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Why Silicon Valley workers who relocate for remote work face pay cuts

Thomas Barrabi

Silicon Valley workers who opt to take advantage of remote work policies and relocate to other cities during the coronavirus pandemic may face pay cuts to account for their new cost-of-living expenses.

VMware Inc., a software firm based in Palo Alto, California, has begun allowing some of its staffers to transition to permanent remote work. Workers who move from Silicon Valley, one of the country’s most expensive places to live, to other less-expensive cities experience significant salary adjustments, Bloomberg reported, citing sources familiar with the matter.

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In one example, A VMware worker who moves from Palo Alto to Denver would have their pay reduced by 18%, according to the report. VMware declined to comment on whether Bloomberg’s figures on the potential salary adjustments were accurate and said the company’s current policy is meant to create a flexible environment for its employees.

“Through our Future of Work initiative, VMware is building a dynamic, global workforce of the future where our people have choice and flexibility to work from any location that accelerates their productivity to deliver the most innovative solutions for our customers,” the company said in a statement on Friday. “Our program is designed to empower our employees with the information to help them make decisions should they desire to relocate. VMware is dedicated to equitable pay for its workforce, not by only race and gender, but also work location or geography.”

Many U.S. companies across various industries shifted to remote work after the pandemic made it difficult for employees to safely work in traditional office spaces. With no clear timeline for a return to pre-pandemic work conditions, some companies are allowing workers to work remotely on a permanent basis.

Pay adjustment is a common practice when workers relocate from one city to another. Facebook and Twitter, two other tech companies based in Silicon Valley, have similar policies.

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Representatives for both companies said the policies have been in place for years and were not a reaction to employees relocating during the pandemic.

“We have always used a ‘market-based’ approach to compensation, meaning that we pay in line with the common market practice in each location where we operate,” a Facebook representative said in a statement. “This is our current practice and has been for years. It applies to all workers, including remote workers."

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A Twitter representative said the pay adjustments for relocating workers are “not a new policy.” The company has put a number of benefits in place to support workers during the pandemic, including company-wide days of rest, a $1,000 allowance to buy work-from-home office supplies and employee wellness programs.

“We have always had a competitive approach to pay localization and are proud of the many ways we are supporting our employees during this challenging time,” the spokesperson said.

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