Remote work is closing the wage gap

A new Upwork report analyzes the economic impact of remote work and its potential to solve the growing geographic wage and opportunity gap in the US.

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The pandemic sent most people home to shelter and to work. Remote work has been so successful that many companies have either given employees the option to continue telecommuting when the pandemic wanes or ends, or, have shifted all work to remote operations. There are unforeseen benefits to remote work, which include the wage gap closing, but remote work proved to have a positive economic impact. Telecommuting may be the key to solving the  increasing geographic wage and opportunity gaps in the US.

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Upwork’s “When Work Goes Remote” report presents a comparison of the 15 most expensive metro areas to other US regions, and found that remote work has helped shift economic activity from the 15 priciest to less expensive areas.

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Key conclusions from the report

  • The same occupation is valued differently, based on location and the wage and opportunity gap is large, the report found. An average wage in the top 15 most expensive metro regions for skilled occupations was $40.54 per hour, compared to $28.36 for more typically priced regions, a premium of more than 40% for the exact same occupation.

  • Remote work contributes to the spread of economic opportunity. Only 19% of the US population live in the 15 most expensive places, but businesses are very concentrated there.

  • Independent professionals can make higher wages. Independent professionals who live in the top 15 most expensive areas and hired by businesses can earn an average 18.6% more than the average wage in the same occupational categories in a local market.

  • By hiring outside of the top 15 most expensive places, businesses have access to a larger pool of skilled workers. Hiring outside of the top 15 most expensive places will likely lower a business’ costs, and can provide access to a larger talent pool resulting in improvements to productivity. 

The Upwork report found that productivity gains were likely for businesses that embraced remote work, where pay is reflected in productivity, not location. When the housing/cost of living for those in the top 15 most expensive places is contrasted with that of other areas throughout the country, there is a significant gap.

Remote work translates to more savings for employers. A less concentrated area will have fewer resources/potential hires, but when expanded to remote workers, the playing field is lessened. The report found that if a company moves in its entirety to a less populated location, productivity may drop, but remote work not only gives employers greater access to talent, but allows that worker the ability to concentrate on the quality of work.

Switching to remote work, the report concluded, has great potential for the US economy at large, with benefits for professionals and businesses. The report concludes, “As our research demonstrates, rather than threatening productivity growth, remote work holds the potential to reduce spatial mismatch, lean against the hoarding of opportunity into a handful of cities with expensive housing markets, and help spread productivity across the US, by essentially creating the largest labor market in the world.”

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