Should Salaries Increase Because Everyone Is Working From Home

Many companies have implemented a work from home policy for the rest of the year, or are at least offering flexibility for their employees to spend less time at the office as things begin to reopen. The ups and downs associated with a new working style and environment at the start of the pandemic are starting to normalize, and people are finding their groove. As people adapt to their long-term new normal, should they get a pay rise too?

The commercial real estate sector is trying to predict how things will look when offices reopen on a more consistent basis as a signal to what companies are doing. While rent collections in New York for SL Green have sat around 95% for commercial office space, there has been an increase in companies looking to change their leases - either on space, duration, or both. Retail leases have been harder hit than office space, with no clear trend of what in-person shopping might look like, or how these spaces might be repurposed. 

If office space does decrease, and there is a majority shift towards a hot-desking format of an office environment, other costs for organizations will naturally go down. The cost of office supplies, for example, sits at around $80-$100 per month, per employee, as a conservative estimate. Energy bills, insurance costs, and consumables will also reduce, potentially creating significant savings per employee. From an employee’s perspective, they could spend less on office attire, commuting to and from work, as well as food during the course of a typical workday. But what costs will people working remotely now have to take on that a company may no longer be responsible for?

Employees have a much bigger financial burden to carry with the increase of remote working by having to upfront the cost of equipment and paying for things at consumer price levels. Energy bills, wear and tear on IT equipment, and setting up a dedicated workspace all have bigger costs associated with them as a private consumer, over that of a business.

While the misery of a commute has significantly reduced, a part-time commute makes monthly transit cards less cost-effective Likewise, fear of public transport usage could see employees having to fork out more for a private ride or less-crowded transport solution. This also ignores the spectrum of salaries and positions in an organization, which will be an additional challenge for some, not least from a socio-economic perspective.

The health and wellbeing of employees is an important consideration too. Employees are responsible for their own health and safety in the workplace - something they may not be aware of. Aside from poor ergonomics from make-do workspaces, there are other hazards to be mindful of - fire and tripping hazards could all cause significant injury, and the combined impacts of Covid and mental health may see an increase in employee medical bills. Without an employer there actively implementing policy in the work environment and providing a structured respite between work and home life, there are potential long-term risks associated with working away from the office that will have a cost associated with them. Likewise, if injury does occur at home during the remote workday, will employers be forgiving with medical leave?

IT equipment is also something to consider - while a laptop may be suitable as a shorter-term solution, organizations need to think about how they will quickly and more readily adapt to a second wave, should government-mandated limitations occur again. Likewise, issues around data privacy, data security, and company IP could also come into play in the new normal.

There needs to be a balance. Acknowledgment from organizations that employees are taking on additional costs in working from home and thinking of solutions will help shift the impact. Offering access to discounted IT equipment, corporate memberships, or vouchers that contribute toward home-office costs could be helpful. Likewise, offering internal commuter loan schemes, and clarity over longer-term flexible working policies to allow people to live away from the city, are all solutions that should urgently be considered.

The long-term impact of this is demonstrating you truly care about employee well-being, which is part of a long-term retention strategy that companies should be adopting to increase trust and engagement. Companies that are flexible, open and fast-moving will win the impending talent war in the long term.