Will Remote Work Reduce Salaries?

The Covid-19 Pandemic transformed so much of modern society that our collective timeline has split into pre-pandemic and post-pandemic. Although the economy came to a stop early on, eventually, Americans started to go back to work. However, they found their workplaces transformed. Many employers began to allow workers to work from home. This movement created many questions and brought with it many obstacles. As the country reopens, employers are figuring out how to return to the office and how remote work with factor into work dynamics. One of the biggest concerns for employees is the prospect of reduced salaries caused by working remotely.

One of the most significant transitions many employees are making with working remotely is moving. Since their office is their home and all they need is an internet connection, remote workers are moving to more affordable parts of the country. As living expenses are shrunk when making these moves, many employers are considering adjusting their employees’ salaries—lowering those salaries to match where an employee lives. The argument being, the employers, were only paying employees more to allow their employees to live and work in more expensive cities. Although this makes economic sense, the counterargument is that employees should be paid their fair share. Especially as most Americans deal with the harsh financial realities brought on by the Covid-19 pandemic, cutting worker pay seems to be inhumane.

Additionally, employers are considering lowering starting wages, and their recruitment pool is potentially higher and more diverse. This increased talent pool results from prospects working remotely; therefore an employer can hire from anywhere. High wages are usually used to attract the best local talent, but if a more significant number of individuals are going for the same remote job from all around the country, the employer could, in theory, offer less pay. Again, the counterargument is a financial economy vs. human economy debate. Should employers take advantage of strategies that lower labor costs, or should they continue to pay based on a worker’s wellbeing?

Overall, the very specific question, “Will remote work reduce salaries?” reflects the great concepts of the great debate of capitalism. Should the free market and the ability to increase profit margins outweigh the value of the labor force and the very human factor that drives that force? No one can say, however, we are still in the Pandemic, despite progress with reopening and the vaccines. Therefore, it is too early to tell if remote work will be as extensive as the hype. Some industries have adapted well to the virtual workplace, such as our industry - Financial Technology. In contrast, the service and hard labor industries cannot work remotely. To stay up to date on all these exciting and thought-provoking topics, stay tuned to the VerifyInvestor.com Blog.