Would You Return to the Office for a 30% Pay Increase?

Let’s check the math

Photo by Vanessa Murrieta on Unsplash

The BBC recently reported that American employers are paying up to 33% more for fully in-person roles. This aligns with another pressure tactic where Dell employees cannot be considered for promotion if they are not at least hybrid.

Employers are taking a hard stance for Return To Office (RTO), but does the math make sense?

Let’s check to see who wins. Will it be the employers or the employees?

Assumptions

To keep the math simple, I’m going to use a 30% salary increment (instead of 33%). I will assume that the employee was making $100K and is now eligible for a 30% increase when they switch to a full-time in-office equivalent role or are recruited to a new role that requires 100% in-office.

We’re comparing two cases:

1. A $100K salary with 100% Work from Home (WFH)
2. A $130K salary with 100% Return to Office (RTO)

Since I’m from Ontario, Canada, I will use the tax rates for that province. Substitute your state or provincial rates to follow along with the steps.

Let’s dig in.

Salary and taxes

A 30% increase sounds good on paper, but it’s not a lot when you factor in taxes.

While an annualized net benefit of $17,568 sounds good, monthly, it’s only $1,464.

The question is this:

Does an increase of (nearly) $1,500 / month offset the costs of going to the office?

How much does your in-office job cost you?

There are many variables and nuances involved in answering this question. The big one is transportation and commute time.

I’ll provide a few prompts for each category, which you can consider according to your circumstances.

Transportation

Will you need a second car? If yes, consider the monthly cost of the car, gas, parking, and regular maintenance (oil changes, tire changes, etc.). If you plan to use public transport, that’s a more cost-effective option.