Geographic pay differentials: Not just a big-company thing

Yeah, we all know big employers use geographic pay differentials to set the salary of employees in spread-out locations. But surely, that’s just a big-company thing?

Don’t call it surely.

In a new survey of 304 employers by compensation consultants Culpepper & Associates, 61% of companies with 101-500 workers and multiple locations reported using geographic pay differentials. Even among the smallest employers –- 1-100 workers -– 39% did so. (Big firms -– 10,000+ workers -– came tops at 86%.)

Culpepper says 89% of employers providing such differentials do it for professional-level people. And 79% also do so for hourly/non-exempt workers.

Salary surveys, cost of living
The most widely used data to establish the differentials is, unsurprisingly, salary surveys – 86% of employers use these. But 26% also use some kind of cost-of-living calculation.

Takeaway: As the labor market grows more competitive, smart employers will want to stay competitive in all job markets where they operate.