Although remote working is thought to help workers and employers save money, research has shown that permanent remote workers are spending more on larger living arrangements to accommodate their home offices.
This research by Christopher Stanton, the Marvin Bower Associate Professor at Harvard Business School, found that companies who do very little to offer remote workers a housing premium could risk losing top talent.
“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,” said Stanton.
Companies who have turned to more flexible and hybrid work arrangements are navigating what employee pay will look like for those working remotely. For instance, Facebook said it would adjust its employees’ pay based on the worker’s local area.
The research proposes that employees who are working remotely but living in the same commuting zone of their original office should be offered some of the savings from employers to alleviate housing costs.
“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,” said Stanton. “But in places with very expensive housing, especially relative to the price of commercial real estate, that need for compensation goes up.”