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January 27, 2021

Paul Rocha

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Wish you could work from home forever? Be careful on what you wish for. (short version)


The post-Covid work from home movement has some potentially serious consequences for Canadian white-collar salaries and white-collar jobs in general.

Cost-of-living, and Supply and Demand are two major factors in Salary determination. Salaries in higher cost-of-living regions are generally higher than those regions with lower cost-of-living. Employers can now higher candidates living in regions with lower cost-of-living and thus reduce salaries accordingly.

The Supply and Demand theory dictates that the more supply there is for something the lower that something costs. With respect to salaries the more supply a candidate pool has, the lower the salaries. Think of unskilled labour jobs vs brain surgeons. It stands to reason that among other things, brain surgeons get paid more than unskilled workers because there are vastly more unskilled workers.

The shift to a work from home economy, has essentially increased the white-collar labour pool overnight. If you are a Toronto based business, you can now search for candidates from anywhere in Canada. You are no longer limited to just candidates from the GTA. This increased supply in the white-collar pool may put downward pressure on those salaries.

On a much darker note, there is a very real potential for the outsourcing of white-collar jobs to countries with much lower wages, ultimately resulting in Canadian job losses.

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