Surprise! You make less money working from an office

This work from home expert says remote work actually pays more than your office job. But how can that be?

How do you put a price on this?

The benefits of working remotely are substantial: greater flexibility, control over your work environment, improved work-life balance, lower stress, conference calls wearing pajamas…

Unfortunately, salary doesn’t usually make the benefits list. I have been working remotely for nearly 15 years and closely following the topic and trends for nearly the same amount of time. From my experience as a manager, candid conversations with other remote denizens and observing job postings, I estimate that work from home positions pay between 10% and 40% less than the average US national salary for the same position when you just look at the raw numbers. If you live in an expensive metropolis like San Francisco or NYC then the salary gap can seem staggering.

However, it hardly tells a complete story. If you are considering working from home, read to the end of this article before turning down that “lower” offer. It may not be lower at all.

Cat not included.

Vive la différence!

Let’s get this out of the way. For many, working from home is just this side of nirvana. Twice-daily traffic jams and crowded subway cars are a thing of the past. No one is sitting in a cubicle next to you clipping their toenails and you can create your own work environment including working in a coffee shop, the beach or next to the pool. You can’t put a dollar amount to those perks so they aren’t reflected below but, holy cow! Keep them in mind.

No planes, trains or automobiles

According to the AAA, the average American spends about $9,000 (USD) a year on their car if you include all the factors (financing, insurance, gas, wear and tear, etc). Think about what you spend on driving yourself to and from work every year. A lot of remote workers, like me, have sold their family’s second car after a year or two of it rarely leaving the driveway. What if you took that money and spent it on a dream vacation instead. Where would you go?

Even if you don’t reap that entire benefit by ditching a redundant vehicle, the savings still impact your bottom line. Ditching the daily commute not only means buying less gas, it means fewer repair bills, a lower insurance rate and a higher resale value when you do put old bessie on the market. So if you’d prefer a range, go with $2,000 to $9,000. Since it’s my article and I went the full monty, I’ll chalking up the $9k.

Transportation savings: $9,000

Time is money

And while we are talking about dragging your butt to work and back most days of the week, how long did you spend commuting to work this morning? According to one statistic I found, the average American wastes 42 hours a year sitting in traffic. That’s an entire work week where you weren’t paid and did very very little. What would you do with that time? Work out? Write a best selling ebook? Play with your kids?

OMG! The average American wastes 42 hours a year sitting in traffic. That’s an entire work week where you weren’t paid and did very very little.

What if you were paid for that time? $25 an hour is $1050. CNN says the dollar amount is closer to $2,600. I bet you can do better things with that time and money.

Recouped commute time: $2,600

It’s an all-day pajama party!

I haven’t had a suit dry cleaned in over ten years. I got rid of all my business clothes over five years ago because I was wanted to use the space for something else. I can’t even calculate how many times I was wearing at 5pm what I went to bed in the night before (yes, ewwwww!). From a quick internet search, I found that it’s not uncommon to spend between $1,500 and $3,500 a year on business clothes. Estimate how much of your wardrobe is for business and what you spent on it. Now add that to that remote job salary. Are things looking up yet?

Savings on “work” clothes: $3,500

Childcare-free

Are you one of the majority of adults who feels like most of your money goes to entertaining your offspring while you push paper all day? You have good reason to feel this way. According to Business Insider, the average American spends about… wait for it… $18,000 a year on childcare (considering daycare, summer camp, after-school programs, etc). Even if you pay only half of this amount in your area of the country, it’s still significant. And yes, you can work with your children at home. I have raised two children well into school age while being the sole parent working from home. If you are interested, ask me about it in the comments below.

Childcare savings: $18,000

Restaurant lunches are expensive

How many times have you justified going out to a pricey lunch by saying that it’s okay because you are at work, or feel stuck in miserable job or having a hard day? Are you in a job now where you have to eat out at lunch with few inexpensive alternatives?

Cram it down! You have to get back to work.

According to Forbes, the average American spends about $1,000 a year on restaurant lunches. I suspect that when you add in all of the Starbucks visits and snack runs, that number is considerably higher. Even if you aren’t a great cook, tasty lunches are easy to create and inexpensive. And don’t ignore the side benefit of improved health. Fast food is a health crisis all on its own. If you have ever wanted make positive changes to your diet for weight loss or simply improve your health, eating lunch at home provides so many more options.

Eating out: $1,000

And the total is…

Let’s add these numbers up in a few ways so you can use the one that best fits your scenario…

Suburban Carefree DINK total (keep 2nd car, driving less, no kids)
$2k (car) + $2,600 (commute) + $3,500 (clothes) + $1k (food) = $9,100

Urban Self-righteous DINK total (ditch 2nd car, no kids)
$9k (car) + $2,600 (commute) + $3,500 (clothes) + $1k (food) = $16,100

Suburban Boring Parent total (keep 2nd car, driving less, kids)
$2k (car) + $2,600 (commute) + $18k(childcare) + $3,500 (clothes) + $1k (food) = $27,100

Urban Hip Parent total (ditch 2nd car, kids)
$9k (car) + $2,600 (commute) + $18k(childcare) + $3,500 (clothes) + $1k (food) = $34,100

Remote Work Cost Savings: $9,100 to $34,100 a year!

Holy crapola that’s a lot of dough no matter how you do the math! Now take one of these totals and add it to the remote work job salary on offer. In many cases this additional factor puts the salary in range of an office position. In some cases you will find that you can actually make more money working remotely. YMMV. Coupled with the non-monetary benefits, working remotely is looking like a pretty good deal. So what’s stopping you?

Did you come up with a different value or have benefits to add? Tell me in comments below and let’s discuss.


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