Your commute — or lack thereof — could be hindering your earning potential.
The research, conducted by Jose Maria Barrero, Nicholas Bloom, Shelby Buckman, and Steven J. Davis, found that hybrid workers make at least $80,000 per year on average.
Remote employees, in comparison, make about $74,000. Those who never work from home — mostly employees who have to physically be in the workplace to provide a service or use special equipment, such as waiters and mechanics — are the lowest-earning group, averaging $55,000.
While a person’s working arrangement is one factor in someone’s earnings, job title and seniority are far more important determinants of income, Barrero tells CNBC Make It.
Highly-compensated, white-collar professionals make up the majority of the hybrid workforce, while fully-remote workers, by contrast, often perform specialized functions like IT support or customer service that require less face-to-face interaction and are paid less.
For remote jobs, companies can source candidates from places that have a lower cost of living, whether it’s a different state or a different country altogether, reducing their hiring costs and, in turn, remote workers’ earnings, Julia Pollak, chief economist at ZipRecruiter, points out.
By contrast, those who work in a hybrid environment tend to be managers or experienced professionals who are further along in their careers, Barrero says, and have more bargaining power to negotiate a flexible work arrangement.
“We’ve seen that younger workers in their 20s and 30s are the ones who want to be remote the least, because they believe being in an office will benefit their careers, whereas more seasoned professionals in the 40s and 50s can exercise greater control over where they work, and are choosing to be hybrid,” he explains.
People in remote jobs are also more willing to take a pay cut in exchange for better work-life balance, Pollak says.
A recent ZipRecruiter survey of more than 2,000 Americans found that job seekers would be prepared to take a 14% pay cut to work remotely.
Citing workers’ willingness to sacrifice higher pay for greater flexibility, Barrero expects the pay gap between remote and in-person workers to shrink in the coming months — but hybrid workers will continue to earn the most.