The recent shift to remote work has been a game-changer for many employees, offering greater flexibility and freedom when it comes to where they live and work. And, as it turns out, this shift is also having an impact on salaries.
A recent study by fintech startup Carta found that salaries for tech startup employees in Seattle now match those of workers in San Francisco, where salaries have historically been much higher.
From 35% in 2019 to 62% in 2022, the number of new hires based in a different state than the primary company headquarters has jumped, according to Carta. This trend is driven partly by the fact that startups are now more willing to pay employees equally, regardless of location. These startups are usually valued at more than $500 million, as smaller startups are more likely to adjust compensation by location.
"Within Carta's dataset of venture-backed startups, we are seeing median compensation in many U.S. cities moving towards San Francisco compensation rates," said Peter Walker, director of Insights for Carta.
Amy Stewart, senior content marketing manager at Payscale, attributes this trend to the fact that startups are more agile than larger companies and, therefore, can more easily adjust their compensation practices. “Technology startups are smaller and more agile, and there’s a lot more incentive for them to reduce costs and find ways to attract top talent,” she said.
"This trend, if it continues, will have far-reaching implications for both tech workers and the company leaders looking to make their next key hires. Companies could look abroad for talent more now that US cities are equalizing. New talent hubs may emerge outside of major cities. Non-tech salaries may rise to keep pace—or the difference between tech/non-tech compensation within a given city might expand. Market uncertainty could also begin to cool salaries across markets," the report also noted.
In Asia, this trend of equalizing salaries remains to be seen. Several reports, however, show that there have been salary hikes for Asian talent working for international employers, many of whom are based in the US. For example, Pakistanis working remotely for foreign employers had among the world's fastest-growing salaries, according to Deel's State of Global Hiring Report 2021.
Deel noted that the COVID-19 pandemic has resulted in the globalization of the workforce, with an increasing number of companies hiring employees from all over the world. In the Asia Pacific region, workers in Pakistan (27%), India (8%), and the Philippines (7%) saw the biggest salary increases in 2021.