Remote Work and the Modern Wage Gap [Infographic]

Amidst the COVID-19 pandemic

88% of organizations around the world encouraged or required employees to work from home,
67% of those businesses think remote work is here to stay.

The Work-From-Home Migration

Many companies have announced they will continue remote work indefinitely - Zillow, Twitter, Square, Facebook, Coinbase, Nielsen, Nationwide.

Employees Relocate

Between 14 million and 23 million Americans may relocate due to remote work.

That’s as much as 12% of U.S. households
Migration rates may increase by 3-4X in the near future

Why are so many Americans choosing to move?

City dwellers are more than 2x as likely to want to move.

More than half are looking for more affordable housing.

Most are moving beyond the range of a regular commute:

2+ hours distance: 54%
4+ hours distance: 42%

Businesses Restructure

As remote work gives businesses more freedom, many are

Abandoning leases in favor of work-from-home
Consolidating offices for essential employees
Relocating headquarters to lower cost markets

Many tech companies are leaving California: Oracle, HP Enterprise, Palantir.

Texas has seen a “tremendous increase” in corporate relocations, due to:

Low cost of living
Low corporate taxes
Favorable regulations

"I could envision scenarios where a company could pay an employee in a lower-cost market a great wage for that market, fly the person to the headquarters a few times a year for meetings, and still come out ahead" — Terry B. McDougall, Career Coach & Author of Winning The Game Of Work

In 2020, 66% of Americans said they would take a pay cut if it meant they could work remotely.

Will Remote Workers Be Paid Less?

For employees who choose to move, some companies will adjust their pay:

Reddit: Announced that pay will not change, regardless of location
Stripe: Offered $20K toward moving costs, followed by a 10% salary cut
VMware: Aligned salaries with local cost of living, varying by up to 18%

Equal Pay For Equal Work

In the U.S.

Women earn 82% of what men earn
Black men earn 87% of what white men earn

Remote work may increase workforce diversity and lower management bias, but

Women who work remotely are still paid less than male remote workers
Women and racial minorities are less likely to have the option to remotely

Unlike other pay gaps, location-based wage gaps may benefit everyone

Employees can save $2,500 to $4,000 a year by working from home
U.S. employers could save over $30 billion a day by offering remote work

Why Remote Employees May Be Paid Less

Employees see remote work as a perk

More flexibility for childcare and other responsibilities
Eliminates commutes so they have more free time

Location-based pay cuts may depend on your job

Hard-to-fill positions are likely to keep paying top wages
Companies will continue offering top dollar for executive roles

Silicon Valley wages reflect local market factors

Higher cost of living mean employees demand higher wages
Salaries are meant to help incentivize new talent to relocate

“The entire dynamic in terms of how companies are thinking about geographic differences is changing” — Catherine A. Hartmann, North America Rewards Practice Leader at Willis Towers Watson

How Much Could Wages Change?

VMware will cut salary based cost-of-living compared to its’ Palo Alto headquarters

Moving to Denver: -18%
Moving to San Diego: -8%

How Does Cost Of Living Affect Wages?

Living in New York, Washington, D.C. or San Francisco costs more than 1.5X as much as living in Dallas.

Remote workers who choose to move may find they’re better off making less.

$50,000 per year in Cleveland, Ohio and $132,243 per year in Manhattan both have the same purchasing power.

How To Calculate Cost Of Living

Standard calculations are based on the price of necessities

Food
Housing
Transportation
Utilities
Healthcare
Taxes

Lifestyle factors are often beyond the cost of living

Childcare & Education
Gym memberships
Pet care & Grooming
Recreational activities
Savings & Debt repayment

As more employees are given the choice to work from home, many will have to rethink decisions about where to live.

Relocation & Remote Work

Does Your Salary Cover Rent?

Spending more than 30% of your income on housing (rent or mortgage) is considered “cost burdened” by the Department of Housing & Urban Development

33% of Americans are paying more than they can afford

How Much Do You Need?

Washington, D.C

Median monthly rent: $2,711
Salary needed to afford housing: $108,440
Average annual income: $85,720
Average earner: $22,720 over budget

Indiana

Median monthly rent: $1,113
Salary needed to afford housing: $44,520
Average annual income: $43,950
Average earner: $430 over budget

West Virginia

Median rent: $888
Average income: $41,400
Salary needed to afford housing: $35,520
Average earner: $5880 under budget

Before you decide if a move is right for you, consider how much your new salary can buy.

The Value Of $1

Alabama - $1.15
Alaska - $0.95
Arizona - $1.04
Arkansas - $1.15
California - $0.87
Colorado - $0.97
Connecticut - $0.92
Delaware - $1.00
Florida - $1.00
Georgia - $1.09
Hawaii - $0.84
Idaho - $1.08
Illinois - $1.01
Indiana - $1.11
Iowa - $1.11
Kansas - $1.10
Kentucky - $1.14
Louisiana - $1.11
Maine - $1.02
Maryland - $0.91
Massachusetts - $0.93
Michigan - $1.07
Minnesota - $1.03
Mississippi - $1.16
Missouri - $1.12
Montana - $1.06
Nebraska - $1.10
Nevada - $1.03
New Hampshire - $0.94
New Jersey - $0.88
New Mexico - $1.07
New York - $0.87
North Carolina - $1.10
North Dakota - $1.09
Ohio - $1.12
Oklahoma - $1.12
Oregon - $1.00
Pennsylvania - $1.02
Rhode Island - $1.00
South Carolina - $1.11
South Dakota - $1.13
Tennessee - $1.11
Texas - $1.03
Utah - $1.03
Vermont - $0.98
Virginia - $0.98
Washington - $0.95
West Virginia - $1.14
Wisconsin - $1.08
Wyoming - $1.03

Use an online calculator to determine cost-of-living in your future home - Salary.com, Bankrate, CNN

Sources:

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