A new study found that tech workers are willing to accept an average 25% pay cut for hybrid or fully remote jobs. While this suggests strong demand for remote work, employers aren't lowering wages in response.
Previous studies generally estimated that employees would accept a pay cut of around 5% to 10% for hybrid or remote jobs. However, those studies relied on hypothetical survey questions, asking workers how much pay they would sacrifice for remote work.
The latest study, "Home Sweet Home: How Much Do Employees Value Remote Work?," a working paper published by the National Bureau of Economic Research, took a different approach.
Participants were recruited through Levels.fyi, a platform that provides verified, crowdsourced salary data for tech jobs. Researchers analyzed job offers received by 1,396 U.S. tech workers, including salary data and whether the role was hybrid or fully remote. By observing which offer a worker accepted, they could infer how much pay the job candidate was willing to trade for remote work.
The study focused on high-earning tech workers, with the average job offering $239,000 per year in total compensation.
"Given that we see virtually no gap in compensation within a company, for the same position, remote [versus] in-person, it seems likely that they are not pricing in their current beliefs about how workers value it," said Zoe Cullen, one of the researchers and an assistant professor of business administration at Harvard Business School, in an email to Informa TechTarget.
Some firms might be unaware of the worker preference, but I also think firms may face challenges to personalizing compensation packages.
Zoe CullenAssistant professor of business administration, Harvard Business School
Cullen also suggested that employers might not have adjusted salaries because of concerns about fairness and pay structures.
"Some firms might be unaware of the worker preference, but I also think firms may face challenges to personalizing compensation packages due to equity concerns or some rigidity in how salaries are set," she said.
Victor Janulaitis, CEO of labor market research firm Janco Associates, said he sees no evidence that employers are systematically cutting pay for remote work. But he added that C-level executives he's surveyed are generally negative about the value of work from home.
Janulaitis said many employers prioritize business needs over worker preferences and see remote work as secondary to operational goals.
"Employees come and go, and a business needs to survive and have employees who are focused on getting a job done," he said.
Patrick Thibodeau is an editor at large for Informa TechTarget who covers HCM and ERP technologies. He's worked for more than two decades as an enterprise IT reporter.
