The workers taking a pay cut to WFH

New research from the CEDA - Committee for Economic Development of Australia has found that, since 2020, people who work from home some or all of the time have earned 5.8 per cent less than similar people who cannot or do not work from home.

For the average worker, this has amounted to $4400 less a year for remote and hybrid workers.

It’s the first time that Australian research has used wages data to calculate the causal effect of working from home on salaries.

CEDA’s researchers said the findings, which took into account confounding factors such as education, occupation and industry, weren’t necessarily bad news for employees who worked remotely. Rather, they underscored just how much Australian workers valued flexible working.

“It gives us that first indication of the real monetary value of working from home for Australian workers,” said CEDA economist and report co-author James Brooks .

Importantly, it also indicates that employers who let staff work from home are saving money on their wages bill. Our story this week dives into the research in more detail and explains some of the reasons why WFH employees earn less.

Among the many employees prioritising flexibility over pay is tech consultant Dave Phung , who snubbed a 20 per cent pay rise last year to retain the flexibility to walk his kids to school in the morning and mostly work from home.

Phung told The Australian Financial Review he turned down three opportunities to earn 10 to 20 per cent above his current salary as the job offers involved swapping his fully flexible working rights at Melbourne-based consultancy GPTStrategic for the requirement to spend three or four days a week in the office.

“Even at the upper end of 20 per cent – [the pay rise] isn’t really worth the [extra] time that you give,” said Phung, a father to two children, aged 5 and 7.

Craig Sneesby , managing director of u&u. Recruitment Partners , said he knew of many candidates who had accepted a lower salary for the option to sometimes work from home.

He said the recent flurry of return-to-office mandates at major employers, such as Tabcorp, Amazon and Origin Energy, had only added to the appeal of working-from-home rights elsewhere.

“We are definitely seeing a rise in applications for roles offering flexible conditions,” Sneesby said. “Three days in, two days at home seems to be the most sought-after balance.”

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This week on 15 Minutes with the Boss, executive recruitment guru Jason Johnson tells host Sally Patten about the mistake even top executives make in job interviews. Listen now on Apple, Spotify, or wherever you get your podcasts.

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