A surprising number of workers would take a pay cut in order to work from home, according to a recent report. Compiled by the National Bureau of Economic Research (NBER), researchers at Harvard, Johns Hopkins University, and the University of Illinois main campus, showed that the willingness to sacrifice salary for flexibility has increased. “Our findings indicate that, on average, individuals are willing to forgo approximately 25% of total compensation for a job that is otherwise identical but offers partially- or fully-remote work instead of being fully in-person. Our estimate is three to five times that of previous studies,” the report states. According to the study, 40% of workers would take a pay cut of 5% in order to work from home. And almost 10% would take a cut of up to 20% if it mean that they didn’t have to return to the office. Indeed, RTO (return to office) initiatives have been rising, as a trend, since the pandemic. However, many employers and organizations still see the value in working from home. Turns out, a large number of workers are willing to sacrifice to get it.
Employers like Amazon and Dell have made headlines regarding their return to office policies. Michael Dell, CEO of Dell Corporation, says “What we’re finding is that for all the technology in the world, nothing is faster than the speed of human interaction”, he shared in a recent message to all Dell employees. “A thirty second conversation can replace an email back-and-forth that goes on for hours or even days.” In contrast, Pew Research says that nearly half of workers who currently work from home (at least sometimes) would be likely to quit if RTO required 100% in-office commitments.
Kim Parker, director of social trends research at the Pew Research Center, says that the data shows not only a desire to work from home – it’s also a familiar context. “Our data underscores how comfortable people have become with this arrangement, and how it really fits in with their lifestyle,” she tells CNBC.
Work from Home: Advantages for Employers
When employees can work from home, morale improves. Reports show that employees quit less often – saving on recruitment costs. And multiple reports have show than productivity does not suffer in hybrid work arrangements. As a result, many firms are bucking the RTO trend, offering high-paying jobs where people can work from home.
Nick Bloom, an economics professor at Stanford University, tells CNBC that remote work is the equivalent of getting a raise. Indeed, for many companies, allowing people to work from home is a sign of status and contribution – sort of like getting a promotion. Because work from home has real economic benefits. Bloom estimates that work from home translates into about an 8% raise, depending on the role and the salary. The savings comes from reduced cost of typical return to office expenses: the cost of commuting, and time lost due to travel. Additionally, when you work from home, you can always respond to tasks at all hours of the day or night (for better or for worse).
By eliminating commute costs and time, employers can gain an effective pay bump for workers. Will engagement scores increase as a result? Regarding work from home, it can be seen as a perk, or a pay raise. Either way, it’s an attractive feature for a job – especially if your circumstances (or distance from the office) make working from home a part of your productivity. Especially if the nature of the business will allow it, workers are seeking options and flexibility.
Work from Home: It’s Not for Everybody
About 41% of workers who have the ability to work from home – but rarely do – say that being in the office is better. They report feeling more connected to co-workers. Mentoring is also enhanced in an in-office environment, according to 20% of respondents in the Pew Research study – perhaps a crucial element for new and younger employees seeking guidance. What makes the most sense largely depends on your job responsibilities, the nature of your work, your obligations at home, and the size of your commute. There are other factors at play, to be sure, and everyone’s situation is different. The question is: is your employer able to work within your circumstances to create a mutually beneficial situation?
With the investment in real estate that many large companies possess, it makes sense to try and leverage it – via RTO initiatives. For employees, work from home presents advantages, for personal finances and scheduling. The pandemic proved that productivity doesn’t have to suffer in a hybrid or work from home environment. However, the ability to connect in person (and in the office) can be vital to some roles. And for some CEOs, for all roles. Work from home, like work itself, is a balancing act – and finding the balance that’s right for your career (and your employer) is the key.