According to a new study released Thursday by global independent platform Upwork, the massive shift to remote work that results from companies adapting to the changes caused by Covid-19 has great potential to reshape opportunities across the country. and close the geographic wage gap.
This is because companies are more concentrated in the 15 most expensive places to live in the US, even though they only house 19% of the US population, but with the recent move to remote work. , 49% of the business spending now going to those workers will be scattered across the US, extending productivity to other talent pools and thus essentially driving the creation of the world’s largest job market, he says. Upwork chief economist Adam Ozimek.
Titled “When Work Goes Remote: How Remote Work Can Help Close the Gap in Geographical Opportunities,” the report claims that with major tech companies like Twitter and Facebook switching to remote policies first and hiring managers who plan to duplicate their plans. Remote over the next few years, this will have a significant impact on the overall economy.
Already, says Adam Ozimek, chief economist at Upwork and author of the study, the shift to remote work caused by the pandemic is starting to push business spending beyond the top 15. This will likely not only help close the wage gap for the 72% of freelancers living outside of these locations, but provide lower costs for companies than in their local markets.
A look at the geographic wage gap
Using his own platform data for the study, Upwork analyzed thousands of remote projects between American companies and freelancers, totaling more than $ 100 million in profit. What they found was that companies are disproportionately located in the most expensive areas, while the freelancers they hire reside across the country.
The study specifically analyzed 12 occupational categories: accounting; human Resources; management consulting; personal / virtual assistant; Customer service; technical support; graphics and design; law; network and system administration; marketing; web, mobile and software development; and engineering.
Using data from the Bureau of Labor Statistics, Upwork sorted more than 500 geographies to find the meters with the highest average earnings. They found that, on average, hourly earnings in the top 15 metro areas for these occupational categories were $ 40.5 per hour compared to $ 28.36 for the average location, a premium of over 40% for the same occupation.
The study also found that when freelancers located outside of the more expensive areas are hired by companies in the top 15, they will earn, on average, 18.6% more than companies in their local market.
The benefit of relocating
Despite having higher wages in these expensive areas, a high percentage of income goes to housing costs. Median home values in the top 15 exceeded $ 500,000, almost three times more than the average place. Those who live in the top 15 have a price-to-income ratio that is more than double that of the rest of the country: an average of 680% to a maximum of 1,260%, according to the study.
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