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Will Remote Work Create a Larger Wage Gap?

When the coronavirus reached America last year, millions saw their lives changed in dramatic ways. Even for those who never caught the disease, masks went from a rarity to a necessity, students’ classrooms moved online, and large segments of working adults saw their home office transform into their only one. The first two events may […]

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When the coronavirus reached America last year, millions saw their lives changed in dramatic ways. Even for those who never caught the disease, masks went from a rarity to a necessity, students’ classrooms moved online, and large segments of working adults saw their home office transform into their only one. The first two events may be temporary, but working from home could be a permanent fixture to many Americans. Of the 88% of global organizations that required or encouraged telework, 67% think those changes are here to stay. 

Looking into the future, many workers are wondering what this will mean for them. How will familiar workplace dynamics be altered by remote work achieving permanence in several companies? Will the endemic issue of wage inequality improve or worsen in these conditions? As with any change, predictions see a mixed blessing on the horizon. When it comes to wage inequality on the basis of gender or race, remote work may not be the solution people are hoping for.

To start, the reason many businesses want to make remote work permanent is the cost savings. Employers don’t have to own or rent as big an office space and employees don’t have to incur the expenses of a daily commute. If workers don’t need to come into the office in person as often (or, in some cases, ever), there is no longer a need for them to live in the major metropolitan areas where many businesses are headquartered. While businesses were already migrating out of the priciest cities pre-pandemic, workers are now able to leave major cities by the millions. Between 14 and 23 million Americans may relocate due to remote work, and over half of them list the pursuit of affordable housing as a major factor in their decision.

Since part of an employee’s wages are based on local living expenses, workers who move to a less expensive area may face a pay cut. However, because their annual expenses have also decreased, the worker may still improve their standard of living. According to Terry B. McDougall, career coach and author of Winning The Game Of Work, “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.” American workers stand to save between $2500 and $4000 a year by working remotely while employers as a whole could save up to $30 billion a day. Location based pay differences are a form of wage gap, but they’re one in which both sides win.

The same can’t be said of gender and racial wage gaps. Women are still earning less than men in remote positions, and women and racial minorities are less likely to have remote work be an option for their jobs. While remote jobs may see fewer instances of hiring and management bias, that won’t be enough to bring pay equity into the United States.

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