Companies are letting you work from home so they can pay you less — and so you'll be happier

Companies are letting you work from home so they can pay you less — and so you'll be happier
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  • Companies offering remote work may be treating it as a tradeoff for a bigger raise.
  • A new paper finds that 38% of firms see remote work as a way to moderate wage growth.

If you're reading this from the comfort of your own home, you may be among the legions of office workers who no longer work in an office.

For many so-called knowledge workers — who have always been able to do their work from the comfort of a laptop screen — the pandemic made remote work the norm for many. It's been a boon for some, and one way that workers have seen themselves gain some power over when and where they're working.

But some companies might have ulterior motives for letting you work in your pajamas — it's saving themselves some money in a still-hot labor market.

A new National Bureau of Economic Research working paper from economists Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent H. Meyer, and Emil Mihaylov looks at wages and remote work, and how companies are approaching both.

The research, which was first reported on by NPR's Planet Money, is based on the Federal Reserve Bank of Atlanta's Survey of Business Uncertainty. That survey goes out to monthly to hundreds of executives, and the economists added new questions for April and May polling.


They asked executives if their "firm expanded the opportunities to work from home (or other remote locations) as a way to keep employees happy and to moderate wage growth pressures." The answer: 38% of the firms surveyed were letting their workers stay at home — and using that as a tool to not raise wages as much.

That was particularly concentrated among larger firms, where 52.4% said that they made remote work more available in an effort to offset potential wage growth.

And some companies are planning on letting their employees stay remote, but with a wage tradeoff. The researchers asked if, over the next year, firms will let employees stay remote for at least one day a week "to restrain wage-growth pressures." Broadly, 41% of executives said yes, and about 55% of executives at firms with over 250 workers said they were planning on it.

The study finds that this may be good news for inflation, since the remote work for less wages tradeoff means wages won't keep soaring and pushing businesses to pass those higher labor costs on to customers.

Of course, a subset of remote workers have left cities like New York and San Francisco for locales with lower costs of living, and businesses with fully-remote job openings can hire from anywhere in the country. Switching to a remote landscape means that companies formerly recruiting for in-person roles in costly cities can hire in areas where wage expectations are different.


Some remote workers have already seen their salaries pared down for their new home bases, as companies reason that a lower-cost area would traditionally have them compete against a different band of salaries.

The research also offers a glimpse into how employers are balancing workers' desires in the labor market. Workers still want to work from home, and some will even quit if made to come back. An ADP survey of 32,000 workers found that 64% of respondents would start job hunting, or consider it, if their bosses asked them to return to working in-person full time.

So allowing remote work is a good way to keep your employees, and keep them happy. The economists also noted that remote work can impact potential turnover, and cut down on hiring costs.

But when companies do offer remote work, it also presents an opportunity to pay their workers less than they might have otherwise. Some workers are fine with this tradeoff. Owl Labs and Global Workplace Analytics polled 2,050 workers in September 2021 for their State of Remote Work survey, and found that 38% would take a 5% paycut if it meant they could work remotely at least part time after the pandemic.

Alonso Morris, a 39-year-old who believes he could be earning more, told Insider's Jason Lalljee that being able to work remotely is worth the salary tradeoff.


"That kind of flexibility is honestly life-changing," Morris, who real name and company were kept private, told Insider.