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Home / Blog / Paying HR Workers a Remote Salary Vs a Location-based Salary

Paying HR Workers a Remote Salary Vs a Location-based Salary

Want to know what's happening with location-based salaries vs remote salaries? Find out here...

Orane Ennis
Technology Researcher
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Are you wondering how compensation for remote HR or people ops jobs differs throughout the US? Or how location-based salaries for these roles compare to what a remote position pays in the current job market?

We’ve put together this salary report to answer some of your questions about how companies determine salaries, as well as what the current standards are.

In This Article

The state of remote work in HR

Remote work is not a new phenomenon in HR. However, since the onset of the Covid-19 pandemic, the demand for remote work has dramatically increased. Accordingly to Owl Labs, 18% of the United States' full-time workforce worked remotely by 2021. It also looks like the shift to remote work has staying power.

According to the Pew Research Center, 55% of people who had to work from home during the height of the pandemic continue to work remotely full time or most of the time. This figure is based on a survey from January 2022. The workers stated that they found their happiness and, most profoundly, their productivity has improved from working remotely.

According to the LinkedIn Workforce Confidence Index survey, this is especially true of people working in HR. In a 2020 survey, 85% of HR professionals said they can be effective while working from home. This makes perfect sense given the tasks a typical HR employee is responsible for, and the rapid rate at which people ops is becoming digitalized.

It also poses an important question for many companies. Should remote HR employees be paid the same, more, or less than those who come into the office? The answer seems simple, doesn't it? If you do the same amount of work, you should receive the same amount of pay as an in-office employee with the same responsibilities. It turns out, fair remote compensation is not that easy to determine.

We aggregated data for this post from Glassdoor, Payscale, Ziprecruiter, BuiltIn, and our People Ops Job board to help you learn about the location-based salaries vs remote salaries debate.

Looking at Location-Based Salaries vs. Remote Salaries

What is a location-based salary?

A location-based salary, also known as a geographic or location-dependent salary, is compensation tied directly to the pay scale of a location, like a specific city.

But there are two locations that can influence a location-based salary; the location of the employee, and the location of the company. For employees who work in-office, and logically then live in the same city that they work, these would be one and the same. Employees that work remotely can also be paid a location-based wage, but it’s a bit more complicated.

If the location of concern is the employee’s location, they’ll be paid based on where they live, regardless of where the company is based. This means the company would pay varying salaries for employees in the same remote role if they live in different cities.

If salaries are based on the company’s location, the reverse is true. Compensation would be based on where the company is located, regardless of where the employee lives. In this case, the company would set the salary for a role but, depending on where their employees live, it may be just enough or more than enough to live on. If an employee is living in a city with a high cost of living, they may be incentivized to look for employment elsewhere.

How are Location-Based Salaries Calculated?

The four factors that determine location-based salaries

Factors that Determine a Location-Based Salary

When a company is considering a location-based salary, there are a few factors that are taken into the equation.

  • Market rate: The range of pay for that position in the area of the country.
  • The candidate’s experience: More experienced candidates qualify for better compensation.
  • The local cost of living index: This lets employers calculate how much it would cost the employee to live in a particular area. The cost of living index factors in the average cost of transportation, housing, food, healthcare, energy, entertainment, and education in the area.
    As we’ve seen, the company can choose to work on the cost of living of where they are based, or the city where an employee lives.
  • The local income tax rate: Some companies will offer a higher salary to international employees with higher tax rates so that their take-home pay is on par with other employees.

Advantages & Disadvantages of Location-Based Salaries

Location-based pay, based on the location of the employee, allows remote workers in high-cost-of-living areas to negotiate higher compensation. But this also puts job hunters at a potential disadvantage. A company may make the economic choice to employ another candidate in a less expensive city simply because their cost of living demands less pay.

In this way, location-based pay benefits the employer, providing they can find the remote talent they need in lower-cost areas. But there is little advantage for the employees and their morale.

