Tech workers and employers alike are beginning to question location-focused pay scales.

"A handful of companies are moving to abandon them altogether.

In setting pay without regard for location, tech companies including Reddit Inc. and Zillow Group Inc. are making a potentially expensive gamble to retain talent and gain a hiring edge. The move can entail maintaining relatively high salaries of employees who are relocating, and adopting a revised scale for new hires. Though it is early, the move challenges a long-held, but not universal, notion that where people live should determine what they make.

Some big tech companies including Facebook Inc. were clear early on in the pandemic that people moving away from the Bay Area to less expensive cities would see a pay cut. Payment platform Stripe Inc. offered one-time bonuses for workers who moved out of San Francisco, Seattle or New York -- and agreed to a pay cut of up to 10%.

But a pay cut for any reason can be bad for worker morale, said Jake Rosenfeld, a sociology professor at Washington University in St. Louis who researches pay determination. "Employers really have to do a bit of a dance to justify it to workers," he said.

Workers considering more flexible work scenarios are themselves divided. A November survey of 600 tech workers by the job-search platform Indeed found that 60% of respondents would be willing to take a pay cut to work remotely permanently while 40% said they wouldn't.

Zillow, the Seattle-based real-estate search company, told its 5,600 employees in October that if they chose to relocate from their current city, their pay wouldn't be adjusted. "We're not making this change to save money," said Dan Spaulding, chief people officer of Zillow. "We're making this change to retain our employees."

Since the announcement, around 50 employees have decided to move to a different state. The company will try this pay model through at least the end of 2021. With new hires, Zillow plans to work toward a nationalized pay scale over time.

Sahil Lavingia, founder of the 24-person e-commerce startup Gumroad, heard from hundreds of job seekers after tweeting that he would no longer consider geography when determining wages.

Mr. Lavingia said many of the tech workers he has heard from are based outside the U.S. -- in India, Nigeria, Singapore and Eastern Europe. He anticipates that as more people compete for fully remote jobs, the going rate for tech work will come down."[1]

After all, the best employees of our technology can work not in Vilnius, but somewhere far away in the world and receive the same salaries as those working in Vilnius. Vilnius needs to be prepared to do something better than to scatter cat pee-smelling sand for fake beaches in the city squares if we want Vilnius to attract well-paid workers to live here.

1. Tether on Salaries, Location Loosens
Bindley, Katherine. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]30 Dec 2020: B.1.