I'm not sure why working from home would imply a pay cut. The employer is the one who saves money when the employee works from home - no infrastrcture costs for one (no desk in the office - with all that implies... insurance, space, smaller office required with more employees working from home).
You are generally paid for the work you do - and that shouldn't change simply because you are not located in a centralised office.
I have worked from home - telecommuted - since 1997. When I joined my current company in 1999 there was no question of me being based anywhere but from home. The company had one office in the UK at that time - in London. And I live near Manchester.
Since then there have been many changes - but one thing remains the same. I still work from home.
Working from home generally means - in my case at least - that I tend to do more than if I was in an office. I have no daily commute. That time is spent doing "actual work" instead of sitting in a car, or on a train.
I work in an engineering team which is based around the world - I can start early and work late. If I was in an office then I would be far less productive than I am. I can get the kids ready for school in the morning, prepare a meal in the evening and take an hour or two for myself at some point in the day and *still* get more work done than if I had to commute to work.
My company gets a really good deal from having me work from home.
Obviously, not everyone can work from home - it depends on the job. But many I.T. roles are ideal for this providing the infrastructure is in place. What matters is the results - if you get the job done, it matters not whether you are in an office or at home.