Workers who are being paid less for the same work, compared to their colleagues and industry counterparts, simply because of where they live may feel demoralized and undervalued. A location-based salary may also, ironically, make it impossible for the employee to live in another city without changing jobs. Therefore, since there are companies who will pay an industry median regardless of the employee’s location, this option can negatively affect retention.

A location-based salary generated by the employee's cost of living also makes advertising a post difficult. Because the hire’s location will determine pay, the job posting can’t clearly show the compensation an applicant may find appealing. This may deter top talent since the majority of job seekers want to see a salary before applying for a position. According to a survey by Glassdoor, 67% of job seekers consider salary to be a top priority when reading a job posting. In this sense, a remote salary makes hiring much easier to advertise than location-based compensation.

A location-based salary determined by the company's address makes more sense because, to a certain degree, salaries are standardized by it. The trouble with pitching this salary to a remote job hunter is that they really don’t have a reason to be concerned with the local cost of living. If the company is, for example, in Indiana, and the job seeker is in New York, a salary based on the cost of living in Indiana may likely not be appealing.

What is a Remote Salary?

Remote salaries, or location-agnostic salaries, do not factor in where an employee lives or where the company is based. It simply compensates workers for the work done based on a value scale set by the company.

This means an employee can work for a company in New York City while living in Indiana, and still receive the same pay as their coworker who is based in New York, as well as another remote team member based in, for example, San Francisco.

But how do companies determine a fair wage without factoring in location?

Some companies pay a set rate per project, hour, or result. Other employers that offer location-agnostic compensation calculate their salaries based on the national average.

How Are Remote Salaries Calculated?

The  factors that determine remote salaries

Factors that Determine a Location-Based Salary

Remote salaries are more straightforward to calculate than location-based salaries. This is because companies only need to look at two or three factors:

General market rate: This is the range of pay for the position on a national or international level.

The candidate’s experience: As before, a more experienced candidate will qualify for better compensation.

The company’s value scale: Some companies may set a minimum or maximum salary for a role determined by how much income or value the hire is expected to generate.

Oftentimes companies will also provide employees with a remote stipend. A remote stipend is a set amount of money that a company pays to an employee, in addition to their salary, to cover the costs that they incur from working at home. This money can be paid monthly, quarterly, annually, or however else the company sees fit.

A remote stipend would typically cover additional energy usage, stationary, or other tools that are used for work. Some companies issue work laptops, tablets, or phones to save their remote employees the cost of purchasing their own.

Advantages & Disadvantages of Remote Salaries

Remote salaries have their own set of advantages and disadvantages for both employees and employers.

Remote salaries are affected by performance, rather than location. Therefore it can foster greater harmony among employees as they earn similar salaries for what they do, rather than where they live. This also makes it easier for employers to gauge an employee’s impact and value to the company. For a remote employee, this value can still be profound.

Bear in mind that a link between remote work and high productivity has been established. Reportedly, remote employees put in an average of 1.4 more days per month than their office-based counterparts. Time saved on commuting is also often used to work more which leads to an increased number of tasks accomplished per day. According to the Global Work From Home Survey, 47% of the time former in-office employees saved on commuting is now used to work more.

Studies have also shown that remote employees produce 40% fewer quality defects than those in the office.

As it stands, remote work can offer great benefits for both employees and employers. However, there has been some pushback by many top companies on providing their employees with location-agnostic salaries that reflect this

What is the Current Issue With Location-Based Salaries vs Remote Salaries?

Currently, the major issue regarding compensation is how rapidly companies are expected to shift from an in-office work environment to remote or hybrid employment. Many companies are wondering how to deal with this fairly, and different companies have different solutions. In reality, some positions in a company must be manned in person, so how do you offset this with employees who do get to work from home?

Some tech companies such as Meta, Google, Apple, and Microsoft have stated that, while they support employees working remotely full-time, they would give those employees a pay cut if they moved out of Silicon Valley.

Google has even launched a Work Location Tool that allows employees to see the range of their salary cuts if they moved out of expensive areas such as the Bay Area or New York City to a place with a lower cost of living.

