Opinion: with Facebook planning pay cuts for staff who move to less expensive areas, remote working may not be a great idea for some employees

Many of us have been working from home during the pandemic lockdown, often combining remote work with homeschooling, and it is not fun. You might find some solace in going to meetings in your pyjamas, and you finally can get through your day without having to interact with your least favourite office mates or listening to your boss drone on, but working from home is stressful and difficult.

In a recent meeting, Facebook boss Mark Zuckerberg found a way to make it even worse. Zuckerberg expects that about half of Facebook's employees will work from home within the next five to 10 years, and he has proposed that employees who live in more affordable areas should expect to be paid less. Not only that, but current employees who move to less expensive areas will be required to notify Facebook and they can expect to see a pay cut.

Facebook will save all of the costs associated with providing these workers with an office and, if this proposal goes through, they will also benefit from the employees' financial misery. Each time an employee is forced by economic necessity to move to a less desirable location, they can also expect a pay cut, adding insult to injury. If we project into a dystopian future, the business model at Facebook might eventually be to close their absurdly expensive San Francisco Bay Area campus and push as many employees as possible into the dingiest slums, thus driving down costs even further.

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To be fair to Facebook, their salary levels are driven in part by the fact that much of their workforce is located in the San Francisco Bay area, one of American’s most expensive areas. The median list price for houses in Menlo Park is over $2.425 million, while the median price for houses in the San Francisco Bay area is over $1.4m. In part because of the exorbitant cost of housing, Facebook has been forced to set very high pay rates; the median pay at Facebook is over $240,000. Facebook’s pay policies take location into account and they already pay a high premium for employees in Silicon Valley, so paying lower rates in less expensive locations is not necessarily unreasonable. 

But giving lower pay for the same work, based on the local cost of living, is likely to add insult to injury for many remote workers. Working from home is often described as a benefit, giving employees flexibility and control over their lives. The sad truth is that this 'benefit’ is available to only a small, affluent slice of the workforce, mostly managers and professional workers, and it is far from clear that it is really all that beneficial. 

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Working from home is often stressful because of social isolation. It also leads to more work-family conflict, in part because boundaries between work and family responsibilities can be difficult to set and maintain. Some of the companies, such as Yahoo, that experimented with large-scale remote working prior to the pandemic soon came to the conclusion that that it led to losses in creativity and productivity. Remote working also removes employees from the centres of power in organisations, making it less likely that they will be considered for promotions or re-assignment.

In this context, Facebook’s proposal to keep cutting remote workers’ pay every time they move to a lower-cost neighbourhood seems insane. For many workers, working from home is bad enough as it is, and they are likely to feel that they deserve 'combat pay’, not a pay cut. While Zuckerberg can make a reasonable argument that the pay at Facebook is high because the cost of living is steep in Silicon Valley, he ignores one of the most basic findings in psychology, that people think differently about losses than about gains.

Research on loss aversion has repeatedly shown that the prospect of losing money is felt much more strongly than the prospect of gaining an equivalent amount.  For example, if you move from Dublin to Castlerea, your cost of living is likely to go down substantially, and your overall economic situation might improve even if your pay is substantially lower. However, you will almost certainly feel like you have lost quite a bit by taking a pay cut. If you preferred living in Dublin to moving to Castlerea (no disrespect to Castlerea), this will only add to the misery. If you throw in the fact that going to the office gave you a chance to get away from the house each day and interact with other adults, asking people to do work in a more stressful environment and a less desirable location and paying them less to boot may be a bit too much.

If you preferred living in Dublin to moving to Castlerea (no disrespect to Castlerea), this will only add to the misery.

Is remote working the future? For most employees, the answer is obviously no. Farmers, gardai, publicans and many others do not have jobs that are in any way conducive to working from home. The answer is more of a mixed bag for office workers. Some employers will find the cost savings too hard to ignore, and some employees will prefer to work from home, but the best bet is that the telecommuting bubble will burst once this pandemic is over, the same way it has burst so many times before. I don’t know about you, but I can’t wait to get back to the office!


The views expressed here are those of the author and do not represent or reflect the views of RTÉ