Facebook Dashes Hopes of Paycheck Arbitrage With Remote Work Plan

Zuckerberg he dashed a Silicon Valley dream: that techies would be able to take their generous salaries with them as they flee the Bay Area's housing costs.

By Reuters | Updated: 23 May 2020 11:23 IST

Facebook Dashes Hopes of Paycheck Arbitrage With Remote Work Plan

Zuckerberg said he expects half of Facebook's workforce to take him up on the offer over the years

Highlights

Zuckerberg expects half of Facebook workforce to take him up on the offer
Zuckerberg made the announcement in a live stream on his Facebook page
Facebook reportedly uses its own apps' to track employee locations

With Facebook's adoption of permanent remote work on Thursday, Chief Executive Mark Zuckerberg has untethered one of Silicon Valley's biggest companies from the place that incubated it.

But he also dashed a Silicon Valley dream: that tech workers would be able to take their generous salaries with them as they flee the Bay Area's crushing housing costs, dirty sidewalks and crowded roadways.

As lockdowns dragged into their third month, message boards popular with well-paid tech workers have lit up with fantasies of working long-term from tropical beaches and spacious houses in affordable small towns in the Midwest.

"Does that mean I could apply for a job in Silicon Valley and work remotely from, say, the Caribbean? Asking for a friend," wrote one user on Blind, an app designed to let workers swap information anonymously.

Afraid not, Zuckerberg said, addressing employees in a publicly broadcast livestream on his Facebook page.

The company, one of Silicon Valley's biggest employers, is giving US staffers who are approved to work remotely until January 1, 2021 to update the company on where they plan to base themselves, at which point their salaries will be adjusted to reflect the local cost of living.

Zuckerberg said he expects half of Facebook's workforce to take him up on the offer over the next five to 10 years.

Employees who attempt to wiggle around those compensation adjustments will be subject to "severe ramifications," he said, as the company needs to account for employee locations to avoid violating tax laws.

Zuckerberg said Facebook will monitor adherence by checking where employees access its VPN. Facebook also uses its own apps' to track employee locations, according to CNBC, one time using the data to find interns who failed to show up for work.

Even as many tech workers dream of a future in low-tax states, others on message boards fret about how the shift to remote work could exert downward pressure on salaries across the board and warn that being far from headquarters could steepen the climb up the corporate ladder.

One former Facebook employee, who in his 20s lived in Silicon Valley's suburbs for the short commute, said the change would open up opportunities even for employees who stay in California.

"A 25-year-old maybe would rather be in San Francisco, while someone looking to raise a family might prefer to move outside the city," he said.

A Facebook spokesman said the company was not planning layoffs, compulsory moves or salary adjustments for employees who opt to stay in the Bay Area.

If the experiment is successful, Facebook's move could prompt other tech giants to compete for engineering talent by embracing remote work - and other states to compete for Californians.

"The warm, sunny states with affordable housing and zero taxes will see an influx of educated, rich workers. States will need to cut taxes to keep up," Chamath Palihapitiya, the chief executive of venture capital firm Social Capital and an early executive at Facebook, said on Twitter.

The most important implication of this permanent WFH movement are state income taxes.

The warm, sunny states with affordable housing and zero taxes will see an influx of educated, rich workers. States will need to cut taxes to keep up.

The biggest loser in this is CA.
— Chamath Palihapitiya (@chamath) May 21, 2020

The biggest loser, he predicted, would be California.

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