Remote work and the wage gap
Over a year ago, the workforce experienced one of the most dynamic and time-sensitive changes they have ever seen. 88% of companies required their employees to switch to remote working in order to deal with the COVID-19 pandemic. Of these companies, over 67% say remote working will be a permanent part of their business beyond the pandemic.
Leading companies like Twitter, Facebook and Nationwide Insurance have already publicly stated that the transition from in-person to remote work will be an integral part of their business model. This decision could have a lasting impact on the entire industry. If this is really the case for our business company, we may see huge differences and changes in employee behavior as a result of this decision. One of the biggest changes will be the location.
Between fourteen million and twenty-three million people will emigrate in the United States when remote work becomes permanent. Remote working gives employees the flexibility to move where they want, and many employees want cheaper, more affordable lives in other states. People will also tend to move to places that are beyond the traditional commute. 54% of respondents said they would be two hours or more away from the office, while 42% said they would be away four hours or more. People who live in cities are twice as likely to move when remote work becomes permanent.
There are three main reasons companies prefer remote working over traditional in-person work.
The first is the reduced need for real estate. With just a few people participating in a personal office space, companies can give up some of their leases and save money.
Second, they can also combine their offices into smaller areas. This would reduce the high price associated with large office buildings and help cut down on some business expenses.
Third, because employees can work anywhere, there is no need for a central hub or headquarters. This means companies can switch to cheaper industrial markets to maximize the money spent on real estate.
However, the benefits cannot outweigh the losses. Industry leaders have announced that they may pay remote workers less than those who come into the office. They can do this by having a variable wage based on the cost of living in each city, or they can subsidize a move but then cut the salary. This could lead to an unfair pay gap for women and ethnic minorities. Women currently earn 82% of what a white man makes in the current market. An African American earns 87% of what a white man earns. Women and ethnic minorities may not have the opportunity to work remotely and therefore may be unfairly biased.
However, this pay gap can be mitigated by the financial benefits remote working brings to everyone. Research suggests that workers who work from home could save an average of two thousand five hundred to four thousand dollars a year by working from home.
And it can have some credibility to pay to work remotely. Working from home is seen as an opportunity that allows people to have more free time and reduce the need for childcare and other expenses. A location-based wage cut can also depend on the nature of your job.
If your job is in high demand or receiving significant perks and salary, then working from home can actually do your title a disservice. Therefore, it is the company’s rights to make decisions based on your proposed productivity.
Businesses still value executives and the location of Silicon Valley, but hope that wages based on the cost of living can attract new talent from these higher-priced areas to lower-cost housing markets. This could directly benefit the company as it can control where its talents are.
Cities like New York, San Francisco, and Washington DC are 1.5 times as expensive as cities like Dallas and Cleveland. This means that the purchasing power is the same, but the standard of living is very different. In order for companies to be able to convince their employees, they have to find a solution to this problem.