Can independent contractors make more working remotely?

Pay rates vary significantly throughout the U.S and are relative to each state in terms of housing prices, cost of living and other factors.

A recent study by Upwork   ‘When Work Goes Remote‘ examines the potential for remote work to reshape the geography of opportunity in the U.S and help to lessen the growing wage gap.

With more businesses adapting to a remote model, workers are also making this transition.  For workers in the top 15 most expensive cities in the U.S , remote working is now making it possible relocate, but continue the same work.

The analysis considered how different the most expensive parts of the country are from the rest.  It then examined how remote work can benefit professionals currently outside the most expensive places, professionals looking to relocate outside these places, and businesses located in these places.

Remote work is undoubtedly on the rise, especially as companies adapt to the changing times of COVID-19, but as the report asks, what impact will this have on the broader economy? In this analysis, they examine the potential for remote work to reshape the geography of opportunity in the U.S. Using a variety of data sources, evidence is provided that remote work is already helping to send economic activity from the top 15 most expensive parts of the country to less expensive parts. When this happens, the report says, we show that it can be mutually beneficial: higher earnings for independent professionals and lower cost for businesses than in their local labor markets. In addition, both sides will likely benefit from a variety of under-discussed benefits beyond pay.

Key Findings from the Report

  • On average, wages in the top 15 most expensive metros for skilled occupations were $40.54 per hour, compared to $28.36 for the average place, a premium of over 40% for the exact same occupation.
  • Despite having only 19% of the U.S. population, businesses are highly concentrated in the top 15 most expensive places. However, with remote work, 49% of business spend is going from the top 15 most expensive places to lower cost places.
  • Upwork project data shows when businesses in the top 15 most expensive places engage independent professionals remotely, they will earn, on average, 18.6% more than average wages in the same occupational categories in their local market, and 8-11% more than Upwork clients in their local labor market pay.
  • Despite having higher pay in the top 15 most expensive places, the extremely high cost of living means that a high percent of earnings are eroded by housing costs. The price to income ratio in those top 15 metros is, on average, more than double the rest of the country, to an average of 680% and as high as 1,260%.
  • While hiring outside of the top 15 most expensive places can help lower costs, it can also provide access to a larger talent pool, and even improvements to productivity.

For businesses, the major benefit that remote work will have is in the ability to provide them with access to a larger, equally-qualified talent pool than their local markets.

This switch to remote work has great potential for the U.S. economy at large and has benefits for both professionals and businesses. As our research demonstrates, rather than threatening productivity growth, remote work holds the potential to reduce spatial mismatch, lean against the hoarding of opportunity into a handful of cities with expensive housing markets, and help spread productivity across the U.S. by essentially creating the largest labor market in the world.

Click HERE to download the full report.

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