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Millions of Americans will lose more than $10K commuting: RPT

Jacob Channel, Lending Tree Sr. Economic Analyst, joins Yahoo Finance’s Sibile Marcellus in this week’s Career Control to discuss the cost of commuting as workers head back to the office.

Video transcript

ALEXIS CHRISTOFOROUS: Millions of workers have been saving money on their commutes by working from home. But a return to the office is inevitable for many, so how much money do workers stand to lose? Here's Sibile Marcellus now with the latest installment of "Career Control." Sibile.

SIBILE MARCELLUS: Long commutes are a major part of work life for millions of Americans. Now, the shift to work-from-home means that many have been able to save money on gas, tolls, parking fees, and public transportation. Now, before the work-from-home shift happened, what we saw is that on average across the country's biggest cities, workers were spending nearly an hour commuting to the office.

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Now, new data from Lending Tree shows that for millions of Americans, the return to back to the office commutes will end up costing them more than $10,000. I want to bring in Lending Tree's Senior Economic Analyst Jacob Channel to break this all down for us. Now, Jacob, how much money will workers end up spending on average with this back to the office commute?

JACOB CHANNEL: Yeah, so based on our study, the average amount of money spent is around $5,500 a year-- a little bit higher, actually. And in some areas, like really expensive places to live, places with really long commute like San Francisco, for example, that number can be in excess of $10,000 a year.

SIBILE MARCELLUS: Well, Jacob, as your data indicates, if instead of commuting people were spending the time at the office on the clock, they could be earning nearly $6,000 more annually on average. Now, do you think that this opportunity cost is a major factor why many workers would prefer to keep working from home?

JACOB CHANNEL: I certainly think it is. I think that it's not only the opportunity cost, but a lot of people are saying to themselves, well, all I do at the office is sit and look at the computer. The only conversation I have with any of my coworkers are grunts over the coffee machine in the break room. So why can't I stay home, do my work just as productively as I was, and maybe save a little bit of money both in terms of cash and in terms of time?

SIBILE MARCELLUS: The most expensive and longest commutes tend to be in the cities with the highest median earnings-- that makes sense. San Francisco and Washington, DC are among the cities at the top of the list. But how important is commuting costs to employees who prefer to work from home? And is living closer to work an option?

JACOB CHANNEL: Well, no matter where you live, people usually are trying to save money. So even if you don't have a long commute or your commute's less expensive because you earn less money, or maybe just the cost of commuting things like gas or car maintenance in your area are lower, you're still going to want to save that money. So certainly, if they are required to go back to the office, a lot of people are going to say, OK, well, I want to live closer-- maybe a five-minute drive as opposed to a 20-minute drive, maybe a quick walk across the street.

The problem is that, like you were saying, in the really expensive areas where commuting costs tend to be higher, that's impossible. You know, you can be making $150,000 a year in San Francisco, for example, and still not be able to afford to live anywhere near where you work.

SIBILE MARCELLUS: Many of the least costly and shortest commutes are in areas with the lowest median earnings. Do you expect that trend to continue?

JACOB CHANNEL: Well, it sort of depends. I think that if people are required to go back to the office, then certainly it probably will continue because the more expensive places are going to continue to be more expensive in terms of commute. That being said, if a lot of people are left-- are allowed to work remotely, then the trend might reverse a little bit.

So you might see the really expensive areas where a lot of people work tech jobs or other jobs that can be done remotely, like in San Francisco, which is my favorite example of the day, you might end up seeing the cost of commuting falling there just because a lot of people are working from home now-- or in the future.

SIBILE MARCELLUS: And people don't often think of commuting as something they should be paid for. Based on your findings, does that change that calculus?

JACOB CHANNEL: Well, it might a little bit. I think that you're right-- people often think, well, I work from 9:00 to 5:00. The great Dolly Parton even wrote a song about that. But if you really think about it, if you have to leave your house at 8:30 in the morning to get to work by 9:00, it's kind of like you're starting work at 8:30. So certainly, as people have grown accustomed to not having to work from home-- or not having to commute, rather, they might go to their employers and say, look, if you want me to start commuting again, you're going to have to start paying me for it.

SIBILE MARCELLUS: It will be definitely interesting to see how that all pans out in the workplace where that tension is between employers wanting employees to come back to work and many employees preferring to continue working from home. Jacob Channel, it was great to have you on. Thanks so much.