There is no right or wrong answer.
Today's workplace has changed tremendously due to COVID-19, with more employees working from home than ever before. According to Gartner research, 88 percent of organizations have encouraged or required employees to work from home since the start of the pandemic. Along with the shift to remote work, many organizations are deciding to keep some positions permanently remote.
Additionally, companies are taking actions similar to a recent move by Facebook, who announced plans to make cost-of-living pay adjustments for employees in remote positions. Their rationale? Employees working from home in a low cost-of-living location don't require the same pay rate as employees doing the same work in a more expensive location such as San Francisco or New York City.
If you're a job-seeker now, you'll need to decide if you are willing to adjust your salary expectations and compensation packages for a remote position; it's one of the many considerations you'll need to factor into your job search. Even if you've already taken steps to tailor your resume for remote roles, deciding if remote work is worth a pay cut will help you negotiate a fair salary offer. It will also help you determine if working remotely is the best fit for you in the long-run.
And it will affect your interview, as well. One of the interview questions growing in popularity is whether or not candidates are willing to take a pay cut for a remote role. To help you think about how you should answer that question, here are three things you should do first.
Understand how companies view the cost of living
Before deciding whether you would accept a lower salary for a remote position, it's critical to understand why a hiring manager or employer would ask the question in the first place. Cost of living is one factor companies use to determine the local market or “going rate” for a position.
Because companies want to attract and retain the best talent, they rely on cost of living information, among other factors, to set competitive pay rates for the geographic markets where they hire. For example, a company typically paying $50,000 for an accounting position might pay $60,000 or more to attract accounting candidates in higher cost-of-living areas.
With remote work thrown into the mix, companies still consider the cost of living but may discount salaries for many workers living in lower-cost areas. They may also point to the fact that, in a remote position, you have no commuting costs and, therefore, may be open to a lower salary.
The problem with this approach is that your commute or where you live are not the only factors determining your cost of living. They will also consider whether you rent or own, have roommates or live alone, or whether you have a working spouse who shares costs; all of those factors impact your true cost of living. Most importantly, the location where you work says little about your capabilities or the value you can add in exchange for your salary.
Develop a rationale for your salary expectations
While your cost of living may help you decide if you would accept less pay to work from home permanently, you should also do your research and set realistic goals for your preferred salary. When you take the time to think about what's behind your salary expectations, you'll be in a better position to articulate them to recruiters. You should also consider the following factors:
The skills and expertise you bring to the table: If you possess additional knowledge, skills, or certifications compared to other people in your position, you may be less inclined to accept a lower salary.
Growth potential: You may be willing to accept a lower pay based on the growth potential associated with a remote position. If it could lead to a higher salary down the road, a temporary cut may be worth it.
Determine how much you value working from home
Remote work has its advantages and disadvantages. For some, remote work gives the freedom to pursue a better work-life balance and stay productive in an informal setting, while other people miss the camaraderie and face-to-face collaboration with co-workers. Depending on how much you value working from home, you may be more or less inclined to accept less money.
When thinking about what salary you would accept to work from home, consider the financial and non-financial benefits you might gain in exchange for a lower salary. Some of the benefits include:
The money and time you save on your commute
Reduced day-to-day expenditures, such as going out to lunch and weekly dry-cleaning
Potential tax breaks associated with having a home office space
More time to spend with family
Some remote workers relish working from home, while others feel imprisoned by it. Whether you see remote work as a privilege or a punishment will help you determine if it's worth a pay cut.
And there's no right or wrong answer. If you would give almost anything to work remotely, then a pay cut may not be such a sacrifice. If not, then don't rush to accept a remote position offering a salary you feel is too low. Instead, keep looking for an ideal role in the location and salary range that works for you.
This is a difficult question to answer — especially during the interview. Our expert interview coaches can help make it a bit easier.