Fed up with the expensive housing market in California and resuming his two-hour commute, Corey Long instead moved to Colorado after getting a taste of remote work during the pandemic.
The move, though, cost the 33-year-old father of five 8% of his salary. But the pay cut was well worth it mentally and emotionally — and didn’t pack as much of a sting financially as he first feared.
“That drop was also kind of canceled out by the fact that Colorado state taxes are just much lower than California,” said Long. “My take-home is actually very similar. It really worked out nicely.”
‘I'm just much happier overall’
Long is part of a contingent of workers who have decided, after 18 or so months of working from home, that they would rather not return to the office — even if it means taking a pay cut, a strategy being considered by big tech companies including Google, Facebook, and Twitter.
Three in 5 workers (61%) said they were willing to take a pay cut to maintain their remote working status, according to a survey of 3,500 adult Americans by Goodhire. A similar survey by Breeze of 1,000 workers found that almost two-thirds of remote workers or those looking for a remote job are ready to take a 5% pay cut to work from home. One in 4 said a 15% pay cut would be an acceptable tradeoff.
“I'm just much happier overall,” Long said. "I see my family a lot of the time. I live in a place that I enjoy more.”
‘There was just no viable path to buy a house’
Some workers, like Long, have found that the financial ramifications of the pay cut have been muted. Workers who are remote half the week save between $600 and $6,000 annually due to reduced costs for travel, parking, and food, according to a study by Global Workplace Analytics.
In addition to lower income taxes — Colorado has a flat rate of 4.55% while California has a progressive rate up to 13.30%, according to the Tax Foundation — Long retained his company equity and bonuses. He is also saving $6,000 annually on his commute and housing is much cheaper.
“There was just no viable path to buy a house that’s worth the money and also close enough to the kind of jobs that I would be doing [in California],” Long said. “We turn to Colorado, we found a new homebuilder, we jumped on that, purchased it, and moved down here.”
‘We would save money on gas, money on food’
Fay Lane, who lives in Georgia, didn’t relocate but took a $10,000 pay cut by moving to a job that allowed her to stay remote full time. Lane — who has asthma — was exposed twice to COVID at her previous job, requiring her to isolate each time. She decided working from home would be safer and make more sense — logistically and financially — in the end.
“We realized we would save money on gas, money on food. We really thought that it would pay for itself,” Lane told Yahoo Money. “They also had better benefits — actually — at a lower cost.”
Without her 40-minute commute each way, Lane calculated she would save $2,400 in gas each year. Her new medical insurance was also cheaper, saving her close to $1,000 annually.
“It was very stressful mentally to be in that environment,” Lane said of her previous job. “My level of stress is a lot less being in the house than being in an office environment.”
‘Those pay cuts may not stick’
Many of the companies slashing pay for remote workers are bigger ones that typically pay higher salaries and can afford to cut pay but still remain competitive, said Julia Pollak, labor economist at ZipRecruiter. That’s meant that smaller companies — struggling to get talent — are now more likely to offer flexibility on work arrangements.
“We're seeing an interesting split,” Pollak said.
Employers reap benefits, too, in addition to reduced paychecks. Companies save $11,000 annually per worker who is remote 2.5 days a week, the Global Workplace Analytics study found, due to increased productivity, lower real estate costs, reduced absenteeism, among other factors.
Still, Pollack doesn’t expect the pay cut trend to last.
“The announcements … have been met by a huge backlash by employees,” she said. “I think [those pay cuts] will be so unpopular that they could result in retention problems, and you may see companies have to walk those back.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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