Facebook workers get remote work option—but it could come with a pay cut

Facebook will become far more friendly to remote work, founder and CEO Mark Zuckerberg announced in a Thursday livestream to employees that was shared publicly.

“We’re going to be the most forward-leaning company on remote work at our scale,” Zuckerberg said. “I think that it’s quite possible that over the next five to 10 years, about 50 percent of our people could be working remotely.”

Right now, of course, far more than 50 percent of Facebook employees are working from home due to the pandemic. The company has told workers that they’ll be free to work remotely through the end of 2020. But even after the COVID-19 threat subsides, Facebook will be more accepting of remote workers than it was before the pandemic.

In practical terms, this means two big shifts in corporate policy. One is that many new Facebook jobs will be open to people living anywhere in the US—though Zuckerberg says that Facebook will focus its recruiting efforts on particular geographic areas.

Facebook will work to build up three new talent “hubs” in Atlanta, Dallas, and Denver. Facebook won’t necessarily establish offices there—at least not right away. But according to Zuckerberg, Facebook plans to “focus the recruiting energy” in those cities in an effort to “get to hundreds of engineers” in each location. He hopes that will allow for the development of local communities that will aid further recruitment.

Facebook will also seek to hire more people whose homes are less than a four-hour drive from existing Facebook engineering offices in Silicon Valley, Seattle, New York, and elsewhere.

“We’ll basically adjust salary”

Facebook’s other shift in corporate policy is that some Facebook employees—those with significant seniority and strong performance reviews—will be eligible to request remote work status and relocate to another metropolitan area. They might do this to be closer to family or to move to a city with a lower cost of living. But this option comes with a catch.

“Our policy here has been for years—is already—that [compensation] varies by location,” Zuckerberg said. “We pay a market rate, and that varies by location. We’re going to continue that principle here.”

In other words, a Bay Area engineer who chooses to relocate to Omaha or Birmingham would take a pay cut.

Zuckerberg didn’t go into detail about the size of the cut. Theoretically, it could be small enough that moving to a lower-cost area would still improve a worker’s standard of living.

And not everyone will be eligible to become remote workers. Lawyers who have to appear in court regularly, for example, won’t be able to relocate. Neither will moderators who have to deal with graphic or disturbing content. Zuckerberg says they’ll need to stay onsite so they can get mental health support.

Right now, in the midst of the pandemic, Facebook is giving employees wide latitude about where they work. But on January 1, Zuckerberg said, “we’re going to need everyone to tell us where you’re working from now.” He added that “we’ll basically adjust salary to your location at that point.”

Zuckerberg says that Facebook is “mostly going to rely on the honor code for this”—but not entirely. Facebook will check IP addresses to help detect people who lie about where they’re living.

“There will unfortunately have to be severe ramifications for people who are not honest about this,” Zuckerberg said. One reason for that, he said, is that Facebook needs to know where its employees live for tax purposes.

Remote-friendly policies could have downsides

Allowing people to work remotely has obvious benefits. Employees get more flexibility to live near friends and family. Facebook can expand its talent pool to include people who are unwilling or unable to move to a big city.

But Zuckerberg also acknowledged that the shift to remote work could have some significant downsides. Facebook recently surveyed its employees to gauge how they’ve felt about working from home during the pandemic.

“While the majority of people say that individual productivity is at least as high if not higher than it was before, people do report a lower feeling of alignment,” Zuckerberg said. “That’s less ability to build social bonds and connections, to build culture. It’s harder to have group creativity, things like white-boarding, more free-flowing conversations.”

“It’s unclear at this point how much we’re all drafting off of existing bonds that were built before this COVID period that have the potential to fray or break down over time,” he added.

The death of distance might be exaggerated, again

During the 1990s and early 2000s, many people predicted that the Internet would bring about the “death of distance.” People thought that as communications tools got better, it would become possible for people to work from anywhere, and as a result, economic activity would become less concentrated in urban centers.

Instead, during the 2000s and 2010s, the opposite occurred. High-paying jobs became increasingly concentrated in a handful of big cities, pushing up real estate values to astronomical levels.

The Internet seems to have played a role in this. In a number of industries, the Internet helped transform regional markets into national or global ones. The companies that came to dominate these markets ended up being concentrated in particular cities—San Francisco for software, New York for banking, and so forth.

But while the Internet has made long-distance communication easier, it hasn’t entirely reached parity with in-person interactions. Face-to-face meetings still tend to be more productive than video chats. You’ll get better industry gossip from a friend over drinks than you’ll ever get in a Slack conversation.

This is why Mark Zuckerberg moved from Cambridge to Silicon Valley 16 years ago to start Facebook—instead of trying to do it in Massachusetts (where he was in college), New York state (where his parents lived), or somewhere with a low cost of living. And it’s why Facebook insisted that most of its early engineers move to Silicon Valley, too. It’s possible to do software work remotely, but some teams tend to do their best work when they’re all in the same room—and when they regularly rub elbows with smart engineers from other technology companies.

Silicon Valley’s housing situation has become unsustainable

Facebook, Google, Apple, and other technology giants collectively needed hundreds of thousands of engineers. Those engineers, in turn, have been competing for Bay Area housing that keeps getting scarcer as the technology boom continues. Even with Facebook’s generous salaries, it’s hard for rank and file Facebook workers to afford a big enough house to comfortably raise a family.

So something needed to give if Facebook wanted its engineers to make their careers at the company. An expanded remote work program could be just what the company needs. Facebook isn’t a scrappy startup. It’s a big company with a deeply entrenched product. It probably doesn’t need the same level of rapid iteration that allowed Facebook to conquer the social media market in the first place.

But it does need to retain a large number of talented and experienced engineers over the coming decades. Letting some of them move to Dallas or Des Moines while they continue working for Facebook remotely helps them do that.

But I’m skeptical that this represents a permanent change in the broader American economy. COVID-19 won’t be around forever. When the pandemic is over, the professional and entrepreneurial advantages of face-to-face meetings—and hence, of living in a dynamic urban center—will be as strong as ever. Facebook might not need those creative forces as much as it did a decade ago. But the next generation of entrepreneurs and creative professionals probably will.

And even within Facebook, the most ambitious engineers and managers will likely still want to be in Menlo Park so they can be close to senior management. In an ideal world, physical proximity wouldn’t matter; Zuckerberg says Facebook will try to organize the company so that remote workers aren’t at a disadvantage. But the only way to make that true in practice might be for Zuckerberg and other Facebook executives to relocate themselves out of the San Francisco Bay Area.