January 27, 2021

Paul Rocha

minutes remaining


Wish you could work from home forever? Be careful on what you wish for.

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Are you loving the newfound freedom and flexibility that working from home has given you? Wish that you could work from home forever? Be careful on what you wish for.

The Positives

Since the onset of Covid-19 many white-collar workers have been working from home. In fact, the trend started well before Covid, Covid simply accelerated the process. To many, this new work from home reality has been a godsend. It has saved Canadians thousands on transportation costs and saved an average of 2 hours per day in commute time. Another big trend that we are seeing and one which I will write about in a separate post is, Canadians moving to a new smaller city with lower housing costs. Of course, working from home has other less obvious and more debatable advantages as well, such as you can work in your jammies if you like, you can take a few mid-day breaks to do non-work related tasks. These are all benefits of working from home.

"The main goal for most Businesses is increasing profits"

You may be saying, all this sounds fantastic what could possibly be the downside. Lets fast-forward a few years and let’s assume that the work from home movement is a raging success. Most of us are employed by a business. If you are a government employee count yourself lucky you are not part of my work from home downside theory. The main goal for most Businesses is increasing profits, and profits can either be increased growing revenues or by reducing expenses. Herein lies our potential work from home downside.

Salaries account for a significant part of any business’ expenses. There are several components that employers take into account when determining the salary for a given position. Cost-of-living and supply and demand, are two of these components. It stands to reason that positions in areas with higher cost-of-living would get more highly compensated than those with lower cost-of-living (think outsourcing call centres to India, or the Philippines).

The Supply & Demand Dilemma

Supply and demand is an other key component in the salary equation. The smaller the pool of qualified candidates the higher the premium employers will have to pay. Conversely the bigger the pool of qualified candidates the lower the premium.

Work from home has dramatically increased the pool of qualified candidates. Employers are no longer restricted to candidates who live or are willing to live in the business’ direct geographical location. It makes sense that if the supply of candidates increases then the pressure on salary premiums decreases, and in-turn salaries drop.

The Cost-of-Living Reality

It also stands to reason that if an employer can hire a candidate from anywhere in Canada, and in particular a region where the cost-of-living is much lower, the pressure for a cost-of-living premium is also reduced.

While neither of the two scenarios above will influence current employees in their current positions, I suspect that going forward white-collar salaries have the potential to trend lower.

A Gloomy Outlook

There is also a much gloomier scenario that I touched on quickly and one that I will post on in a separate post, and that is the very real potential for the outsourcing of white-collar jobs to countries with much lower wages, resulting in Canadian job loss.

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