New research from the Federal Reserve Bank of San Francisco suggests the opposite phenomenon is happening—at least for some workers. Employees working from home are actually getting paid more than their in-office colleagues.
Researchers found employees who work from home, at least some of the time, earned, on average, 12% higher hourly rates than those working fully in-person. About half of this boost was correlated with education levels, gender, and age, and when researchers controlled for these variables, they still saw about a 6% difference in wages, with remote employees still earning what researchers call a work-from-home wage premium.
The study noted both France and the U.S. have similar levels of employees working from home, and both countries have more remote work opportunities for higher-paying, better-educated employees.
“Using French administrative data and controlling for a rich set of worker and firm characteristics, we find that workers who work from home earn higher hourly wages than those who do not,” researchers said.
To be sure, remote employees are not magically getting paid more just because they clock in from home. The San Francisco Fed study noted nearly half of the 12% pay bump for hybrid workers was the result of certain demographic factors, such as age, gender, and how long someone has held their job position. Older workers with more senior titles, for example, were paid more.
That other 6% in wage premiums may be bad news for Gen Z workers who want flexibility in the early stages of their careers. The study found remote employees who were paid more had higher-paying positions ahead of the pandemic, as well as non-observable assets such as greater productivity and negotiation skills that essentially allowed them leverage in brokering perks with employers.
Taken together, the data suggests higher pay for more flexible work isn’t the result of remote employees successfully proving to their bosses that their work-from-home practices or productivity warrants higher pay. Rather, it indicates more senior employees with greater leverage—who were getting paid more anyway— negotiated better with employers for more flexible work structures.
The San Francisco Fed’s study suggested its results give credence to a major argument from future-of-work experts: “Our findings are consistent with case-study evidence that firms offering WFH disproportionately attract more educated and experienced workers,” researchers wrote.
