Bloomberg Businessweek - USA (2020-12-21)

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Bloomberg Businessweek December 21, 2020

debatingwheretoputthetown—or

whethertocallit outatall.

“Have youbeento Bend?It’sso

small,”saidoneexecutive,suggesting

theycouldsafelyignoreit.

Kelmandisputedthis.“It’sgrowing

incrediblyfast,”heargued.“It’slikethe

AustinofOregon.”

T

wodayslater,Kelmansent

anemailtoallstaffoutlining

thenew policy.Hesaidhe

expectedmostheadquartersemploy-

eestoeventuallycomebacktoa Redfin

officeatleasta fewdaysa week,but

they’dnowhavetheoptiontowork

wherevertheywantedfulltimeif they

gotapprovalfromtheirmanagerand

a seniorexecutive.Employeeswould

also get six weeksof notice before

officesreopened.

Thenheturnedtothejuicystuff:

money. Extremely expensive areas

(theSanFranciscoandSanJosemetro

areas) wouldcontinue tocommand

thehighestsalariesandequityawards.

Recruitingandretainingpeopleintwo

ofthemostcostlyhousingmarketsin

thecountrywouldbeimpossiblewith-

outpayingtopdollar.Expensiveareas

such as Boston, Los Angeles, New

York,Portland,andWashington,D.C.,

aswellastheirsuburbs,wouldhewto

thesamelevelsRedfinhadbeenpaying

employeesinSeattle.

After that,therewasa biggroup

ofmid-tierareas.Anyonewhomoved

fromanexpensiveplacetooneofthese

wouldgeta 10%to15%reductionin

cashcompensation(salary,plusbonus),

aswellas10%to20%lessinstock.

These included Austin, Baltimore,

Chicago,Denver,Houston,Miami,and

Philadelphia,aswellasFrisco,Texas,

justoutsideDallas,whereRedfinhas

anoffice.Thecompanyalsothrewin

a fewcitiesinthePacificNorthwest,

includingOlympiaandBellinghamin

Washington,andBend.

Everything thatdidn’t get called

out—whichincluded vacation spots

such as Aspen, Colo., Rust Belt towns

like Detroit and Rochester, and some

major metro areas like Atlanta—

ended up in a vast (and vaguely

insulting)bucketcalled“Restofthe

U.S.”Employeeswhomovedtothese

placeswouldexpecta 20%reduction

incashcompensationanda 25%cut

toequityawards,eventhougha few

oftheselocaleswereboundtohave

highercoststhanSeattle.

Almosta hundredquestionspoured

induringa liveemployeeQ&Ainlate

September.Workerswanteddefinitions

ofthecostsoflivingandlaborandto

knowhowtheirspecificcircumstances

wouldbetreated.A fewaskedtheobvi-

ousquestion:Whywasit fairforpeople

doingthesamejobstobepaiddifferent

wagesdependingonwheretheylived?

Kelmanhadanticipatedthepushback.

“Evenfora businesswhereeveryoneis

inoneoffice,payis a hornet’snest,”he

wroteattheendofhisemailoutlining

thepolicy.“Whatmakespayespecially

trickynowisthatsimplicityandfair-

nesstradeoffwithoneanother.”

Mostemployees chosetoseethe

brightside.NickSmith,a 35-year-old

seniorproductmanagerinSeattleand

avidsnowboarderwho’dbeenwiththe

companyfortwoanda halfyears,was

alreadyheadedtoBendwhenthepol-

icywasannounced.The10%to15%

paycutseemedfairtohim,because

hisresearchsuggestedwagesinBend

wereasmuchas22%lessthanwhat

theywereinSeattle.(Aseniorproduct

manageratRedfininSeattlecanmake

between$147,000and$163,000insal-

ary,beforebonusesandequity.)“It

wasa sighofrelief,”Smithsays.“Iwas

like,‘Yes!’”

He and his wifesold theirfour-

bedroomCraftsman-stylehomeina

walkableSeattleneighborhoodand,

forroughlythesamemoney,bought

a ruralpropertythatfeltlikea palace.

Theirnewhouseis4,800squarefeet

andhasanin-lawunit,onabout3 acres

outsideBendand 32 milesfromthe

closestskimountain.Redfin’sremote-

workpolicy—and what Smith was read-

ing about other companies—made him

comfortable that he wasn’t commit-

ting career suicide. He says he plans to

stay in Bend for the rest of his life and

raise his two kids there. “I don’t want

my options to ever be limited,” he says.

“And I don’t think they will be.”

At least for a narrow slice of the

workforce, this seems to be the case.

The remote positions U.S. employers

most want to fill right now are domi-

nated by tech roles, including front-

end developer, full-stack engineer,

and product manager, according to

LinkedIn. For these jobs the pandemic

has created what amounts to a national

labor market that could ultimately

causesalariestostagnateintechhubs

whiletheygraduallyriseelsewhere.If

companies can source talent anywhere

more cheaply, the extremely high sal-

aries in the Bay Area and Seattle may

look a lot less reasonable.

Kelman has been attuned to this for

years. Redfin used to pay engineers

fresh out of school about $80,000 a

year, but that had spiked to around

$120,000 to $130,000 as the com-

pany has tried to keep pace. “Part

of what we’ve always been doing is

rationalizing the higher pay,” he says.

“Our CFO’s perspective on this isn’t

‘Why are we lowering pay in Dallas?’

It’s ‘Tell me why the worker in San

Francisco, earning 50% more than

the worker in Seattle, is that much

more productive.’ ”

Much wider adoption of remote work

has implications beyond money. Many

companies say remote work will help

recruit more diverse employees. Redfin

has been somewhat of a leader on this

front, hosting a symposium on real

estate and race two years ago and pub-

lishing data regularly on diversity in its

workforce. Even so, only 3% of its tech-

nology employees are Black. As Kelman

points out, “one reason engineering has

been this enclave of White privilege is

because we created a cult around a cer-

tain type of person.”

Consider Phyllis Njoroge, who grew

up in Massachusetts. After graduating

from Tufts University in 2019 with a

degree in cognitive and brain science,

shestartedmakingspreadsheetsof

placesintheU.S.that hada warm

climate, were diverse, and had a rea-

sonable cost of living. Houston won

out, and she moved there in March