In response to the COVID-19 pandemic, many companies shifted to remote work. Now that restrictions are easing, employers are facing the question of when and how to bring their employees back into the office. For some, the answer is "Never." Major companies like Facebook, Twitter, Square, and Shopify all say they're keeping remote work for at least some employees even after the pandemic is over.
Remote work offers a potential win-win for workers and employers. Employees can work from anywhere, and employers can tap into a broader talent base by not being limited to their surrounding area, including workers located outside of the highest cost metros. By opening their doors to virtual employees in lower cost areas, employers stand to save anywhere from 21% to over 60% on wages.
This When Work Goes Remote report examines the potential cost savings to employers in major U.S. metropolitan areas who engage remote workers. We used median wage data from the U.S. Bureau of Labor Statistics to evaluate the cost of hiring workers in 13 different occupations across the U.S. We looked at which metros were the most and least expensive to hire in overall and by occupation. Keep reading to see how much your business could save by hiring professionals outside of just your local labor market.
How Much Could Your Business Save With Remote Workers?
What could you save by using remote workers instead of local staff? To help you determine how much hiring remote workers could save your business, we created this interactive calculator. All you need to do is input your metropolitan area, then choose the number of people you're looking to hire within each occupation and the hours per week you'd like them to work. Based on these inputs, the calculator will return your total annual cost to hire locally based on the median wages for each occupation in your area and the potential annual savings to hire remotely based on the average wage of all other metropolitan areas.
To give an example, let's consider Sally, who runs a business in Seattle, Washington. Her business requires the following employees:
- 1 accountant
- 3 customer service representatives
- 1 engineer
- 1 graphic designer
- 1 lawyer
- 2 marketing professionals
- 1 network administrator
- 1 public relations agent
- 2 technical support staff
- 1 software developer
She wants everyone to work a full 40-hour week, so she leaves the hours per week at the default 40 hours in all columns. From these inputs, the calculator shows her the annual cost to hire locally within each occupation. For example, it reveals that Sally can expect to spend $73,626 per year on a local accountant. If she were to hire a remote accountant, on the other hand, she could potentially save over $11,000 a year on this individual alone. Her two local marketing associates cost her almost $62,000 per year more than the average marketing salary across all metropolitan areas. By hiring remotely, Sally stands to save $313,932 per year overall, cutting her payroll expenses by almost 27%.
Cost savings aren't the only benefit to using remote workers, either. Employees are more productive when they're free from workplace distractions and report higher satisfaction rates, which should translate into increased retention rates.
The Potential Savings of Remote Work Across the Nation
The potential savings to hiring remote workers versus local workers vary by location. If your company is based in an area where wages are lower, such as Daphne, Alabama, the financial benefit to remote workers won't be as large as someone whose business is in a higher cost area like the San Francisco Bay Area. That said, there is still a significant cost-savings benefit to hiring remotely even in the lowest cost metros.
In the lowest cost metro area of Daphne-Fairhope-Foley, Alabama, the median wages are still over 21% higher than the national average. In the highest cost metros, you stand to save anywhere from one-third to almost two-thirds of your payroll costs by using remote workers. And remember: This is not substituting high-quality labor for cheap labor. What we're showing here is the average wage for comparable workers. You can get the same quality labor, just based in a different location where the cost of living is lower, and thus the wage expectations are also lower.
When you use remote workers, you also open the possibility for your own relocation, which can provide its own financial benefits. The high costs of living in the most expensive metros of the U.S. often erode the benefits of a higher salary. In the 15 most expensive metros, the price-to-income ratio, which measures the affordability of housing in a given area, is more than double that of the rest of the country, on average.
If you were to move from San Francisco to Bakersfield, California, for instance, you could save 46% on your annual cost of living. This would mean to maintain the living standard provided by a $100,000 income in San Francisco, you'd only need to earn $54,373 in Bakersfield.
How Wages Vary by Occupation and Location
The benefit to hiring remote workers is that you aren't limited to your surrounding area when looking for talent. This can open the door to not just more diverse talent, but also less expensive talent. Just as the cost of living varies by location, the average salary of a given occupation can vary by location. Some metros may be better for finding talent in a given industry than others.
