What Factors Influence a Work-From-Home Salary?

“Some companies use remote work as a strategy to hire people for less money. That doesn’t mean the worker is getting paid fairly, but you can hire a great marketing person in Kansas that will cost you half the price of that person in LA or New York. So everyone wins. The employee doesn’t have to move to New York or LA to get the job, but they will be paid according to the cost of living where they live.”
Chris Dyer, Entrepreneur, Author, and Remote Work Expert

Being able to work remotely comes with many perks. While many employees may seek out remote work for the flexibility, lack of commute, or work-life balance, there is another significant benefit to working remotely: higher wages. A recent survey published by Ringover, cloud-based software technology, found that, on average, remote workers in the US earn $8,553 or 9.76 percent more than their in-office counterparts.

However, more pay is relative: “Some companies use remote work as a strategy to hire people for less money. That doesn’t mean the worker is getting paid fairly, but you can hire a great marketing person in Kansas that will cost you half the price of that person in LA or New York. So everyone wins. The employee doesn’t have to move to New York or LA to get the job, but they will be paid according to the cost of living where they live,” says Chris Dyer, entrepreneur, author, and remote work expert.

Despite remote employees being paid more than in-office staff, if they are in a low-cost-of-living area, those wages may be higher than other positions in their geographic area. The survey was done by comparing job posting salaries in different regions. The highest difference in earnings between remote workers and in-office staff was in Baltimore, Maryland, at 39.16 percent, followed by Indianapolis, Indiana, at 29.76 percent. Both cities have a cost of living much lower than the US average.

Some roles have a higher disparity in pay for remote workers than others. Office managers earn significantly more if they are remote, as well as PR managers. However, junior web developers make more in the office than remotely. This analysis intentionally left out jobs that are impossible to perform remotely, including mechanics and other trades. However, generally speaking, most remote workers can expect to earn more than or at least as much as those in the office.

There are many reasons for differences in remote worker pay and acceptance of these disparities. Continue reading to learn from Dyer why these differences exist, what he considers when setting salaries for remote employees, and what the future of remote employee pay may look like.

Meet the Expert: Chris Dyer

Chris Dyer

Chris Dyer is a recognized company culture and remote work expert. As a former CEO managing thousands of people, his companies consistently were named the best places to work. They have also been named the fastest-growing companies by Inc. Magazine five times. Dyer routinely consults and speaks, and Inc. Magazine ranked him as the top “Leadership Speaker on Culture.”

Dyer has two bestselling books: The Power of Company Culture and Remote Work. He has been named among the leaders on the Hum Power List, a Top 50 Voice in Leadership, a Top 40 Change Management Guru, a Top 50 Global Thought Leader, a Top 50 HR Leader Shaping the Future of Work, and a Top 101 Global Employee Engagement & Experience Influencer by Inspiring Workplaces and WorkBuzz.

Reasons for Differences in Pay

There are many reasons why pay may differ between remote and in-person work: “I think there’s a difference between pay within companies because employees value work-life balance, the ability to take their kids to school or to volunteer during their lunch break. Often, employees are willing to take a different compensation package because it comes with flexibility and the ability to live life,” says Dyer.

“We always looked at it as what was the total package? What was the total thing we were trying to do with that person? We lived by the motto that you can’t treat everyone equally, but you can treat everyone fairly. So we tried to always pay people in a way that was fair for the job they were doing where they lived.”

He continues, “With my staff, the most important factor is that they can control their time. This isn’t always the case with customer service, but operations staff typically can be very flexible. To them, it was more important than pay or even benefits. The fact that, for example, they could go to their kids’ classrooms for an hour and not need anyone’s permission was critical. The pay can be different because there’s a different benefit.”

In most circumstances, employers set pay according to where employees live when they are hired: “The cost of living can be dramatically different. Someone in California will have different pay than someone in Singapore or Thailand. Businesses aim to pay people comfortably for the market they are in,” he explains.

Remote Worker Pay Acceptance

Within a given company, remote workers will accept pay variances because of the benefits of remote work. In Dyer’s company, they focused on what employees were getting instead of the pay differences. “We focused on the benefit of remote work,” he says. “We considered an advantage to be able to go hire people in smaller markets and get great talent for less money. It helped boost our competitiveness. We consistently had employees happy with their pay in exchange for remote work. Sure, they may be earning $20,000 or 30,000 less because they weren’t in LA, for example. But they were happy to work for a great company, doing a job they like and being able to live where they want”

However, not all workers will accept less pay simply because they live in a lower-cost-of-living area: “We have seen that many big tech companies tried to tell their staff that they wouldn’t be paid as much if they didn’t live in Silicon Valley or the Bay Area. I don’t know of any examples of where that’s worked. I know they tried it, but it didn’t work because the skill level required for that job is high. They may hire new employees for less but haven’t been able to adjust salaries for employees that moved.”

“It’s a balancing act,” says Dyer, “It can be hard for employers and employees. Ninety-nine percent of the time, it was never a problem. Sometimes though, we had to have tough conversations with people who felt differently.”

Bias and Equity Concerns for Remote Workers

Within every conversation about paying workers differently, there needs to be awareness of how bias can creep in and create inequity. At Dyer’s company, they worked hard to remove any possibility of bias throughout their hiring process: “We did two things that helped us. One was we would screen our resumes with no name or location and would instead just look at the resume. Of course, we would intentionally advertise in markets where we knew it might be less expensive to hire, but we anonymized it regardless. That was one of the best ways to remove bias on the front end.”

He continues, “The second thing we did was on the back end: once we were moving into interviewing, we had everyone do the StrengthFinders assessment and discover their top five strengths. We kept a giant spreadsheet of all our employee’s strengths. Then, we would only interview those with at least one top-five strength we didn’t have on the team. For example, we had a great team, but no one had analytics in the top five, so we looked for analytical candidates. It was a really easy way to have a more diverse workforce without putting a label on it to say I want more of this specific kind of person,” he says.

And it worked. “By doing this, we would get new types of applicants, which shocked me. We did it originally just to get diversity of thought. We didn’t know that we would get actual diversity from that sort of exercise. The kinds of people I was interviewing were radically different,” he says. “Targeting different markets was also helpful. If we wanted to work on diversity, we would advertise in, for example, Georgia instead of Idaho.”

The Future of Remote Worker Pay

Remote work is here to stay, but the pay will continue to vary from hybrid or in-office work. “I believe there will be more and more people who want remote work. And those people that don’t get it or can’t get it will tolerate hybrid schedules,” says Dyer. “I think you’re going to see less total remote work in the next five to ten years, but those doing it are not returning to the office. It all also depends on the economy. If it’s not an employee’s market, employers can just shut people back into offices. But if it’s an employee market, that can make a team more flexible and increase pay.”

Kimmy Gustafson
Kimmy Gustafson

Kimmy Gustafson is a freelance writer with a passion for sharing stories of bravery. Her love for world-traveling began when her family moved to Spain when she was six and since then, she has lived overseas extensively, visited six continents, and traveled to over 25 countries. She is fluent in Spanish and conversational in French. When not writing or parenting she can be found kiteboarding, hiking, or cooking.

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