Hybrid work boosts pay for all, study finds, debunking employer myth of inequality

A study of workers in the U.K. assessed the compensation packages of people working from home to understand the financial fallout of working patterns that have become normalized since the COVID-19 pandemic. 

A wave of companies have scrapped remote and hybrid work policies in recent months, including Amazon and iPhone challenger Nothing, who have argued remote work isn’t compatible with continued growth. The widespread mandate risks upending the wallets of several unprepared workers.

The financial struggles of workers returning to the office have been well documented as RTO mandates ramped up over the last 12 months.

Earlier this year, a report by the Prince’s Trust found that 10% of 16-24-year-olds in the U.K. were forced to turn down work because they couldn’t afford the uniform and transport costs.

There are fears that perceived growing inequalities between workers resisting the return to the office and those coming back risk increasing resentment among colleagues, strengthening the hand of bosses who are keen to have workers return. 

Studies have suggested that remote workers tend to be those with higher levels of education working in the highest-paid jobs, leaving those in lower-paid jobs strapped with less disposable income as they grapple with the costs of the commute.

However, analysis by researchers from the University of Nottingham, the University of Sheffield, and Kings’ College London found that hybrid working didn’t increase the compensation gap between remote workers and in-office employees. 

“The shift to remote work has resulted in no significant change in overall inequality, but rather a substantial increase in average compensation across the board,” the authors wrote.

While the authors of the latest study admitted in their research that remote work was a potential influence on labor market inequality, they found the benefits of remote work, including free childcare and access to a company car, had worked to counteract this. 

Meanwhile, office workers found that the salary boost more than compensated for the costs associated with making the trip to work.

This apparent anomaly is the result of a new equilibrium in the hybrid working space, the authors said, where growing demand for in-office workers increases their salary packages. In contrast, remote workers seem prepared for a lower salary as remote listings fall. 

Analysis of Brits’ working patterns found remote workers would give up 8.2% of their salary in order to work from home for two or three days a week, after asking them to report associated costs with in-office work, including transport, food, and clothes.

“There are arguments suggesting companies should encourage or even mandate that their workers should come back into the office, and you might argue that if working from home increases inequality, it gives a further argument for doing that,” Paul Mizen, vice dean at King’s Business School, King’s College, London, told Bloomberg.

“Our research shows that it doesn’t increase inequality so you can’t use this as a reason to get people back in the office.”

There are other obstacles those staying at home may have to get used to, however. Bosses who haven’t mandated workers back to the office have used the stick to gently lure them in.  Studies have found that remote workers are less likely to be promoted than their in-office peers. A separate survey found that 80% of CEOs would rather promote an in-office employee than a remote one.