4 Thoughts on Spotify Paying Remote Employees NYC and SF Salary Levels
It's not entirely trailblazing...
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So not only did Spotify announce plans to allow its 6,500+ employees to work remotely, it also stated that they plan to pay salaries rated to NYC and San Francisco for everyone.
This lies in stark contrast to the likes of Facebook and Twitter, both of which said employees who leave the San Francisco Bay Area would see their salaries cut. Spotify’s model is, however, similar to Basecamp, one of the early advocates of remote work that has been paying SF-rated salaries for its entire existence.
Spotify also said it would be re-working its offices in global hubs like New York city and Stockholm to be collaborative spaces for its employees if / when they want to come into the office. This is in line with how Shopify is planning its “digital by default” roll out and in opposition to companies like Dropbox that are subletting their massive offices.
If you know the above facts, you’re basically up to speed in the remote work world. It was a busy week after Salesforce also announced permanent remote work options for its staff.
But I want to focus on Spotify for a minute, in particular because of their salary announcement. It raised an interesting debate about whether pay should be based on location or something else.
I have four thoughts on this.
1 - I like Spotify’s parameters
This one is less about salary, and more about the structure of their program.
According to Business Insider, the program: lets “employees choose how they want to work at the company — in an office, remotely, or at a coworking space that the company will pay a subscription for.”
But there’s a catch: “Employees have to commit to an option for one year at a time, and have their manager's approval. But other than that, all employees need is their laptop and internet access.”
I actually like these parameters. What it indicates to me is forethought. Spotify may be trendy, but it’s not trend hopping. That signals (hopefully) a better work life for remote employees - they are less likely to become second class citizens (something that happens a lot sadly).
2 - I like how conscious they are of inclusion
Paying everyone the same salaries is an inclusion tactic. It guarantees that people who can’t sustain living in a high cost of living city (for any reason) are not hindered in their earning potential.
Spotify’s head of D&I, Travis Robinson, had this to say to Business Insider about the move: "Black employees historically have been discriminated against when it comes to pay and growth opportunity, and it is likely the local market pay is lower than a comparable city with a large white population.”
Honestly, I hadn’t thought of it this way before. But I like the perspective a lot.
3 - I like that Spotify considers outcomes over geography
I spoke with remote work expert Rhys Black about how paying equalized salaries is really just a talent grab - and Spotify is going to win when compared to the likes of FB and Twitter. Emily Lonetto, the head of growth at Voiceflow, shared a similar belief: that work is about outputs, not location.
Frankly, this is a win in my books. And for those concerned that this will make small startups even less competitive, I like DHH’s comment on that:
4 - Spotify is not a trailblazer, if I’m being honest
In comparison to FB and Twitter, Spotify is trailblazing. They are paying equalized salaries no matter where people live - the other two are docking pay if you move.
But Basecamp has been doing this for years. And even they weren’t really trailblazers when you consider management consulting pioneered pay equalization decades ago. A consultant in Dallas will make the same as a consultant in New York City even though rents are way cheaper. There was some discrepancy internationally, but even then large global firms did some equalization measures based on purchasing power parity (and even then, offering generous top ups).
Regardless though, I applaud Spotify’s move. It’s a strong market signal that talent is valuable. It’s a nice opposition to Facebook and Twitter’s implication that talent is replaceable or lower value if that talent isn’t willing to live in the Bay Area.
Now if only Spotify could pay artists as fairly as it pays employees.
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Stefan, great review on Spotify. I've used their app for several years and appreciated their offerings. They only get better and better. I'm happy to hear they are treating their employees with the same care as their customers/users.