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A Simmering War – Compensation and the Job Market

Posted by errol on December 12, 2020

Since the beginning of time, location has been a factor in the job market. When applying and accepting a position, an applicant may consider the weather, the commute to work as well as distance from schools and entertainment. In addition to these factors, many candidates consider the price of living and location packages offered by the company. If the cost of living and the salary of a position doesn’t match up, the candidate would be hesitant to apply at all.

Now that most students are learning virtually and entertainment experiences have gone virtual, it leaves room to ask how much location really matters in the job market. The flexibility of remote everything has companies getting ahead of the curve by removing location as a factor in how they pay employees.

It all started when Reddit released Reddit’s Evolving Reddit’s Workforce piece. In the piece, the company had a strong stance on compensation, location and working remotely.

“To support employees to live where they want to and do their best work, we are eliminating geographic compensation zones in the US. It means that our US compensation will be tied to pay ranges of high-cost areas such as SF and NY, regardless of where employees live.”

— Life at Reddit

Reddit’s decision has started a few conversations. The first is obvious. Should employees be paid the same regardless of where they live, or should location be taken into account when salaries are set? And what does this mean for workers who have already been given a set salary?

When asked by LinkedIn News, many users offered their own opinions as well as systems that work well in other countries. One member mentioned an index-linked system where pay is determined by rent increases and years of experience. Others brought up the future of desirability in states like New York.

I personally imagined a world where an avid skier could spend his free time doing what he loves in Colorado while being paid as if he lives in Sunny San Francisco. 

Reddit may be one company but it stands as the first domino to fall in the conversation regarding remote work. What will come next? Will companies adopting a more hybrid return to work follow suit. What other benefits will they offer if compensation stays the same? In my opinion ,the job market will become entirely dependent on the benefits companies can offer their employees.

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