As the Covid pandemic has dragged on and remote working has become the norm rather than the exception, discussions have focused on whether people will return to the office once restrictions are eased.  Most of the time these discussions have focused on the enjoyment employees have had from working at home, but research from Harvard reminds us that for many, it has imposed a clear financial cost that should be considered.

The paper highlights how for people who are working from home full-time, there are costs associated that often go unexplored.  For instance, they found that between 2013 and 2017, people who worked from home full-time were typically spending 7% more of their monthly income on housing than their peers who were commuting to the office each day.  This was not a situation that was exclusively affecting renters either, as homeowners would also spend around 9% more on mortgage payments and property taxes than their commuting peers.

Cost of living

It’s a process by which the real estate costs associated with working migrate from the employer to the employee, with this especially onerous for poorer workers who are known to spend far more of their income on housing than wealthier workers.  Indeed, the researchers argue that employers would have to pay poorer workers up to 15% extra to effectively compensate them for the increased housing costs associated with working from home.  This is an effective level of compensation that is not replicated among wealthier workers, in large part because their homes are already big enough to provide adequate space for home offices.

Of course, the research was conducted among workers in the same city, so both remote workers and their office-based peers were located in the same place, with property costs therefore similar across both groups.  It’s quite probable that those able to work remotely will move to cheaper locations, although it remains to be seen how people will respond if they are mixing home working and office-based working.

Either way, the paper provides a timely reminder that remote working is not without costs, and especially so for those workers at the lower end of the income scale.