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  • Writer's pictureAHAP Inc.

Working from home creates economic winners and losers.

Working from home creates economic winners and losers. It can benefit highly skilled employees but depress others’ wages and make it hard to organize.

When the pandemic hit and tens of millions of American workers suddenly redeployed to their basements and living rooms, it was easy to imagine that their workdays would unfold roughly as before, with communication tools like Slack and Zoom substituting for face-to-face interactions (and maybe with slightly greater multitasking opportunities).

But the shift to a heavily remote work force — companies like Facebook and Twitter have announced that they will allow many employees to work from home permanently — has the potential to change people’s work lives in much more profound ways. It could significantly affect their wages, alter career prospects, and restructure organizations. And as with many economic shocks, workers are likely to be affected unevenly.

The changes that remote work is accelerating “are a disaster for low-skilled labor and could be a good thing for high-skilled labor,” said Gerald F. Davis, a professor of management and sociology at the University of Michigan’s Ross School of Business who has written extensively about shifting work arrangements. “I anticipate it having this centrifugal effect.”

Many workers could see an increase in disposable income and flexibility, but others could be pushed into contracting arrangements that lower their wages and make their livelihoods more precarious. Even highly skilled workers may find it harder to band together to improve their pay and working conditions.

So-called fully distributed companies, where everyone works remotely, often pay employees somewhat less than they might earn in the most expensive metropolitan areas, but more than they would make elsewhere.

This benefits skilled workers living outside the most expensive markets, and especially where jobs with generous pay are scarce.

And while wages for high-skilled workers in the Bay Area could increase less quickly as a more remote world reduces local competition for talent, even they could come out ahead in the end. Reduced hiring of affluent workers in the Bay Area would also mean fewer bidders for real estate, slowing the rise in housing prices, said Adam Ozimek, the chief economist of Upwork, an online freelancing marketplace.

The deeper change is organizational. At a typical company, small chunks of information relevant to one’s work tend to be scattered throughout the organization — with the woman on the other side of your desk pod, the guy three cubicles over, the manager at the end of the hall. This forces workers into a series of person-to-person interactions throughout the day, making it necessary for them to keep similar hours even when that’s not convenient.

Several academics and industry experts said the changes might go even further. For example, remote companies, because they are set up to allow people to work efficiently on their own, are also well positioned to use contractors and other workers who are not employees.

“If you know how to have remote full-time employees, it’s much easier to have remote on-demand people from a freelancing platform,” said Stephane Kasriel, who until recently was the chief executive of Upwork.

The ease of working as a freelancer can be a boon to many skilled workers, who can command high hourly rates. But for lower-skilled workers, such as those in customer service or data entry, working as a contractor tends to reduce wages and increase insecurity. Companies often pay low-skilled employees above-market wages because they have internal pay scales but pay only the market price for a contractor or freelancer.

Excerpts from The New York Times By Noam Scheiber Published July 26, 2020

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