Work From Home Workers out earn Office Workers in the US

A GLO Working Paper (Remote Work, Wages, and Hours Worked in the United States by Sabrina Wulff Pabilonia, Ph.D. & Victoria Vernon, Ph.D.) examines wage and hours differential trends for full-time remote and office-based workers. Historically, full-time remote workers consistently earned more than their on-site peers, with the gap widening recently. In 2010, telecommuters had a modest 5.4% wage premium over office-goers. Fast forward to 2021, and this premium has rocketed to 14.2%. This trend isn’t just hourly-based but is also reflected in annual income.

Wage Differentials:

1. Remote Workers Earn More: Full-time remote employees saw wage premiums consistently.
2. Increase Over Time: In 2010, remote workers earned a 5.4% premium over on-site workers, which surged to 14.2% by 2021.
3. Varied by Gender: Wage premiums for remote work appeared less consistent for men than for women from 2012 to 2021.

Hours Worked:

1. Longer Hours Pre-Pandemic: Remote workers, irrespective of gender, worked longer than their on-site counterparts before the pandemic.
2. Hours Gap Narrowed: In 2020 and 2021, the difference in work hours between remote and on-site workers was reduced.

Variation by Occupation:

1. Wage Gaps Differ: Depending on the profession, some jobs, like sales and management, see remote workers earning more, while others, like healthcare support, face penalties.
2. Sales Peak: Sales roles particularly benefited from the productivity boost of remote work.

Differentials in Broad Occupation Groups:

1. White-Collar vs. Blue-Collar: Remote white-collar workers consistently saw wage premiums. In contrast, their blue-collar counterparts faced wage penalties until 2021.
2. Pandemic Hours: During the pandemic, remote white-collar workers worked slightly fewer hours.

Differentials by Gender and Parenthood:

1. General Trends: Remote workers earned more irrespective of gender or parental status.
2. Mothers Earn Less: Mothers with young children faced a slightly reduced wage premium when working remotely.
3. Fathers Work Less: Remote working fathers clocked fewer hours.

Wage Growth Analysis:

1. Initial Difference: Initially, remote workers earned significantly more. But this wage difference vanished by 2019 when considering demographics and industry.
2. Positive Correlation: The higher the percentage of remote workers in a profession, the more significant the occupation-level wage growth.

Takeaways:

1. Remote Workers Earn More: On average, remote workers earn more than their on-site counterparts.
2. Wage Surge During Pandemic: Wages grew faster for remote workers during the pandemic.
3. Converging Hours: By 2021, remote employees’ working hours will be aligned with on-site workers.
4. Marginalized Groups: These groups earned slightly lower returns when working from home, highlighting that the pandemic magnified existing wage inequalities.

Final Take:

Remote work is changing where we work, how much we earn, and how long we work. On average, remote workers out earn their on-site colleagues, with this wage gap growing during the pandemic. We know that working from home is correlated with higher fertility and marriage rates, and this may explain a portion of the higher rates.