:52PM UTC
IMO I am in favor of salary ranges based on the cost if living in certain areas.
“Digital nomad” or not, any employee would have a home address associated to their W-2 no? Their compensation range should match the area where they pay their taxes?
IMO it is irresponsible of companies and these employees to move to low-cost communities with an income level that is outside the range of the area, because their and their money’s presence there drives up the cost of living for regular families who work locally., compromise housing availability and affordability, and put pressure on local public works.
misskelleypFebruary 12,2023 at 9:30PM UTC
Not to mention that - legally speaking - these employees should be paying taxes where they are performing the work. And the company should be paying their share of employer taxes in those locations. Which opens up a Pandora's box for employers, potentially creating a tax nexus in these locations. Employer's need to tread very carefully when allowing employees to work from wherever they choose, and that includes within the US from state to state!
AnonymousFebruary 12,2023 at 6:24PM UTC
Localized compensation is the correct way to compensate folks based upon the COLA - cost of living - in each geographic location. You can check your local resources online or look at other companies for comparison to assess how off or correctly you are being paid. Your need to make more may mean you have to change jobs to find a company that can pay you more if your current employer cannot adjust or just does not want to.
Gail Buckley CraneFebruary 13,2023 at 12:41PM UTC
BTW - COLA is "cost of Living ADJUSTMENT"...usually invoked when salaries (or benefits) lag behind the prevailing financial structure. For example when a COLA (ADJUSTMENT) such as for SSI is implemented. It's my experience that it is across the board - not calculated on recipient's geographic and economic location. It's usually a percentage of the previous amount - which means the same % across the board - but absolute value is dependent on the current basis.
Travel, per diem, and expense variations of course are calculated based on actual cost structure in a region - a bowl of oatmeal in Washington, DC costs more than the same product in Rockford IL, and the traveler should be reimbursed according to prevailing market costs.
AnonymousFebruary 13,2023 at 11:33PM UTC
Personally, I think it's nonsense. The salary should be be based on what the company values the job to be... OR, more practically, it should be based on the cost of living wherever the company is headquartered. Employees can then choose to live in a cheaper or more expensive area if they'd like. I realize this is equality and not equity, but I truly think this is the best solution, because it also doesn't encourage bias (i.e., hiring the cheaper person based on where they live).
Kathy LeskiFebruary 14,2023 at 10:56PM UTC
I think of it this way... saying salary should be the same everywhere is like saying every 2400 sq ft home should be the same price. If that were the case, I'd be living on a warm beach somewhere! There are many factors that go into salary grades. What's important to me is that those factors are applied consistently.
Liz MilneFebruary 20,2023 at 1:03AM UTC
Your salary should buy you the same things that it buys your colleagues - phrase it that way, and present an itemised list of things you would like to get, but cannot because of your lower pay. Even with a raise, you're likely to still cost a lot less than people based in more expensive countries: I don't see why you can't get a pay bump based on that...