4th November 2022

Are Salaries Keeping Up with Cost of Living?

The Benefits of a Remote Workforce if Your Office is Located in a High Housing Cost Area

The U.S. labor market has seen a huge and lasting shift to working from home. Surveys show that 30% of work is still being done at home as of August 2022, and many employers and employees expect work from home to become a permanent fixture (Barrero, Bloom, and Davis 2021). Working from home may increase a worker’s housing demand because activities that used to be done in offices now take up space and time at home. This in turn has created a volatile housing market, since more and more remote employees have much greater freedom to decide their location.

Determine if Your Business Operates in an Impacted Region

To determine if a remote workforce might be the right fit for your business, you’ll need to take into account several factors.

  • First, the type of work you offer matters because it’s not possible to do every job from home. For example, if you work in an industry with a lot of technology jobs, you would be expected to have more remote work opportunities than workplaces with mostly service-oriented jobs, such as hospitality or restaurant work.
  • Second, areas with relatively cheaper and more available housing attract remote work because people working from home want more space at home instead of using space at an office. If you live in a city where the housing market is significantly impacted by high housing costs, you might have more trouble attracting an in-person workforce. Alternatively, if you live in a location where housing costs are relatively low, chances are you’ll have a larger population of potential remote workers.

Benefits of a Remote Workforce

We’ve written previously about the potential benefits of a remote workforce; it can save money, increase productivity, and improve employee retention. Especially when considered against the cost of commuting, and high housing costs, from an employee’s perspective, the benefits are significant.

Areas with a higher cost of living also have a pool of positions with higher salaries to compete against. Employee benefits, including salary, have to be attractive if you want the best talent on your team.

Of course, one of the clear benefits of a remote workforce is the opportunity for location-based salary and compensation. Employees that live in a high-cost-of-living area will need compensation to offset their high housing costs or the cost of commuting to and from the office, should they need to maintain a physical presence. Remote employees have an opportunity to choose a location that will mitigate their cost of living, and since studies show that most employees would rather work from home than receive a raise, employers can ultimately benefit from that flexibility.

Be aware, however, that many companies don’t do location adjustments, and that by offering high-paying salaries regardless of location, these companies may seem more attractive to top talent.

What This Means for You

Remote work is here to stay, and along with it, increased demand for housing. It’s time for employers to consider making overall strategic adjustments to recruiting and compensation policies. Considering benefits packages, increasing wages to match the increase in inflation, or providing housing assistance are just some of the ways companies are working to keep employees happy in a world where their options are increasing every day.

If you are considering moving your team to remote work, even part-time, remember to account for the benefits as much as you account for the concerns. If you need help making the transition – or even help considering it – feel free to check out the blog for more information, or even look into our coaching program. Our team would love to support you!