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Pay and Remote Work

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One thing I’m pretty interested in and have been since fairly early in the pandemic is how employers respond to the rise of work at home. There’s a pretty clear tension here. On one said is the desire to control employees. On the other is the desire to pay lower rents on office space. As a general rule, I am finding employers desperate to get the employees back to the office, but it’s harder now since many don’t want to and the labor market is very strong, especially for higher-level workers. The number of people who prefer to be in the office complaining that their underling is probably canoeing right now is something I’ve heard to much of, and that’s in random conversations.

But here’s another side of it–employers can pay workers less if they stay at home.

Not surprisingly, 87 percent of workers whose employers offered “at least some remote work” have seized the opportunity, spending an average of three days of the workweek doing their jobs remotely. And who can blame them? No more rush-hour traffic. Comfy pajamas instead of annoying business wear. A greater ability to balance work and family. The opportunity to stay and live in places much further away from the office. What a jackpot.

While some companies have been plotting and scheming to get their employees’ butts back into company-owned chairs, others have spotted an opportunity. These companies recognize remote work has tremendous appeal: a big, delicious cookie they can use to lure and retain workers. It’s so scrumptious that offering it to workers can be as good as cold, hard cash. And the best part for business executives: this cookie is cheap!

In a new study, economists Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent H. Meyer, and Emil Mihaylov surveyed more than 500 American companies, asking them how they are using remote work. They find that many companies are capitalizing on remote work by using it as a substitute for giving workers raises, so much so that it’s helping to moderate inflation.

I am highly indifferent to the question of inflation and am interested in the overall equation here. Honestly, this is kind of a win-win for both sides. The pay might be less, but the net pay might be more for workers once you erase commuting costs, the cost of business clothing, etc. Plus the mental side of it, which for some workers will be worth a lot of money. For businesses, how much are they willing to give up second-by-second control in order to retain employees and increase profits? If inflation does continue to rise, how much will this change the equation on both ends?

The whole thing is pretty fascinating from the perspective of what I really care about–worker power. For me, the single biggest advantage to being an academic is control over my time (the second of course is being able to wear flannel shirts in professional settings). That others would want to control their own time is something I very, very much understand. And let’s face it, I give up a lot of money in order to do this. In a different world–one where I had to not speak publicly about politics and didn’t have a record the size of War and Peace that would make private employers not hire me–I could have used my brain to work on Wall Street or in some tech company and made a hell of a lot more money than I make now. I’m glad I didn’t. I know that people I know in the business world, people with very high salaries, are jealous of my time and travel. I’m jealous of their money of course. But I also value my time and travel.

I imagine many LGM readers are pretty deeply engaged in balancing these questions for themselves. It’s really one about giving labor power and workers taking that power. Naturally, the ideal place for workers to take power is through unions, but we all know that’s not the norm in contemporary work. Sometimes, you take power for yourself. If that means taking less pay to stay at home, well, go for it.

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