Salaries for Remote Work Are Going Up — For Now

As stay-at-home orders across the country begin to loosen, many tech companies are choosing to keep their offices closed. As these employees continue to work from home, how will this affect their salaries?
Prior to the Covid-19 pandemic, we analyzed over 1 million salaries to understand if there was a pay benefit for telecommuters or workers who primarily worked from home. We found that 54% of telecommuters earned more than those who worked in the office, contrary to popular belief that remote workers are paid less than their in-person counterparts.
Since the pandemic hit, we’ve continued to see higher pay for remote workers in the tech industry. By isolating 89,919 survey respondents nationally and 14,161 Bay Area respondents within the technology industry, we were able to measure how salaries have changed for telecommuters in the tech industry since Covid-19. To fully understand the differences in pay across remote workers and overall workers, we look at two different measures: the uncontrolled pay difference and the controlled pay difference.
The uncontrolled pay difference does not account for employment characteristics, such as job title or years of experience. It simply compares the median income for remote workers and overall workers. The controlled telecommuter pay difference, on the other hand, is a comparison of pay between telecommuters and overall workers who have the same job and qualifications.

Median pay for tech workers, nationally, regardless of their work-from-home status is $86,800 since March 1st. For remote workers, median pay jumps to $93,300 — a 7.2% increase in pay.
Median pay for remote workers has generally been increasing. Last year’s median pay for tech-industry telecommuters in the Bay Area was $84,700 (compared to $105,000 now) and nationally it was $80,700 (compared to $93,300 now).
Some of this overall salary growth for telecommuters can be attributed to standard yearly increases in pay, but a key factor driving up the overall median pay for telecommuters is that there are more managers, directors, and executives who would typically be expected to go into the office at least some of the time now working remotely.
The future outlook for remote work remains unclear, but research shows that when workers get certain job benefits, including flexible work-from-home policies, they tend to value those benefits highly. Workers might resist being asked to commute into offices after having the luxury of waking up and starting the workday at their leisure. Additionally, it is not yet clear that there will be leased office space to return to even when it is safe to do so. Many companies are looking to renegotiate office leases due to layoffs and a loss in revenue related to the recession caused by the pandemic. Because real estate is a major overhead expense for companies, it’s likely that there will be a muted desire for commercial office space for the foreseeable future.
Our data shows that real wages still have not fully recovered from the Great Recession of 2008.
If companies permanently transition to a more flexible work environment, it’s likely that employee compensation packages will be reduced to reflect cost-of-living adjustments — even after any sort of economic recovery. The majority of tech employees currently work in offices located in major cities because employers have by default congregated to where their talent or customers are. But if employers are agnostic about where their workers are geographically based, there could be a mass exodus of talent to less expensive regions in the United States. This would be a signal to employers to adjust their salaries to institute cost savings for talent relocating to less expensive cities. This is something that Zuckerberg recently noted, rather controversially, as premium compensation packages common in Silicon Valley would be adjusted if Facebook employees chose to live in areas with a lower cost of living.
Our data shows that real wages still have not fully recovered from the Great Recession of 2008 and the current economic crisis will likely set many Americans back five years or more in terms of their financial stability. Too many companies today still set their compensation strategies to prescriptive increases of 2% (as a cost-of-living adjustment). Given the lack of real recovery in the American worker salaries since the last recession, it would be a mistake for employers to reduce wages even further simply because more people are working from home. A better approach is for business leaders to take a holistic view on compensation and ensure that employees are paid what their job skills are worth in a fair and equitable manner — regardless of location.
Previous Post Next Post