People who value working from home (WFH) are making a trade-off between their wage and the benefits they see from the arrangement. In short, workers highly value working from home and are willing to forgo some of their wage to do so. This paper suggests employers can also make a trade-off: choosing either to accept the cost savings from work from home arrangements or to pay a premium to mandate office attendance.

The authors advise employers and employees to work together to find solutions that work best for their circumstances, acknowledging these arrangements may require adapting over time based on individual team needs and work requirements.

Key findings

• Since 2020, workers who have hybrid or fully-remote working arrangements earn nearly 6% less than otherwise similar people who cannot or do not work from home.
• Employers who want staff to return to the office may need to pay higher wages to get what they want.
• Working from home isn’t only allowing firms and employees to exercise more choice in their work and compensation arrangements, it’s also helping to boost labour supply.
• WFH provides greater choice for both employers and employees, allows greater access to the labour market for those who previously faced barriers and alleviates cost pressures for employers.