Your next pay rise (or cut) could depend on where you live
Bosses are starting to set wages based on where their remote workers live. Photo: Getty
Where you live is playing a bigger role in how much you are paid as the pandemic drives millions of workers to earn their pay packets remotely.
New research published by recruitment firm Robert Half has found wages for the same job can now vary by up to 16 per cent based on location alone, as bosses mull big changes to the way we work and live.
As remote work has become commonplace during the pandemic, many people are leaving big cities for lower-cost outer suburban, rural and regional areas.
But bosses are now weighing up whether to adjust their wages in line with where they set up their remote offices.
More than half of executives recently surveyed by Robert Half are now taking into account worker locations when setting wages for remote roles.
That is a big departure from the traditional approach of setting pay based on the location of the company’s offices and the living costs of the surrounding areas.
In Australia, some workers can expect to increase their effective wages by taking advantage of working remotely from a lower-cost rural area.
Others, meanwhile, could be offered lower rates of pay in the future if prospective employers decide their living costs will be lower over time.
Trent Hancock, principal at Jewell Hancock Employment Lawyers, said this practice of setting wages based on worker location isn’t unlawful.
“An employer can choose to offer a prospective employee a lower or higher rate of pay based on whether that person will work in the office or work from home,” Mr Hancock said.
But he doesn’t agree with the strategy.
“It shouldn’t matter whether the employee is completing the work from a beach on the Gold Coast or a cubicle in the Melbourne CBD,” he said.
“Every employee is also going to have different personal circumstances, independent of where they live or work, that will impact [living costs].”
It comes as big employers in the US lead the way in setting pay based on location, with Google mulling a 25 per cent pay cut for remote staff.
Bosses overseas argue that workers no longer commuting to the office or copping city property prices don’t deserve the same wages.
Even the UK public service is considering cutting the pay packets of London staff who are working remotely, if they don’t return to their city offices.
Location-based pay works both ways
The good news is that this pay trend is working both ways Down Under.
In Australia, where skill shortages are widespread right now, bosses are finding it harder to offer remote workers lower pay for the same job.
Robert Half Asia-Pacific managing director David Jones said workers living outside cities can therefore increase their earnings by looking for remote jobs with city-based employers offering higher wage rates.
“This migrant issue is driving up wages,” Mr Jones told The New Daily.
“Employers are now saying that instead of only looking at Melbourne or Sydney, they will now look around the whole country.”
Mr Jones said whether workers can secure a pay rise depends on their profession, with roles in technology and finance in highest demand.
Victorian businesses are paying up to 13 per cent more on average for finance and accounting professionals than bosses in Queensland.
That means workers in Queensland looking for remote jobs down south could earn much more than employers in their home state are offering.
For technology workers, bosses in New South Wales are paying up to 16 per cent more on average than employers in Western Australia.
And finding these remote jobs is much easier now than before the pandemic.
The number of employers hiring remote workers has risen 283 per cent since the pandemic, with 72 per cent of executives telling Robert Half they are open to bringing on staff that work from home all the time.
Mr Jones urged remote workers to lock in higher earnings rates while they can, because the current jobs market conditions are unlikely to last forever.
“When international borders open, we’ll probably see a huge migration spurt coming in, [and] that will balance things out a bit,” he said.
“If you are thinking of negotiating a remote-working scenario, you are better off doing it some time between now and the middle of next year.
“Companies today are being very accommodating [in Australia].”