I saw a news story today that focused on a topic that I find interesting: geographic compensation zones. The story explains why Reddit will pay workers the same salary no matter where they live. 

The trend of remote work has escalated during the pandemic, with many employees temporarily working from home with the expectation that they will eventually be back in the office next year. I think the trend of permanent remote work will continue, and with it comes an interesting dilemma related to salaries. 

If a company has remote workers from all over the US (or the world), what is fair compensation for those workers? If two workers with the same performance on the same team work in different locations, is it fair that one employee would be compensated more because where he lives there is a higher standard of living?

Companies like Twitter and Facebook are already telling employees that if they leave California and move to another state, they will apply a reduction in salary based on formulas that compare the standard of living between silicon valley and the new location. Something about this doesn’t feel right to me. Shouldn’t your pay be based on your performance and value that you bring to the company? What does where you live have to do with it?

Reddit, on the other hand, has chosen to pay workers the same salary (at the high market rates of California and New York no less) regardless of where they live. 

Ultimately, the market may decide the final outcome. Talented and skillful people tend to know what they’re worth and will insist on being well-compensated. If companies try to cheap out, that may hurt them in the long run.