SAN FRANCISCO—Stripe, a financial services and software company headquartered in San Francisco, plans to pay employees who move out of San Francisco, New York, or Seattle $20,000 while cutting their base salaries. The offer applies to any of the 2,800 employees who is willing to move before the end of 2020, a Stripe employee told Bloomberg.
Multiple technology companies have implemented pay cuts to remote employees moving to less-expensive cities. VMware employees who leave expensive areas, including Silicon Valley within the Bay Area, could receive an annual pay cut up to 18 percent, according to information gathered by Seeking Alpha.
Vmware plans to adjust this percentage based on the “cost of labor” of an employee’s new residence, that includes increasing wages for those moving to more expensive cities. Twitter is also planning on making pay cuts while providing $1,000 in allowance to actively relocating employees. Facebook announced, beginning in January, employees’ pay will be adjusted based on location noted Kate Conger of the New York Times. ServiceNow, a cloud-software maker based in Santa Clara, California, is considering lowering the pay of employees who move out of the Bay Area, according to the Chief Executive Officer Bill McDermott.
Companies must know where their employees reside for tax purposes, but pay cuts are of their own agency.
According to data from the U.S. Bureau of Economic Analysis, in 2018 the San Francisco area had the highest prices for goods and services, including rent, among large cities in the country. New York came in second. Smaller cities in California, San Jose, Sunnyvale, and Santa Clara, within Silicon Valley, had the nation’s highest rents.
Business Insider reported only 18 percent of San Francisco households are able to afford to purchase a median-priced home in the region and a survey by Blind Bog found that 70 percent of workers in technology cannot afford a house in the Bay Area.