As organizations are grappling with the new nature of work, the idea of pay cuts for remote employees has been floating around. Tech giants in particular—Facebook, Twitter, Microsoft, and Google—have all said that employees who relocate to less expensive markets could see a pay cut of up to 25 percent. But is this really a good policy? Some experts argue that these notions are misguided at best and will ultimately end up being counterproductive. In today’s tight labor market, there are more open jobs than people to fill them. Simply put, it doesn’t make financial sense for employers to give employees a reason to walk out the door. “Chances are, if you have to go out to market to replace them, you’re going to have to pay \[their replacement\] more anyway,” said Jason Walker, an HR expert. These policies demonstrate “a lack of understanding of what the talent market is really telling people,” he added. Thrive HR Consulting co-founder Rey Rameriz agrees. “\[It’s\] crazy when you start looking at the numbers,” he said, adding that the cost of replacing an employee is 6 to 12 months of their pay, and even if that worker doesn’t leave on the spot, the demotivation they’d feel after taking a pay cut would certainly impact their productivity and engagement levels. “There are some definite consequences from using that big stick approach that’s not going to end well for an organization,” said Ramirez.