Why The Real Cost of Working From Home Varies Wildly in US Cities

By Brent Singleton. Edited by Asim BN.

How much does it really cost to work from your living room? And, by the way, it really all depends on your zip code. Allwhere, a company that provides gear to distributed teams calculated the numbers across 50 of the nation’s major metros. What they discovered surprised a great many people. A remote worker in New York City drops roughly $5,180 a year for the task itself from home. A person doing the exact same work in Tulsa, Oklahoma? They pay $1,621. That’s more than three times the difference from the cost of a single arrangement.

So much for the notion of an equal monetary benefit from working from home.

Your Spare Bedroom Is Costing You More Than You Realise.

That is what nobody talks about. The corner of your apartment where you set up your desk? That's not your free space. You are paying rent on it. And when the study broke down where remote work money actually went, housing came out on top by a big margin. We're talking 61% of total costs. We 're talking about your own average monthly expenses! Think about it.

Every square foot you take in Manhattan is expensive stuff. That spare bedroom you transformed into an office could cost you more per month than some workers in Indianapolis pay for their entire remote arrangement. And it gets worse. Many people in expensive cities went in for bigger apartments specifically because they needed room to work, people needed space to live for the business. So, they’re paying even more in rent than they did at the start of the pandemic. It’s not really a problem for workers in the more affordable metros. But for all those people who live in New York, San Francisco and LA, that “free” home office is eating a sizable chunk of paycheck.

The Bills You Forgot About.

One big one is housing, but it’s not the only one. Let's talk utilities.

That meter will keep spinning when you’ve been home all day, running the heat in January or blasting AC in August. Most workers in Phoenix or Minneapolis feel this better than others. Extreme weather leads to extreme utility bills. And unlike at the office, nobody else is picking up the tab.

Then there's the internet. If you are in a city, you get moderate rates. But anyone in a rural area understands the misery of paying a little extra just to receive steady service. Some people might purchase business tier plans just so Zoom calls with their boss don't freeze up. This is an extra cost no one ever told them about.

And the equipment. Nobody budgets for a $400 ergonomic chair until their back hurts six months in. Standing desks, external monitors, webcams, ring lights for video calls. The shopping list gets long fast. Plus it's not a one time purchase. Ink cartridges run out. Keyboards break. Mouse stops clicking right.

The small things add up in a way that’s hard to see until you look at a whole year of receipts.

Even food is more expensive for some. Without the structure of an office, it can be simple to order delivery, or drop by the coffee shop, and leave the house. The $6 lattes add up relatively fast.

Why should employers care?

This is where it gets interesting for companies. The big problem here, however, is the 3.2x disparity between the most expensive and cheapest cities. Employers have begun to change stipends based on where workers actually live. Makes sense, right?

One hundred bucks a month is quite a bit more for Oklahoma than for Manhattan. Yet most companies have not kept pace. They are still giving out flat stipends that keep coastal workers on the losing end while Midwest workers have won the day.

We start to create resentment about that kind of gap, and it is something nobody says out loud. These workers in expensive cities feel as if they’re being shortchanged. And they're not wrong. If companies want to retain happy remote teams, they should start to consider location based support.

When working from home costs 300% more or less according to where you live, one size fits all doesn't fit.

This is Where Remote Work Costs Least.

For anyone considering moving out in an effort to stretch their living-understandably shrinking paycheck further now.

Tulsa topped the list as the cheapest city for remote work in the entire study. Affordable metros also include Oklahoma City, Memphis, Louisville and Indianapolis. These are areas where housing remains affordable, utilities don’t break the bank, and the overall cost of living allows remote workers to retain more of what they earn.

Some of those cities have chipped in on the opportunity. Local governments in places like Tulsa have even created relocation incentives to attract remote workers. They are rolling out the red carpet for people who want to escape costly coastal metros without sacrificing their jobs or wages.

It’s a kind of geographic arbitrage that didn’t exist until remote work became well-established. Now you can reside in a low cost city while making a high cost salary. The math is pretty nice for anyone who wants to make the move.

Where It Costs the Most.

No surprise here. The most expensive place to work remotely in the country was New York City. San Francisco, Boston, LA and Seattle followed close behind.

And the cost of living is more than just rent. Those added costs compound in each category. Utilities cost more. Internet plans cost more. Office supplies and coffee cost even more. Everything in these cities requires a markup, and remote workers know that in every area of their financial life.

Meanwhile, for workers trapped in these metros, the only viable alternatives are negotiating better stipends, scraping tax deductions where they can or even seriously considering a move.

What Workers Can Do.

For anyone working to negotiate a raise or stipend, that data is useful ammunition. You can just point to actual numbers and say: this is what it’s costing me to do this job from home in my city. That is a stronger argument than requesting extra money alone.

Audit yourself and also your configuration. Determine where your money is being spent. Track your spending for a few months. Find out what costs may qualify for tax deductions. Many of the remote employees put money on the table because they never put it all together. And for anyone considering moving, the numbers are telling.

If you transfer to Tulsa from San Francisco, thousands of dollars could be saved on an annual basis, but your salary doesn’t. That's not a small thing.

The Bottom Line.

Remote work was a promise of freedom and savings. And for many people, it delivered. However, the financial reality is far more complicated than the early excitement projected.

Where you live matters. A lot. The cash difference between paying $1,621 a year and $5,180 a year for having the privilege of working from home isn't simple. That's money that's real and that impacts real budgets.

Companies should be waking up to it. Nothing short of flat stipends can’t go it when costs differ so widely around the country. And workers need to know what they are, in fact, paying for the flexibility of remote work.

The office had its problems. Long commutes, rigid schedules, bad fluorescent lighting. But it also accepted a series of costs that now directly fall on workers. The question moving forward is who should pay for that and how.

No one has a perfect answer yet. But at least now we have the information to start the conversation.

About Author: Brent Singleton is a senior growth marketing leader with extensive experience scaling revenue and GTM operations across SaaS, marketplaces, and high-growth technology companies.

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