The Reason People Who Work From Home Make More Money

More types of lucrative work can be done remotely. JL

Justin Fox reports in Bloomberg:

Those who work at home are much more widely distributed. Their income advantage stems not from geography but from the kinds of work that can be done remotely — white-collar more than blue-collar, high-tech more than low-tech, etc. That work has apparently been getting better: In 2010, those who worked from home made 11% less than those who drove to work. In 2018, they made 5% more. The number of people who reported working at home has risen from 5.9 million to 8.3 million, while their share of American workers has gone from 4.3% to 5.3%
In 2018, for the first time, people who took public transportation to work in the U.S. had higher median earnings than those who drove themselves. But the highest-earning people in the “median earnings by means of transportation to work” statistics released by the Census Bureau last month were those who didn’t commute at all.

The earnings advantage of public transportation users is mainly just a reflection of where the buses, subways and commuter trains are. The New York, Chicago, Washington, San Francisco and Boston metropolitan areas together accounted for almost 63% of the Americans who took public transportation to work, and pay is higher in those metropolitan areas than in the U.S. as a whole.
Those who work at home are much more widely distributed. Their income advantage stems not from geography but from the kinds of work that can be done remotely — white-collar more than blue-collar, high-tech more than low-tech, etc. That work has apparently been getting better: In 2010, those who worked from home made 11% less than those who drove to work. In 2018, they made 5% more.

Over this same period the number of people who reported working at home has risen from 5.9 million to 8.3 million, while their share of American workers has gone from 4.3% to 5.3%. The rise began in the early 2000s, as the spread of home broadband connections made new kinds of at-home work possible.

The annual American Community Survey from which the current data 1 are derived asks people how they usually got to work the previous week. This misses out on lots of
people who didn’t happen to work from home that particular week but do sometimes. A 2016 Gallup survey found that 43% of American employees worked remotely at least occasionally. The European Union’s Eurostat tracks whether people work at home “usually” or “sometimes,” and over the past decade the former group hasn’t grown as a share of the EU workforce but the latter has.

For businesses, and those who work from home, the trend toward remote work seems all to the good. Multiple studies have shown that employees who are given the opportunity to work from home are more productive and happier with their jobs. They also can save a lot of time and money on commuting. (And yes, I am in fact typing these words at home. Thank you for asking.)Some at-home workers get to live in really great places, too. They can be found everywhere, but in the U.S. they are more likely to be found in metropolitan areas with pretty mountains (the Kingston, New York, metro area includes much of the Catskills).You have to wonder a little, though, about what this means for all the people who can’t work from home. Those who can tend to either make a lot of money or not need to make a lot of money. At least, that’s one reading of this data. My thinking here is that most of those making less than $15,000 a year are part-timers looking to supplement the family income with occasional online gig work. Those making $75,000 or more are … making $75,000 or more. While I realize that may not sound like much to some readers, only 20.6% of U.S. workers earned $75,000 or more in 2018. Work-at-home arrangements seem much harder to come by for those in the working class. Adam Ozimek, the chief economist at Upwork, an online marketplace for remote work, reports that working at home has been growing by far the fastest among those with college degrees.

Working at home also appears to be kind of a white people thing, with blacks and Hispanics far less likely to do it.None of this is working-at-home’s fault! These disparities reflect socioeconomic conditions that long predated remote work. But one can easily see how the rise of working at home might undermine support for new infrastructure investment, housing construction in expensive cities and other things that just don’t matter quite so much to those who can telecommute. On the other hand, if loosening the bonds between jobs and locations makes cities and states focus more on making themselves attractive to workers than on offering big tax incentives to would-be employers, that seems like a positive. The rise of remote work is going to change lots of things. It’s just not clear what all of them are yet.

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