WORKSPAN DAILY |
Always on the Move: Determining Pay for Digital Nomads
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We know that the rise of the remote worker has been going on for some time.
COVID-19 has accelerated the push, to say the least. The arrival of the coronavirus pandemic forced millions of American employees to transition to remote work on a dime, with many deciding they’d like to continue working remotely for the long haul.
But remote employees — who typically perform their jobs from one set location — aren’t the only away-from-the-office workers who are growing in numbers.
Digital nomads differ from remote workers in that they opt for a more “location-independent, technology-enabled lifestyle that allows them to travel and work remotely, anywhere in the internet-connected world,” according to Emergent Research and MBO Partners’ “COVID-19 and the Rise of the Digital Nomad" report.
That same study found the number of American workers describing themselves as digital nomads increasing from 7.3 million in 2019 to close to 11 million in 2020, representing a 49% jump.
The composition of the digital nomad population is changing as well. In the past, digital nomads typically characterized themselves as freelancers, independent contractors or self-employed. But 2020 and the coronavirus pandemic saw more “traditional” employees taking their talents on the road. For example, the Emergent Research and MBO Partners report found the number of digital nomads with traditional jobs going from 3.2 million in 2019 to 6.3 million last year. That figure represents a whopping 96% increase.
Earning a living while seeing the world might sound pretty appealing for would-be digital nomads. But it’s not necessarily as simple as packing one’s bags and setting up shop in a new country, and then repeating the process whenever the urge to move on strikes. Working in a foreign country without the appropriate visa is illegal in many places around the world. And COVID-related restrictions have further complicated international travel.
All that said, a growing number of countries — Dubai, Germany, Mexico, Australia, to name a few — have begun offering digital nomad visas in an effort to attract foreign workers to help boost their local economies.
With more destinations becoming feasible for digital nomads, and more workers craving flexibility in how and where they work, we should expect to see the number of digital nomads continue to climb along with the total of remote workers. And, as is the case with remote workers, determining compensation for digital nomads can get tricky.
In the wake of the pandemic, some organizations — with Facebook being perhaps the most high-profile example — have rethought compensation for remote workers, localizing pay based on where employees choose to live.
John Bremen, managing director and chief innovation and acceleration officer at Willis Towers Watson, sees companies applying their existing pay philosophy to all remote workers, including digital nomads.
Organizations are “adapting pay structures for digital nomads to focus on national structures in place of those with geographic differentials,” he said, “under the theory that employees who can work anywhere do not need to be tied to location-specific structures.”
As with all jobs, pay for digital nomads should be determined by the value the role adds to the organization, said Brad Hill, a principal at Warrenville, Illinois-based compensation consulting firm Clearwater Human Capital.
“What is different with digital nomads is the location, and therefore (possibly) the geographic pay differential,” said Hill, who advises clients to only pay geographic differentials to employees working at locations that directly benefit the business.
“So, if my organization requires an employee to reside in the Silicon Valley, then I should pay a geographic differential to reflect the higher pay there,” he said. “But, if an employee determines that he or she would like to work in the Silicon Valley, and it provides little or no benefit to the company, then his or her wage should be the same as workers at headquarters, or established at national pay levels.”
Relevant WorldatWork Resources
- WorldatWork’s 2021 Geographic Pay Policies Study
- Certified Compensation Professional (CCP)
- Global Remuneration Professional (GRP)
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