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Working from home predicted to improve lifetime earnings, but theres a catch
One of the benefits of working from home might be improved income earnings over a lifetime, but theres a disappointing catch.
Before the pandemic, working from home was often considered a luxury by both employers and employees alike. However, with millions of Americans still living and working out of the same four walls, researchers are starting to figure out how working from home might impact your career earnings over the course of a lifetime.
How the pandemic changed the way we work and earn a living
A new study has found that working from home due to the COVID-19 pandemic might lead to higher lifetime income, i.e., the amount of money that you earn in your working career.
This is from a new paper published in the Review of Economic Studios by a team of researchers from Rutgers University, the University of Utah, and the University of Wisconsin-Madison.
They found that both during and after the pandemic, when millions of Americans were forced to work from home instead of traditional office spaces, those household workers saw substantial increases in their productivity.
In turn, and over the course of a lifetime, the researchers suggested that these increased rates of productivity will lead to higher career earnings.
According to the study, this was primarily due to the mass adoption of remote-work technology.
For example, you might have purchased a higher-quality laptop or PC that improved the speed at which you completed tasks, or your company might have invested in a new platform like Slack which improved communication between different teams.
Similarly, commuting was slashed to near zero (or as close to zero as your home office is to your bed), saving home-based workers valuable time and money; both of which lead to better productivity.
Interestingly, the researchers claimed that this phenomenon isnt anything new to the world of work and that many of these benefits would have come about eventually, with the pandemic only accelerating the process.
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Its not all good news not everyone will see a lifetime income boost
Unfortunately, and as to be expected with any study related to working from home, theres a catch which means that not everyone will benefit equally.
Whilst the researchers found that working from home can increase lifetime earnings, it will also lead to more income inequality between different groups of employees; namely high-skilled vs low-skilled workers.
They argued that remote-work technology is more widely available to high-skill workers (people with higher levels of education) and that since low-skill workers might not have the income or expertise to buy a new PC or CRM, the gap between high vs low-skilled workers’ income is likely to worsen.
Another negative impact of working from home described in the study was the cost of renting with residential prices increasing by 14% in downtown areas and 24% in suburbs due to the increased demand for home office spaces.
The change in work-from-home productivity also increased the demand for housing, consistent with the increase in house prices we observed between 2020 and 2022.
The team also said that collaborative work became significantly more difficult since its much easier to talk to someone directly in an office than it is to schedule and re-schedule online meetings.
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So, if you are working from home in a relatively high-skilled area of employment, you might be earning more money in your career in the long run but a large portion of that extra income will likely be spent on higher rent prices.
