The Effect of Remote Work on the Wage Gap

A look at the effect of remote work on the wage gap....
The Effect of Remote Work on the Wage Gap
Written by Brian Wallace
  • When the COVID-19 pandemic reared its head last year, millions of Americans were forced to make dramatic changes to their daily life. Students attended class through a computer, masks became a necessary accessory for outings, and large segments of the workforce did their jobs from home. Nearly 90% of global organizations either encouraged or required employees to work remotely. Of those companies, two thirds of them believe remote work will become a permanent fixture. Changes that many viewed as a coronavirus-induced aberration could become the new normal.

    What does this mean for the American worker? How will converting the home office into one’s only office change workplace dynamics? On the subject of persistent pay inequality, will remote work improve or escalate the problem?  As is the case with any form of change, the transition to permanent remote work has benefits and drawbacks. While good things can arise from the new system, it isn’t poised to iron out payment inequalities any time soon.

    On the side of workers, the major benefit of telework is elimination of commute. Not only does this free up time for employees, but it also spares the money they would have otherwise spent on fuel, vehicle maintenance, or toll fees. Once a worker knows they will rarely (if ever) have to visit their company’s office in person again, they no longer need to live so close to their employer. Despite recent business migrations, many companies are still headquartered in expensive cities like San Francisco, New York City, or Washington DC. These major metropolises have extreme costs of living and scarce affordable housing. If a remote worker no longer needs to live in those cities for their job, they are free to relocate to a less expensive location. 

    And relocate they do. Already as many as 23 million Americans may relocate, with city dwellers twice as likely to move. In the coming years, that number may increase to 3 or 4 times that number. Because part of an employee’s salary is contingent on local living expenses, some companies will cut pay for those who move. However, the drop in housing, living, and transportation costs can more than make up for the decrease in earnings. Location-based pay differences are a form of wage gap, but they are one capable of benefiting everyone. American workers could still save up to $4000 annually thanks to remote work.

    When it comes to the better known forms of wage gap (those incurred on the basis of gender and race), the picture is less than rosy. Though some experts think that telework will decrease hiring and management biases against women and racial minorities, women still earn less than men when both work in remote positions. In addition, many jobs women and racial minorities currently hold are less likely to allow them to work from home, preventing them from realizing the benefits discussed above. 

    Every new update to the world comes with pros and cons. The advent of telework is no different in that regard.

    the modern wage gap (infographic)

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