Does remote work fuel wage inequality? Not exactly – staff working from home tend to be higher earners, but they also experience lower wage growth

New research shows remote work does not feed workplace inequality, contrary to the common belief that it might privilege higher tier earners.

Researchers from universities in London, Birmingham, Sheffield, Nottingham, and Kent said hybrid work is highly valued by workers but is concentrated among the better-educated and higher earners.

“At first glance, it seems remote work will increase inequality by offering a perk to those already better off,” the researchers said.

Remote work leads to lower wages, though, potentially offsetting some or all of the benefits provided through working from home (WFH). The study found that workers in remote-capable positions experienced between 2% and 7% lower wage growth.

“Our inequality decomposition shows that while the option to work remotely primarily benefits workers in higher-paid jobs, the lower wage growth in these occupations fully offsets this effect,” researchers said.

“Consequently, 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 paper likened remote work to an ‘in-kind benefit,’ not unlike access to a company car or the provision of free childcare in the workplace. An in-kind benefit is any perk offered by a company that is not included in a pay packet.

While this perk is unequally distributed – some do jobs that can be done remotely while others do not – and could be a potential influence on labor market inequality, it is a potential that is never realized.

“For those who can RW, this increase in compensation is achieved by reducing their pay by less than the value of the increased in-kind benefit constituted by RW; for those who cannot RW, the entire increase in compensation is wholly in the form of increased pay,” the research said.

“Since the total compensation increases for both types of workers, the effect on inequality is ambiguous,” it added.

Hybrid work must be done practically 

Although this research disproves that remote work contributes to certain workplace inequalities, Hugh Scantlebury, CEO and founder of Aqilla, told ITPro that businesses should be wary of other ones.

Managers, supervisors, and those with higher qualifications are more likely to WFH, Scantlebury said, along with people aged between 34 and 54 – “Where does that leave graduates, interns, junior staff, younger employees and unskilled workers?” he said.

“There’s also an issue around proximity bias. It’s human nature for people who see each other often in person to form close bonds, friendships, and closer working relationships. If left unchecked, this is bound to impact people who spend a greater percentage of their week working remotely,” he added.

Ultimately, Scantlebury noted that hybrid or remote working policies must be open to everyone wherever it’s practical for the business to ensure that no biases are exacerbated.

The RTO debate rages on

The belief that remote work may fuel inequality has played a part in the ongoing debate over a widespread return to the office, which in recent months has seen spats escalate between employees and employers at big tech firms.

Amazon, for example, recently demanded that workers return to work in the office for the full five days a week amid backlash from staff members.

Despite C-suite disdain for hybrid working policies, some research suggests staff thrive under hybrid working policies. For example, a survey from Zoom found that 84% of staff agree they get more work done in flexible or remote working arrangements.

Experts have echoed similar sentiments, with Jasmine Eskenzi, founder and CEO of wellbeing and productivity app The Zensory, telling ITPro that productivity is far from dependent on in-office presence.