Returning To The Office Will Cost Me $17k In Expenses.
Find out how I will take a $17k salary hit if forced to return to the office full-time. Use this ‘Return to the office expense calculator’ to understand your impacts and negotiate your work-from-home needs.
Introduction
Return-to-office mandates are all headlines right now as we close out 2023. Large and small companies are creating mandates to suit up for work or find another job. Finding a remote job is rare, while hybrid is becoming more common. 100% on-site is rare for jobs that don’t require your physical presence, but it is still happening in the workforce.
If your workplace mandates a full-time return to the office, how much will that cost in added expenses and time? Can you negotiate with your work arrangement? Can you walk away if needed and accept a pay cut for a work-from-home position?
Follow along with the ‘Return to the office expense calculator’ from BusinessCaseGuy.com, and I’ll show you how I estimated my $17k salary impacts.
1. My Return to Office Expense Summary
After providing my inputs into the return to office calculator, I understood that with 3 days per month on-site, I spend about $15k annually in expenses. So that’s my starting point.
Compared to 20 days on-site, otherwise known as 100% of the time in the office, my expenses jumped to $29k! That’s a difference of ~$13k in expenses. You can see the breakdown below.
You’re probably wondering why I quoted a $17k salary impact. The reason is because of taxes, which we all pay. I have to earn the money before I can pay the extra $13k in expenses. Once I earn the money, I get taxed on it. After paying my taxes, I’m left with cash flow for my daily expenses.
In my case, I used 25% as my average tax rate. Then, when digging through the ‘detailed results’ section of the calculator, I found the below. You can see that I have to earn $17,729 and then pay $4,432 in taxes to be left with the $13,297 required for the added expenses from returning to the office full-time.
2. My $17k walk-away number — what does it mean?
One of the most important uses of this return-to-the-office expense calculator is to know your ‘walk-away number,’ which applies in these two scenarios if you look for another job.
- How much of a pay cut in salary can I take and still break even?
- How much more salary do I need at another on-site job to make it worth it?
In my case, my answers for each item would be
- If forced to work 20 days in the office per month, I can find another job that pays ~$17k less and only requires me on-site ❤ days per month.
- If I find another job that requires me to work on-site 100% of the time, I’ll need at least $17k in additional salary before entertaining a discussion.
3. Considerations when working through your options
- The distance to a new job will affect the results. The estimate needs to be updated based on any job prospects.
- Depreciation is a hidden cost, meaning it’s not something you pay out of pocket each month or year. You are only impacted when your car is sold based on the condition of your car and added mileage from commuting more. If you want to exclude this from the calculation, use ‘0%’ in the calculator.
- Family and Child care spending will likely decrease as your children age, and less external care such as daycares, camps, and before and after school care is needed. My kids are very young, so for the next 3–5 years, I will benefit from working from home and utilizing less-paid services.
4. The Line-by-Line Numbers in My Scenario
Here are my assumptions that led to my $17k salary impact.
- I used to go on-site 3 days per month, which may change to 20 days on-site (i.e. 100% return to the office mandate).
- I do not use public transit, and I drive 55 km roundtrip for work using a gas-powered SUV.
- I drive about 3,000 non-work KM, which factors into the depreciation estimate.
- I have three young, school-age children I can drop to school in the mornings versus paying for before-school care. Returning to the office will require me to pay for their before-school care.
- I keep two older kids home for a few weeks during the summer since I work from home. However, they will need full-time camp in the summer now.
- My insurance decreased when I reduced my expected KM driven per year when working from home. I expect it to increase when driving every weekday.
- I use toll roads on the way home to pick up my kids on time. Moving to 100% on-site will increase my toll bill drastically.
- My average tax rate is about ~25%.
Below is a detailed breakdown of how my $13k in expenses stack up annually.
5. Trade-off of Time Lost vs. Financial Gain
The time saved working from home benefits my kids and family significantly. My wife works 100% on-site, so being able to drop off the kids, help pick them up, handle appointments and emergencies, and get ahead for the evening is a benefit that would be hard to trade up for another job.
This is a benefit that you have to weigh against any financial benefits and impacts. Assuming our family could afford our expenses, I would take a pay cut to have that personal and family time returned to me.
This breakdown is in the calculator’s ‘detailed’ results section. In my case, I will be losing 11 days
6. Conclusion
The onset of the global COVID-19 pandemic in 2020 fast-tracked the remote work movement for at least a decade. Those personal, family, and financial benefits are at risk as return-to-office leaders feel a loss in productivity and collaboration that is not measured or aligned by the many industry publications.
Protecting your wealth growth from expense savings, personal time benefits, and overall quality of life needs is a challenge many remote workers face now. This will be an ongoing debate and discussion for years to come.
If you are entering into these debates, discussions, or negotiations about the impacts of remote work vs. office work — then it’s always helpful to have some numbers to back up your theory and ideas. Use the ‘Return to the office expense calculator’ to understand your added expenses and time impacts across the various factors.
Knowing the cost and time contribution to your budget and personal life will help you decide about your financial future and negotiate with your current or future employer. Take the time to learn the theory, but more importantly, understand the numbers.
Originally published at https://businesscaseguy.com on September 9, 2023.
