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Should remote workers be paid less than in-office workers?

Should remote workers be paid less than in-office workers?

The debate on whether remote workers should be paid less than in-office workers is undoubtedly one of the most controversial – and relevant – topics in the world of work these days. This is mainly because the topic of remote work has become so prevalent. 

At the start of the COVID-19 pandemic, the shift toward remote work (for knowledge workers and other workers who could work from home) was immediate and staggering. While some companies eventually reverted to pre-pandemic ways of working, others decided to stick with remote work or go hybrid.

According to Gartner research, 30% of workers were remote before COVID-19, while 48% of employees will work remotely at least some of the time post-pandemic.

Source: Gartner

It’s likely that remote vs. in-office will continue to be discussed in the coming years, and it’s even more likely that the economy will continue to edge more toward remote. Now, what should be done about pay? The two sides of this debate typically have strong opinions – but what’s the right answer? Should companies be paying workers differently based on where they work?

Unfortunately, there is no “right” answer – but let’s go over some of the arguments from both sides of the conversation. Then, we’ll give you our take. 

Argument 1: Remote workers should be paid less than in-office workers

There are a variety of reasons why some think remote workers should be paid less than in-office workers. Much of this argument is around what in-office people have to do that remote workers don’t. For instance: Office workers have to wake up earlier and spend more time and money on commuting. Should they have more compensation for that? Should remote workers have less?

For some companies, location is used as the reasoning for decreasing compensation for remote workers. Employees at companies like Google and Facebook could see pay cuts as high as 25% should they relocate to more affordable parts of the country from expensive cities like San Francisco and New York. Some businesses have always taken cost of living into account when deciding salaries, but it’s impacting more workers than ever before with remote work increasing and some people choosing to move. 

Another argument suggested by a Deutsche Bank report is for a 5% tax on remote workers to support those whose jobs are under threat, probably paid by the employer. The report asserts that the taxation would be fair as remote workers aren’t paying into the system like those who have to go to an office each day. Deutsche Bank thematic strategist Luke Templeman said this:

“Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society. Those who can work from home receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced.”

Argument 2: Remote workers should should be paid the same as in-office workers

On the other side of this debate is the argument that compensation should not depend on whether someone is an in-office or at-home worker. This side often touts fairness and productivity in their reasoning.

Fairness – Decreasing compensation for remote employees could easily create resentment and a decrease in morale. Additionally, remote workers have higher household bills, spend a portion of their former commute time on working, and save the company money on office space and associated costs. Is it really fair for them to be paid less than someone in-office when they’re doing the same job? 

Productivity – The Becker Friedman Institute for Economics at the University of Chicago surveyed 10,000 employees who said they thought they were just as productive working from home as they were in the office. In fact, 30% said they were more productive and engaged when working from home. These insights have been mirrored in other studies as well. So if productivity does not decrease, and may actually increase, then why should pay go down?

This side of the argument also says that remote work has downsides just like in-office work, and should therefore not be used as an excuse to penalize someone.

For example, remote workers deal with a blurring of home and office, find it harder to “shut off” from work, and miss out on any in-office perks their company might offer.

Here’s how Paul Ronto, Chief Marketing Officer of RunRepeat, summed this argument up: “If your employees enjoy working from home and are productive, don’t ask them to choose between being remote and their salary. Encourage them to keep up the high level of work, and cut expenses in other ways.” 

Back’s take: Find the right benefits for all your employees

Both sides of this debate have compelling arguments, but our team thinks it’s more about offering your employees the right set of benefits to fit their needs, rather than saying “you have to choose this or that.”

The goal should be to figure out how to improve the employee experience for all your workers, not just those that have one style of working.

If you’re not sure where to start, here are a few of our other blogs that are worth checking out:

In addition, be sure to try out our Employee Experience Canvas to clarify moments that matter to employees and come up with solutions to create a frictionless experience.

What do you think? Should remote workers be paid less than in-office workers? Let us know in the comments.

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