Australians are taking a pay cut to work from home

Workers say they highly value working from home. New research suggests they might be willing to forgo some of their wage to do so. 

CEDA analysis of detailed data from the Household Income and Labour Dynamics in Australia (HILDA) survey found that since 2020, workers who have hybrid or fully-remote working arrangements earn nearly six per cent less than otherwise similar employees who cannot or do not work from home. 

This is the first research to estimate the causal impact of working from home on wages in Australia. 

“These findings clearly reflect the value employees attribute to working from home and closely match the findings of research in the US and UK,” CEDA Economist James Brooks said. 

The research compares the wages of those who stated they had formal working-from-home agreements with their employer or worked more than 12 hours per week from home, with those who did not.  

After accounting for factors that can influence a person’s wage, CEDA found that since the pandemic, individuals who work from home have experienced 5.8 per cent lower wages than those who do not work from home. 

This would mean a worker on average annual pay who works from home would earn around $4400 less than someone who does not. 

“At a time when cost of living is front of mind, lower wages for some workers could be cause for concern,” Mr Brooks said. 

“But this kind of wage reduction is not necessarily bad news. It suggests those who value working from home are making a trade-off between their wage and the benefits they see from the arrangement. 

“Employers can also make a trade-off, choosing either to accept the cost savings from WFH arrangements or pay a premium to mandate office attendance. 

“Working from home 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. 

“At a time of persistent skill shortages, this is surely a win-win.” 

WFH expert Stanford University Professor Nicholas Bloom will speak at the CEDA livestream event Global Matters: WFH, productivity and markets on April 29. Click here for more information. To register to attend as media please email our events team. 

CEDA Economist James Brooks is available for further comment and interviews.

Media contact:  

Justine Parker, Media Manager and Content Specialist 

Mobile: 0436 379 688 | Email: justine.parker@ceda.com.au