For instance, marketing professionals tend to be more expensive in the coastal regions and major cities like San Francisco, New York City, and Boston. The most expensive metro to hire a marketing professional is the San Jose-Sunnyvale-Santa Clara area in the San Francisco Bay Area, where the median hourly wage ($58.65) is 94.6% over the national average. On the other hand, marketing professionals in Yuba City, California, which is only about 150 miles outside of San Jose, have a median hourly wage of only $25.09—16.7% below the national average. If you were to hire a full-time marketing professional based in Yuba City instead of San Jose, you could potentially save over $68,800 per year on this employee alone.
The interactive heat map above lets you explore the wage differentials for various occupations across major U.S. metros. Simply use the drop-down menu to select an occupation, and the map will show you how the wages in each area compare to the national average. Blue shaded areas are ones that are below the national average while the darker orange or red a location is, the higher its median hourly wage relative to the national average. The bar above the map shows the wage range across the country. For example, the median hourly wage for marketing professionals ranges from 57.9% below the national average to 94.6% above the national average.
Which Occupations Offer the Greatest Potential Savings by Using Remote Workers?
To get an idea of which occupations offer the greatest potential savings through remote work, we compared the median hourly wage for each industry in the 15 most expensive metros to the average wage in all other metros. From this, we can see that the legal profession offers the greatest potential savings with remote workers. At $70 per hour, the median hourly wage for legal professionals in the most expensive metros is 64.5% higher than the average hourly wage across all other metros.
Marketing, public relations, and graphics and design professionals also provide significant savings opportunities for employers in the most expensive metros. Each of these occupations in the most expensive metros have median hourly wages that are over 50% higher than the average across all other metros.
Customer service, one of the best roles to do virtually, offers the second smallest savings advantage at just under 25%, but even this small difference can add up to significant annual savings. The most expensive metros have a median hourly wage for a customer service representative of $19, compared to $15 averaged across all other metros. This $4 per hour savings could translate into over $8,000 each year.
The Potential Savings for Businesses in the Most Expensive Metro Areas
Location naturally plays a major role in wage expectations. Salaries are a reflection of the cost of living: workers in areas with higher costs of living tend to demand higher salaries to compensate. You can see this reflected in the minimum wage in the more expensive cities. For instance, San Francisco, one of the most expensive cities in the U.S., has a minimum wage of $15 per hour, over double the federal minimum of $7.25.
If we break the median hourly wages out by location instead of occupation, we can see the potential cost savings by metro area. This table shows the difference between the median hourly wage in each of the top 15 most costly metros and the median hourly wage across all other metros.
For instance, the most expensive metro area to hire in is the San Jose-Sunnyvale-Santa Clara area in California. Here the median hourly wage is $17.82 above the average across all other metros. If you were to hire outside of the San Jose-Sunnyvale-Santa Clara area, you could save $3,100 per month, or $37,100 per year, in wages on each employee. Hiring outside of San Francisco, where the median hourly wage is $16.06 higher than the average in all other metros, could save you $2,800 per month, or $33,400 per year, on each employee.
Remote work may very well be the way of the future. With more companies exploring the benefits of remote workers, some experts say the shift could bring about the next wave of globalization. Upwork's own research has shown that remote work has the potential to provide great benefits to the U.S. economy.
This report quantified the potential benefits of remote work for individual businesses. With potential cost savings upwards of 60%, companies could save hundreds of thousands of dollars each year by using remote labor. And these savings come from simply using workers in different locations, not by switching to cheaper labor. You can retain the caliber of your staff for a fraction of the cost with high-quality remote workers. Upwork will show you how. You can use our platform to browse available talent in specific industries or create a job post and let the talent come to you. Trusted by over 5 million businesses, Upwork's vast network of workers is ready and waiting for you to join the remote revolution.
We used BLS data on occupation wages for this analysis. The calculator was created using the median hourly wage data, and then that number was extrapolated to look at the cost per day, week, month and year. This was combined with proprietary Upwork data to estimate the cost and savings of different occupations.
This data is meant to serve as a guide and help provide estimates. Please visit the BLS website for more conditions and limitations on the data used within this project.
Fair Use Statement
We are always excited to share the benefits of remote workers with those who are interested. Feel free to pass this study and the tools found here for any noncommercial purposes along to anyone you think may enjoy it. We only ask that you include a link back to this study so that users can explore the full context of the data and the authors get proper credit.