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Future Of Work

Compensation Is Becoming an Even Bigger Headache in the Remote-Work Era

Companies try to figure out fair pay amid an uptick in relocations and a tight labor market.

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Illustration: Daphné Geisler for Bloomberg Businessweek

The pandemic untethered millions of people from their big-city offices, allowing them to move to smaller communities where they could work from home. But the mass migration has become a nightmare for companies, which are struggling to find equitable ways to compensate employees who have the upper hand as remote-friendly roles proliferate in a tight labor market. “It’s one of the hardest business problems to solve right now,” says Daniel Yanisse, co-founder and chief executive officer of Checkr Inc., a provider of background checks for hiring based in the Bay Area. About 40% of Checkr’s staff live 50 miles or more from one of its six offices. “We’ve fully embraced remote work, but how do you adapt to all these locations?”

Traditionally, big companies based pay on a set of common guidelines including the cost of hiring skilled labor in a particular region. They then lowered salaries as much as 25% for workers who relocated from, say, San Francisco to Boise, Idaho. That made sense until March 2020, when coronavirus-fearing employees fled hither and yon and came to enjoy their remote-work lifestyle.