Remote workers are earning almost $8,600 more on average than their in-office peers—but it’s coming at a cost
Alongside pricey commutes, sad desk lunches, and uncomfortable business clothes, add another reason to the list of why working from home holds greater appeal than the office for so many remote American workers: They’re earning an average $8,553, or 9.7% more, a year than their in-office counterparts.
That’s according to an analysis of 30 “remote-capable” jobs by Ringover, a cloud-based telecom provider. It found that hybrid workers also earned more than in-office workers, at 9.6%. The numbers come after combing through and comparing over 35,000 LinkedIn job postings for full-time, “remote-capable” roles.
The findings back up other research that reveals those working from home are higher earners. Remote workers are twice as likely to earn above the local median pay for non-remote workers in the same industry: 17% to 58% more, a study from payroll and benefits firm Gusto found last fall. And, per a global 2022 report by job site Hired, remote workers in tech outearn in-person workers in 15 of 17 global markets. The pay gap is due to a variety of reasons, from the ability to work for a more lucrative company even if it’s in another state to companies simply passing along the money they saved from reducing their real estate footprint. But the higher pay comes at the cost of intangible assets—like making connections and gathering critical feedback, which give in-office workers the upper hand.
Office managers stood to earn 31.7% more working remotely than they do in the office—the most out of any job Ringover analyzed. Public relations managers followed closely behind at 30.1%, along with customer service managers and data analysts. Ringover found only six in-office positions earning higher salaries than their remote counterparts: junior web developers (who earn 12.52% more in-office), supply-chain managers, UX designers, insurance underwriters, financial advisors, and sales assistants.
A reason for the disparity, Ringover’s researchers posited, could be that employers decided to pass along their savings from reducing office space to their workers. Indeed, companies can cut their real estate costs in half by moving to a hybrid arrangement, Mark Dixon, founder and CEO of commercial real estate company IWG, told Fortune last year.
Plus, companies can save up to $11,000 per employee working two or three days remotely per week, a study by research firm Global Workplace Analytics found. That $11,000 comes from many sources, primarily reduced rent, upped productivity, and lessened absenteeism and turnover—all commonly attributed to flexible work arrangements.
Another explanation for higher pay: Remote employees can work for companies anywhere in the country that best align with their skills, Gusto’s report pointed out. Also possible, per Gusto: Remote-capable jobs by definition often pay better, or workers with high-paying jobs moved to lower-income areas where their peers aren’t paid the same.
But for all the perks and pay remote work offers, it has some pretty sizable drawbacks.
Mentorship and collaboration get lost in the remote work shuffle
For one thing, most bosses—intentionally or not—fall victim to proximity bias, which describes preferential treatment for the workers who show up to their cubicles. That could mean bigger payouts and faster promotions over time, which add up quickly.
The majority of workers in remote-capable jobs themselves said in a recent Pew Research report they felt that not being in the office limited their opportunities for mentoring and connection. Remote workers also get significantly less feedback than in-office workers, a September 2022 working paper by economists from Harvard, the Federal Reserve Bank of New York, and the University of Iowa found. Lack of crucial redirection is another setback that could stymie career advancement.
That’s especially true for newer or younger workers who need to learn the ropes. “We know empirically that [new Salesforce employees] do better if they’re in the office, meeting people, being onboarded, being trained,” vocally pro-office Salesforce CEO Marc Benioff said in March. “If they are at home and not going through that process, we don’t think they’re as successful.”
Even extremely online Gen Zers can admit as much, indicating the strongest overall preference for working in an office in a Slack Future Forum report from earlier this year. Just under 90% of Gen Z workers who prefer the office say it’s because they’re most productive there.
But many remote workers would hang on to their flexibility even if it meant missing out on such benefits—or taking a pay cut. In numerous surveys over the past year, many workers indicated that they’d accept a nearly 20% drop in pay for a fully remote role. “Flexibility and choice are clearly nonnegotiables for many professionals, and employers will lose good staff if they limit remote options without a valid reason,” Robert Half senior executive director Paul McDonald said last year.
These kinds of tradeoffs could gradually narrow the disparity between salaries for in-office roles and for remote roles, especially if employers begin consistently using remote capability as a means of negotiating lower salaries. Remote workers would likely hope otherwise; higher salaries and flexibility, after all, are a much better way of attracting top talent than fancy office spaces are.
This story was originally featured on Fortune.com
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