Getting paid 12% more than their in-office colleagues, Fed study finds

Late last year, a Harvard-led study revealed the lengths to which remote workers are willing to continue working from the comfort of their home offices: On average, participants were willing to give up 25% of their total compensation to get the same job (except for some or all of the ability to work remotely) instead of working in the office.

New research from the Federal Reserve Bank of San Francisco shows the opposite phenomenon is happening — at least for some workers. Employees who work from home actually get paid more than their office-based colleagues.

A recently released study from the San Francisco Fed used the French Labor Force Survey, company-level data and social security records to analyze data on nearly 25,000 French employees to understand which jobs have flexible options, how much they pay, and demographic information about workers.

Researchers found that employees who worked from home at least some of the time earned an average of 12% more hourly wages than those who worked entirely in-person. About half of that increase was related to education level, gender and age, and when the researchers controlled for these variables, they still found about a 6% difference in wages, with remote workers still earning what the researchers called a work-from-home wage premium.

The study notes that France and the United States have similar levels of employees working from home, and that both countries offer more remote work opportunities for well-paid, well-educated employees.

“Using French administrative data and controlling for a rich set of worker and firm characteristics, we find that workers who work from home earn higher hourly wages than those who work away from home,” the researchers said.

Although nearly six years into the pandemic, the work-from-home debate continues, as major companies including Stellantis and Home Depot last month asked employees to return to the office five days a week. Nearly 65% ​​of employees say their offices practice some form of hybrid work, according to Zoom.

The trend toward workplace flexibility appears to be here to stay: The National Bureau of Economic Research found that Millennial and Gen Z bosses are more likely to have employees work from home than bosses from older generations, adding to the urgency for future of work experts to better understand why this is so compelling in an evolving workforce.

To be sure, remote workers won’t magically get higher pay simply because they clock in from home. Research from the San Francisco Fed notes that nearly half of the 12% increase in wages for hybrid workers is the result of certain demographic factors, such as age, gender and tenure. For example, older workers with senior professional titles earn higher wages.

Another 6% wage premium could be bad news for Gen Z workers who want flexibility early in their careers. The study found that higher-paid remote workers had higher-paying positions before the pandemic, as well as unobservable assets like higher productivity and negotiation skills, which essentially allowed them to broker benefits with their employers.

Taken together, the data suggests that higher pay from more flexible working is not the result of remote workers successfully proving to their bosses that their work-from-home practices or productivity merit higher pay. Rather, it suggests that more senior employees with greater influence (who are paid higher wages, anyway) are better able to negotiate with their employers for more flexible work structures.

“Workers who worked from home after the pandemic were already receiving higher wages before home office became more common,” the researchers wrote in a blog post published Tuesday. “Workers who were more productive or had better negotiation skills were able to obtain higher hourly wages and the right to work from home more frequently.”

The San Francisco Federal Reserve study said its results confirm a major argument made by experts on the future of work: “Our findings are consistent with case study evidence that companies that offer working from home disproportionately attract more educated and experienced workers,” the researchers wrote.

In fact, a 2024 study led by remote work expert and Stanford University economist Nick Bloom found that hybrid work increased job satisfaction and reduced resignation rates by a third among 1,614 employees working at a Chinese technology company between 2021 and 2022. The results are particularly strong for workers with longer commutes, as well as for female employees, who view flexible working as a vital benefit as they shoulder the majority of childcare responsibilities.

The fact that a company’s top earners and more senior employees are the ones receiving flexible working benefits also suggests hybrid working is here to stay. This isn’t just a byproduct of Gen Z’s preference for flexible work; This is also a consequence that companies may want to avoid losing top talent. A 2025 Pew Research Center report found that nearly half of workers said they would be less likely to stay on the job if their bosses no longer allowed them to sometimes work from home.

This story originally appeared on Fortune.com