Flexible working can increase an employee’s so-called «effective wage» by 56% — not because of a higher salary, but because of time saved, lower travel costs, and greater control over one’s own schedule.
Flexible working can increase an employee’s so-called «effective wage» by 56% — not because of a higher salary, but because of time saved, lower travel costs, and greater control over one’s own schedule.
For a hypothetical 39-year-old American programmer with an average net salary of $104,000 per year, the model estimates an «extended salary» of $162,768. The difference is over $58,000 per year.
Of course, the employee does not receive this money in his bank account. It is about the economic value of the time he receives thanks to the flexible work format.
The author of the article for The Hill, Gleb Tsypursky, calls this the «hidden economy» of work: a salary shows how much a person earns, but does not show how much the work itself costs them.
For example, an office format can mean daily expenses for fuel, parking, and transportation, as well as hours spent commuting. Additionally, the employee loses time that could be spent on children, sports, sleep, household chores, or relaxation.
In the Econtime model, one hour of personal time is valued at $193.79, while one hour of financial work is valued at $48.17.
The difference is explained by the fact that free time is a limited resource for a person. Its value is not only in the opportunity to do nothing. It is time for family, a doctor, sports, sleep, or just simple recovery after work.
The model assumes that flexible working allows an employee to reclaim approximately six hours of personal time per week.
For parents, this may mean a few extra hours with their children, for some, the opportunity to exercise or get enough sleep, and for others, the absence of the daily race between work and household chores.
At the same time, the authors of the model also take into account the disadvantages of working from home: an employee may pay more for electricity, heating, air conditioning, Internet, and wear and tear on the home workplace.
Separately, the material mentions a large randomized study in 2024 conducted among 1,612 employees of a technology company.
It showed that hybrid work reduced the number of layoffs by a third and increased employee satisfaction. At the same time, over the two years of the experiment, the researchers found no significant deterioration in performance, according to managers.
This is important against the backdrop of the discussion about returning employees to the office. For an employee, mandatory presence in the office can actually look like a hidden salary reduction: the salary does not change, but additional expenses and several hours of travel appear every week.
At the same time, the researchers are not saying that office work is always ineffective. For some teams, physical presence can be important for learning, mentoring, communication, and building trust.
Therefore, the author suggests that companies evaluate the hybrid model not according to the principle of «everyone in the office» or «everyone remote», but look at specific roles, teams, and tasks.
The main thesis of the study: flexibility is not just a corporate bonus. For the employee, it has a very real economic value. And if a company takes away a person’s commute hours each week, it can be seen almost as a reduction in their real income.
