Remote Work and the Modern Wage Gap

Due to COVID-19, millions of Americans made adjustments to their daily lives. One year later, some of these changes may become permanent. Of the 88% global organizations that had employees work from home, 67% think remote work is here to stay. What does that mean for the American worker? How will it change existing workplace dynamics?

With a permanently remote job, employees benefit from the elimination of a commute and the ability to work far away from their company’s office. Between 14 and 23 million Americans may relocate for this reason. While individual reasons vary, many are choosing to move in search of affordable housing. On the company’s side, businesses don’t need to rent as much office space or supply the same amount of overhead as before, leading to cost savings on both ends.  

Because part of an employee’s salary is meant to address the cost of living, that raises the question: will remote workers be paid less? Answers vary by company, but unless the pay cut is proportionally higher than the amount a worker saves by moving to a lower-cost area, the worker should still come out ahead. Unlike other pay gaps, location-based wage gaps may benefit everyone. Employees can save $2,500 and $4,000 annually by working from home.  Meanwhile, US employers could save $30 billion a day by offering remote work.

As for more well-known wage gaps, the picture is less rosy. There is a chance remote work may decrease hiring and management biases for nonwhite and female workers, but at this time, women in remote positions are still paid less than their male peers in the same situation. Additionally, women and racial minorities are less likely to have jobs that allow them to work from home, meaning they can’t take advantage of telework benefits.

Remote Work and the Modern Wage Gap

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