On the flip side, there are companies such as Zillow, that have stated they would discard antiquated location-based pay policies and adopt a more location-agnostic approach to employee compensation. Chief People Officer at Zillow, Dan Spaulding, stated that:

“It’s a philosophy of giving people the same opportunity to earn top-end salaries regardless of where they live. It means they don’t have to pick between a great paying job and a location that matters to them.”

This means Zillow employees can benefit from moving to parts of the country with a lower cost of living, and not worry about their salaries taking a hit. Zillow stated that adopting a location-agnostic compensation model allowed them to increase retention and hire talent from all across the country.

Comparison of Location-Based Salaries and Remote Salaries in HR

So what can job seekers expect to earn in various US cities compared to a remote position with the same job title? We’ve compared data from multiple job boards such as Glassdoor, Payscale, Ziprecruiter, and our People Ops Job board to create the following comparisons between HR salaries, People Ops salaries, and more.

For our comparisons, we only listed base pay figures. It’s important to note that you can earn higher than your base pay with incentive compensation like bonuses and stipends.

People Operations Manager

Average annual salaries for people ops managers who work in San Francisco, New York, Boston, and remote.

Average annual salary:

  • San Francisco: $102,000
  • New York City: $70,000
  • Boston: $82,000
  • National: $85,951
  • Remote: $70,176

As you can see from the graph above, the average salary for a fully remote People Ops Manager is $15,775 less than the national average. This is because the range of pay for a fully remote People Ops Manager is so vast (depending on industry and company size) that the average salary comes around to the quoted figure.

Another reason for this may be how the data is collected. Most websites that list salaries for different professions use user-submitted data. The quality of the data affects the overall averages listed. If more users are listing lower salary points than higher ones, the average is naturally affected.

According to Zip Recruiter, fully remote People Ops Managers are getting as high as $138,000 and as low as $23,000 per year. The average fully remote People Ops managers are being paid significantly less than those in the San Francisco Bay Area and Boston while being on par with those in New York.

Chief People Officer

Average annual salaries for chief people officers who work in San Francisco, New York, Boston, and remote.

Average annual salary:

  • San Francisco: $255,600
  • New York City: $180,000
  • Boston: $193000
  • National Average: $188,868
  • Remote: $250,000

As shown above, there is a sizable difference between the national average and the remote average for a Chief People Officer. However, San Francisco remains the city with the top salary. It’s important to note that these are the average salaries for these respective locations, meaning that some people are getting paid more or less than what’s shown above.

Human Resource Manager

Average annual salaries for human resource managers who work in San Francisco, New York, Boston, and remote.

Average annual salary:

  • San Francisco: $94,922
  • New York City: $81,202
  • Boston: $79,602
  • National Average: $91,107
  • Remote: $72,705

Similar to the other two positions, the average salary for a fully remote HR Manager position is less than the national average. In fact, it’s $18,402 less than the national average.

Bear in mind, there are companies advertising salaries higher than the average for a remote HR Manager, but more often than not compensation for this role falls short.

It’s important to note that, besides the salaries we based these comparisons on, hires might have received bonuses, stipends, and other benefits. When comparing salaries for positions you’re interested in, comparing these benefits with a higher base pay depends on what you value most.

Our thoughts on location-based vs remote salaries

Ultimately, a worker's expenses should be determined by their income. Not the other way around. And, when it comes to compensation, the value of their output should be the employer’s primary concern. This being said, it’s essential to consider a prime candidate's expenses, needs, and goals when deciding on which salary model to use in your company.

Carefully weigh up the benefits of each model to you in terms of the talent you can access, the money you can save, and employee retention you can expect. Find the best policy for your company by looking at the market, and establishing what your employees expect in comparison to the rest of your industry. In the end, top talent will work where they feel valued and compensated fairly.

Orane Ennis
Technology Researcher
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Orane Ennis has been a content writer with close to 5 years under his belt. He's written about many areas of business but HCM and HR tech is where he's found his home. He's currently finishing a bachelor's degree in Psychology at the University of the West Indies. In his downtime, he enjoys a good book, movie, or anime series. He also enjoys using Photoshop to bring his ideas to life.

Featured in: MUO Bitcatcha Tech Untold

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