Remote workers earn 12% more than in‑office staff, study says

CALIFORNIA, UNITED STATES — A study from the Federal Reserve Bank of San Francisco indicates that employees working from home are actually getting paid more than their in-office colleagues. This contrasts with a Harvard University-led study published late last year, which revealed participants were willing to forgo 25% of their total compensation to maintain remote work capabilities

Analyzing data from nearly 25,000 French employees, researchers of the Federal Reserve Bank of San Francisco found that remote and hybrid workers command hourly wages approximately 12% higher than those working exclusively on-site, with a persistent 6% gap even after controlling for demographic factors.

“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 do not,” the researchers stated.

Why remote workers earn more: Seniority and demographics

Fortune reports that the San Francisco Fed’s analysis of French Labor Force survey, firm-level data, and social security records indicates that the workforce’s existing seniority largely explains the correlation between remote work and higher pay. 

They discovered that approximately half of the 12% wage increase among the hybrid workers could be explained by demographic factors, including education and income levels, gender, age, and experience. 

Moreover, the researchers stated in a blog post, “The workers who are working from home post-pandemic were already paid higher wages before WFH became widespread.”

“Workers who are more productive, or have better negotiation skills, are able to get both higher hourly wages and the right to work from home more often.” 

Therefore, WFH did not lead to higher salaries, but it became a side benefit that high achievers already had.

The research proposes that the remaining premium is attributed to personal characteristics, including increased productivity and better negotiation capabilities, which pre-pandemic worked out before the changed working habits. 

Negotiation skills and worker leverage drive WFH perks

The study indicates that the 6% unobservable wage premium reflects the ability of certain employees—specifically those with greater productivity and sharper negotiation tactics—to broker better terms with their employers. 

These employees were able to negotiate not only higher hourly wages but also the option to work from home, suggesting that remote work is not an opportunity that can be contractualized and negotiated by the majority of employees.

This dynamic presents potential challenges for younger workers entering the industry. The data implies that Gen Z workers, who statistically hold fewer senior positions and have less negotiation leverage, may find it more difficult to secure flexible arrangements early in their careers. 

While nearly 64% of workers report that their offices have hybrid schedules, according to Zoom data, the San Francisco Fed’s research clarifies that the most flexible arrangements—coupled with the highest pay—are predominantly going to experienced employees who had leverage before remote work became mainstream.

Remote work as a top talent retention strategy

Despite ongoing return-to-office mandates from major corporations such as Stellantis and Home Depot, the San Francisco Fed’s findings suggest that hybrid work is firmly entrenched as a long-term fixture. 

“Our findings are consistent with case-study evidence that firms offering WFH disproportionately attract more educated and experienced workers,” the researchers said.

With the National Bureau of Economic Research finding that millennial and Gen Z bosses are more likely to permit remote work, the structural shift appears generational and permanent.

The economic necessity of adopting flexibility is reinforced by the high price of losing the best earners. 

As the report notes, “The fact that companies’ top earners and more senior employees are the ones getting flexible work perks is yet another indication hybrid work would be here to stay.”

“It’s not just Gen Z’s flexible work preferences; it’s also a company perhaps wanting to avoid losing top talent.”

A 2025 Pew Research report used in the study found that almost half (46%) of workers were unlikely to return to their jobs if remote options were reinstated, a statistic that becomes more meaningful given that the most leveraged employees are those currently taking advantage of such perks. 

Significantly, the remote-work wage premium has persisted, indicating that companies are using flexibility as a strategic approach to retain productive, higher-paid employees who can take their skills with them to other firms.