While the pandemic has seen a wholesale shift towards remote working, the work environment for many of those forced to work from home has often been far from ideal, especially in multi-occupancy households with several people trying to work concurrently or children requiring homeschooling at the same time.

Research from Harvard Business School highlights how if remote work is to become a more common feature of working life then the housing costs of those people needs to be something taken into account by managers.

The researchers show that whereas during the pandemic, many of us have made do with the houses we have, for those who work remotely on a permanent basis, they tend to invest in larger properties that are more suited to the task.  Perhaps unsurprisingly, those permanent remote workers also spend more on their homes than their office-based peers.

Housing premiums

As such, the researchers argue that if employees are working remotely, then they should be offered a “housing premium” equivalent to around 3% of their salary when working in the office.

“You eat into about a third of the savings from reducing office space because of a need to provide money to households to compensate them for home offices or bigger dwellings that make remote work possible or at least easier,” the researchers say.

This is interesting because the predominant narrative to date is less about paying remote workers more but actually paying them less, as managers reason that people are tending not to live in expensive city centers but rather more affordable suburbs or smaller towns.  As such, they can get away with paying them less as a result.

For instance, Deutsche Bank argued that remote workers should suffer a 5% pay cut to effectively subsidize their office-based peers.  Twitter have also suggested that while its supportive of employees who want to work from home, they can probably expect a pay cut for doing so.

This logic is somewhat supported by surveys, such as a recent one by Citrix, revealing that 75% of U.K. workers would gladly take a pay cut of up to 20% if they were allowed to work from home on a permanent basis.

Of course, the situation is far from uniform, and the Harvard researchers highlight that higher-paid employees are already likely to have a home suitable for remote working, especially if they’re not already living in a high-cost area.  This may not be the case for low- to mid-level employees living somewhere such as London, however.

“In places where home prices are low and the housing supply is relatively elastic, meaning that you can add more housing somewhat easily, the need to compensate individuals to move to bigger houses is not as extreme,” they explain. “But in places with very expensive housing, especially relative to the price of commercial real estate, that need for compensation goes up.”

The moral of the story seems to be that employers should not expect remote work to be a cost-saving exercise for them, and nor should they expect to employ a blanket remote work policy across all employees.  If they truly believe and invest in their workforce then they’ll need to do better than that.