Some Employers Are Basing Wages on Where You Live, and That's All Sorts of Wrong

When you see the term “income inequality” it doesn’t just mean what rich people earn in comparison to poor people, or the difference between CEOs and the rest of us. It also means pay inequities. We already know about pay gaps based on sex and race, but you can add geographic location to the ways in which corporations attempt to screw workers over in the matter of pay.

An article in Wired Magazine details the pay cuts Google is doling out to remote workers based on where they live or where they’re moving to.

“Laura de Vesine, a former Google engineer, didn’t wait to find out. She left Google earlier this year when she was told her pay would be cut by 25 percent. “There was a discussion about moving our team to North Carolina, and that was originally floated as a 15 percent pay cut,” she says. At first, she thought that was reasonable, then they announced it would actually be 25. “The bait and switch was very upsetting,” she says. “And once I was angry about it, I started questioning why there was even a 15 percent cut. What is it about my work that is somehow less valuable in a different location?””

Google’s response?

“the company has always paid employees based on their location, at rates that match the top of the local market.”

The media is rife with stories of tech workers who can do their jobs from anywhere choosing to move to remote locations or places where the cost of living is lower. They move from state to state, city to countryside, because location has no bearing on job performance. In fact, removing the stress of living in high-cost places that eat up a bigger portion of paychecks is probably beneficial to job performance.

I admit that I’ve assumed what a tech worker makes in San Francisco will be the same if the worker moves to Montana, and I thought that was a pretty good deal. And it might be as long as you don’t work for Google or any other company with similar pay structures.

Take a look at the map the U.S. Bureau of Labor Statistics offers, showing average wages for software developers by state.

Note that a five hour drive between Houston and New Orleans means a $20,000 difference in pay. The average salary for software developers in Houston is $109,570, while those in New Orleans earn an average of $89,540.

When all other things are equal – education, experience, etc. – basing pay on location harkens back to the day when employers were quite open about why they paid women less than men.

In 1985, when I was 21 years old, an employer told me that my newly hired male coworker, who had less experience, was being paid more because one day he would have to provide for a family, while I would be getting married and wouldn’t need to earn as much. Yes, I’m serious, and that’s a true story.

No employer would dare say that out loud these days, but the bias still exists in the minds of many. Clearly. Instead, they find other more opaque ways to suppress wages and boost profits, such as tying wages to where you live.

I understand why that’s a more defensible position for industries like manufacturing (looking straight at you, Boeing. Also, I don’t fully agree, but that’s another article). But, we’re talking about remote workers who are producing the same work regardless of where they are. The Wired article talks about issues of fairness, but it’s very much about profits over people.

Tech companies don’t lower the purchase price of their products based on where their workers are located. But being able to pay people less because they live in South Carolina instead of Washington state means higher profits. Period. No matter what kind of spin you put on it.

Telling a worker that they’re suddenly going to earn 25% less than their current wage because they’re moving to another state, even though they’ll still be doing the same job, is worse than insulting and unfair. It’s how income inequality is maintained even at the higher ends of the middle class scale.