South Florida Sun-Sentinel (Sunday)

Cheaper digs amid crisis may end up being costly

Survey: About 33% of bosses will cut relocated workers’ pay

- By Jeff Green and Alexandre Tanzi

As many as a third of remote workers who move to a cheaper place to live during the pandemic could end up getting a pay cut that offsets any savings, Willis Towers Watson found in a survey released Thursday.

About a quarter of employers said they will reduce pay to reflect lower living costs for relocated workers, and another 9% said they will cut compensati­on for workers who aren’t in critical roles, according to the survey of executives at 344 North American companies in September and October. The executives, who employ about 5 million workers in industries ranging from manufactur­ing to retail, also said that they expect more than half of their employees to work from home through at least the first quarter of 2021.

“They are doing it on the very logical premise that the cost of labor is different in these different locations,” said Catherine-Hartmann, a managing director at the consulting firm and one of the researcher­s on the survey.

The pandemic is reconfigur­ing a larges wath of the U.S. workforce, with about

35% of employees working from home because of

COVID-19, according to the U.S. Census data gathered from late October through Nov. 9. Many white-collar workers who had returned to the office are being forced back home by a recent record-setting spike in infections, which have killed more than 260,000 Americans and sickened almost 13 million. Still, a majority of U.S. workers — those in sales, services and essential jobs — are unable towork from home.

Facebook CEO Mark Zuckerberg, who has said many workers will never come back to the office, told his employees in May that while they are free to move away from costly Silicon Valley to more affordable communitie­s, they should anticipate their future pay to reflect the lower living costs. Other tech firms have since made similar statements, including Slack Technologi­es Inc. and Box Inc. Tech made up only 13% of the companies in the Willis Towers Watson survey, suggesting many other companies are also looking at pay cuts.

Employers are also studying how to account for the costs of remote work, such as adding more benefits for emergency child care or reimbursem­ents for using home technology. Only 28% of employers said they had no plans to change their compensati­on regime to adapt to remote work.

The survey also found that the executives now predict about a third of their employees to be working from home fulltime in three years, up from 5% three years ago.

Companies that do reduce pay based on geographic savings will have to

develop a clear process for determinin­g whether an employee has moved to a lower-cost area, whether pay cuts will make the company less competitiv­e and whether there might be legal implicatio­ns in area such as pay parity, Hartmann said. Many companies will be watching to see whether reducing pay based onlocal living costs is actually widely adopted, she said.

As many as 23 million Americans, or11% of households, plan to relocate as working from home becomes more popular, according to a survey released Oct. 29 from online freelance company Upwork Inc., which polled 20,000 people.

A study of the 30 largest U.S. metro areas during the pandemic from March to September showed that people leaving big cities such as San Francisco, New York or Los Angeles were moving to less-expensive metro areas in the same region, such as San Diego or Philadelph­ia, according to Orbital Insight, a California-based company that tracks movement of goods and people. Northerner­s also tended to move to warmer cities in the South, the data showed.

 ?? TRENT NELSON/AP ?? Facebook CEOMark Zuckerberg told his employees they should anticipate their future pay to reflect the lower living costs if they move away from Silicon Valley.
TRENT NELSON/AP Facebook CEOMark Zuckerberg told his employees they should anticipate their future pay to reflect the lower living costs if they move away from Silicon Valley.

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