Understanding Why Not Every Employer Can Offer Permanent Remote Work-From-Anywhere Options

There is so much talk about how the workplace dynamic is going to be changing, how all employers will be forced to see the value of working 100% remotely and allowing their employees to work from anywhere at anytime.

I want to give the general populace some perspective on a few things. Enterprise/Fortune 100 companies that have established offices around the globe have a huge advantage over your local startup: resources. By that I mean *all* resources: money, expertise, infrastructure, access to trained professionals in specialized areas like employment law, international taxation, and human resources.

Anywhere an employer has an employee, they need to pay into the state Worker’s Compensation and Unemployment funds, which means they also have have a full business license in that state. Even in the US, every state has different taxation laws for their employees. I live in Washington: we don’t have a state income tax. Our nearest neighbor to the south, Oregon, has no state sales tax. Rounding out the west coast is California, which has some exceptionally stringent HR laws that require administration from someone that knows and understands them as it relates to the hiring process. Setting up *separate software systems* and professionals to track and manage changes by states is an expensive proposition. We are talking HR, finance, and legal employees or consultants. Or, outsourcing is an option but also an added cost. In addition, some countries have restrictions on internet access, or lack security needed for some north American companies to do have employees accessing sensitive information there.

Now that we are several months into remote work due to covid19, SHRM released an article addressing this very topic.

Last week, Facebook announced that they will introduce opportunities for employees to work remotely, with the caveat that those employees will be paid according to local salary trends. If you live in Witchita, don’t expect your paycheck to reflect the same dollar amount as it does in Silicon Valley. The amount will be ADJUSTED to reflect localized income trends. What does this mean? If the cost of living is 32% lower in Witchita (and I made that percentage up for argument’s sake), you will probably see about a ~30% reduction in your base salary.

Companies pay money for information called *salary surveys*, which are aggregated (and detailed) reports of what positions in various areas pay. It is based on: geography, the local vertical market, specific titles/occupations. These surveys are constantly in flux, but the majority of them offer a report on either a quarterly or annual basis. Most companies choose one survey; for candidates, the equivalent would be the personal reports you can pull from payscale.com or salary.com (both offer corporate salary surveys as well for a fee.) The information is gathered via many different channels: self-reporting by individual employers, goverment data (local, state, and federal), changes in the economy, and even self-reported information from users. Algorithms and AI further enhance those numbers on a constant basis. Purchasing a report is expensive: here is a screen shot from the SHRM (Society of Human Resource Management) Compensation Resource center (powered by Salary.com) — notice the cost for *one* report. Then look at the 2020 report by one of the primary stand-alone companies, Culpepper.

Let’s expand our search to international opportunities. For an employee to work in another country, an employer must establish some basics such as a legal business entity that manages payroll and taxes. Outside of North America, employment contracts are standard, and some countries like Germany also have labor unions. If you are living in, say, Austria and working for a US-based company and you don’t list your Austrian address as your legal residence, you will be unable to access federally offered healthcare in an emergency, and you could face astronomical fines for not paying taxes. US expats also are responsible for paying US taxes even if they ARE legally employed by an established foreign company. On top of that, to be employed *legally* by a company, you would need to qualify for a work visa in that country.

The whole point to offering work visas to non-citizens is to fill in gaps for highly specialized training that is in sparse/limited supply in the host country. What does this mean? If you do not possess what the country defines as an “in demand” skill, then chances start to significantly decrease that you will qualify for a work permit. Also to consider: most countries have age caps (usually below 40) on visa approvals, and some countries even have health requirements (meaning a physical and full medical history).

This isn’t to say that remote work options won’t continue to rise in the years to come, but this isn’t something that will automatically become “standard” overnight.