How Much Will Yahoo's New 'No Remote Work' Policy Cost Its Employees?

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Yahoo CEO Marissa Mayer
Yahoo CEO Marissa Mayer, Twitter
Last week, Yahoo CEO Marissa Mayer announced that it was ending its policy of allowing employees to work from home, one of the Internet giant's most-prized benefits. Stating that "We need to be one Yahoo!, and that starts with physically being together," the memo announcing the change noted that the policy will take effect in June, and will affect every aspect of remote work, even staying at home to wait "for the cable guy."

According to some reports, the new move has raised morale among office-bound workers who felt that the 200 or so colleagues who worked from home were taking advantage of the company's liberal policies. But for many Yahoo (YHOO) employees, the option of working remotely was a major economic factor in their decision to join the tech company. Now that they have to come to the office -- and, perhaps more importantly, now that other companies have announced plans to follow Yahoo's lead -- it's worth asking how much the move will cost these workers ... and, by extension, how much it will cost Yahoo if the company hopes to keep them.

It's not hard to find articles touting the benefits of working from home. Home-based employees save money on transportation, food, clothing, and other assorted office expenses, not to mention some of the costs of child care for working parents. But how much impact can this make on an average worker's net income? We did some "back-of-the-envelope" calculations.

In the case of a software engineer, a job right around the middle of reported salaries at Yahoo, the average annual salary is just over $102,000. Assuming a daily commute of 16 miles each way (the national average), and an average of 25 miles per gallon, Yahoo's workers can now expect to spend an average of $1,120 more a year on gas. Then again, given the high cost of real estate near Yahoo's Sunnyvale, Calif., headquarters and many of its other offices, chances are that many of these telecommuters have moved to greener, cheaper pastures and are now living even further than that from the nearest company outpost.

On the bright side, parking at Yahoo's main campus is free.

To be fair, Mayer has sweetened the deal with a recent announcement that the company is offering free food. Still, it isn't hard to imagine that some of Yahoo's returning workers will take a while to acclimate to the office, and might want to eat off-campus rather than in the cafeteria. Assuming an additional $10 a day for lunch for eating out rather than at home, and an average of three off-campus lunches a week yields a total yearly cost of about $1,500.

As for clothing, many returning workers will probably need to replace their tattered sweats and stained T-shirts with work-appropriate togs. According to the Bureau of Labor Statistics, the average person spent about $1,740 on clothes in 2011. Given that many of Yahoo's stay-at-home laborers may have been skimping on office-appropriate clothing purchases for awhile, it isn't unreasonable to imagine that many will be laying out at least that much in preparation for going back to the office.

So, between gas, food and clothes, Yahoo's prodigal sons and daughters can expect to spend somewhere around $4,360 a year extra to get back to an office-based desk. Given an average salary of $102,000, that's about 4 percent of one's annual gross income. For some workers, however, things will be even tougher.

According to a 2012 report from Childcare Aware of America, full-time child care costs an average of $11,823 in California. In Sunnyvale, the higher-income area where Yahoo is based, prices are even higher: Participants on a local community board cite monthly costs of $1,500 or more, which translates to a yearly cost of over $18,000. Employees working from home would already likely pay about half of that, or $9,000 a year, for part-time care. The additional $9,000 that they would have to pay to switch to full-time care would translate to almost 9 percent of the average salary for a Yahoo software engineer.

With this in mind, it's hardly surprising that Mayer has drawn heat from working parents. The CEO, who has installed a personal nursery next to her office, doesn't provide in-house day care for her rank-and-file employees. In other words, many of Yahoo's returning workers won't just be returning to the office -- they'll be rediscovering the economic hit that most of us take when we have to find people to help care for our kids.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971

Photo Credit: Yahoo CEO Marissa Mayer, Twitter

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Andrew Montalvo

insomeniac - have you ever worked where Yahoo is located, taken 237 and the price of living there? If you haven't, then keep your comments to yourself.

How long has Marissa Mayer WORKED in the Technology field, if you have bad apples working remotely - get rid of them, there are a lot of people (like me) who go out of there way when working remotely, I would put over 12 hours a day to complete a task, script, program, etc, etc.. This will hurt Yahoo; I hope good companies like HP and IBM don't fall for what Marissa is doing.

Andrew
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May 13 2013 at 11:19 PM Report abuse rate up rate down Reply
Brian

ralonne, you idiot. At least SHE worked....

March 07 2013 at 7:00 PM Report abuse rate up rate down Reply
insomeniac

This is a very silly article. First off, let's not wring our hands too much over the personal expenses of an employee that makes $102,000 a year. Most people get by on half of that or less to support their families and that's WITH having to commute to a physical workplace. Have these employees been living in a bubble? It's like, welcome back to the real world where life isn't easy and nothing is cheap. Cry a river to the folks who've been out of work for a year or more and are faced with having to apply for $8 an hour retail jobs. Sorry Mr & Mrs. $102,000-a-year, you'll just have to suck it up.

March 07 2013 at 6:12 PM Report abuse rate up rate down Reply
1 reply to insomeniac's comment
legacykwst

First off, let's realize that Silicon Valley and surrounding area has costs similar to living in Manhattan... but w/o being compact like Manhattan. A trashy apartment goes for at least $2000/mo, which is why so many people moved to developments in the Central Valley, with 1-way commutes of 100-150 miles. So, you either pay the extreme rents (if you can even find anything) or you do the extreme commute. For a family of 4 to have the bare minimum of basic necessities - food, housing, transportation, health insurance - requires a minimum of $90K per year. There are people who are working in Silicon Valley who actually spend the nights riding the buses, because they can't afford a place to live. These are people who have tech jobs. One guy secretly lived on the Apple Campus for a full year. He was employed as a techie there. Working extreme hours on a flat salary, which most of the country would find a very high wage, but he could not afford an apartment anywhere with a reasonable commute.

March 11 2013 at 12:14 PM Report abuse rate up rate down Reply
King Timothy

with the job market being what it is, most will have to suck it up and live with it. For every employed engineer that quits, there are hundreds to take their place.

March 07 2013 at 2:00 PM Report abuse rate up rate down Reply
ralonne

Typical of CEOs - do as I say, don't do as I do. SHE gets a nursery built into her office, but the rest of the parents who will now have to come back to work in the office aren't afforded even a child daycare at HQ. I hope these workers leave yahoo in droves and find work elsewhere to teach her a lesson.

March 07 2013 at 1:48 PM Report abuse rate up rate down Reply