Almost exactly a year ago, I wrote a post titled An optimist’s view of the future of work. A great deal is written about how workers are increasingly at risk, whether from automation, offshoring, or the apparently inexorable increase in the returns to capital vs. labor. My thesis, in that article, is that there are a number of trends that are favorable for many working people. The main themes in that piece are:
- You don’t need to be a big company to reach a wide audience for your work
- Low-cost technology empowers individuals and small firms to do amazing things
- Some high-quality retirement plans are inexpensive and getting cheaper
These all relate to benefits of self employment and working for small companies. The world of mid-2019 seems much more than a year ago, but COVID-19 has emphasized the value of these changes. COVID-19 also accelerated the trend towards working from home (or otherwise working remotely) which has enormous benefits for many workers.
With so many white collar workers doing their jobs from home, employers are realizing that they don’t need to have everyone sitting in the same location. In effect, COVID-19 has resulted in a massive global experiment in remote work and companies that might never have considered remote workers are realizing that this model can be effective. Remarkably, half of employed Americans have been working from home during COVID-19. The CEO of consulting giant Accenture recently commented that an established proficiency in remote work has been a substantial advantage for the firm. A much larger population of people now realize that companies can be functional and productive without having everyone travel to the same location every working day. I predict that a growing number of positions will be advertised as location independent.
While some people don’t like working from home, remote work provides substantial benefits. Consider the financial benefit of avoiding the direct and indirect costs of commuting. The American Automobile Association (AAA) estimates that the average all-in cost per mile of driving is $0.40 per mile for a small sedan driven 20,000 miles per year and $0.87 per mile for a medium SUV driven 10,000 miles per year. If we assume a cost of $0.50 per mile, a 20-mile (one way) commute can add up to around $5,000 per year. On a pre-tax basis, that’s probably around $6,500 of pay that goes to cover commuting. The real cost of commuting is the time spent, however. If you spend an hour a day commuting, that’s probably around 250 hours per year (50 weeks x five days). If your income equates to $30.00 per hour, that commute is costing $7,500 per year of your time.
Even more significant than the immediate cost savings of working from home, there is the higher quality of life from being able to live wherever you want, the ability to avoid insanely expensive urban areas where many high-paying jobs are located, and being able to apply for attractive jobs that are further from where you live without having to uproot your family and commit the time and energy to relocate. A related benefit of remote work is that people can be more agile professionally if they don’t have to move when they change jobs.
To be an optimist is not, however, to be blind to the challenges. COVID-19 has highlighted the vast separation across the socioeconomic divide. The emerging advantages for workers are heavily skewed to white collar jobs. Many working people cannot do their jobs from home and, as a result, are disproportionately likely to be exposed to COVID-19.
The tragedy of COVID-19 also highlights reasons for optimism in the future of work. We live in a society in which technology has enabled millions of people to continue to do their jobs and to be productive even as they must remain socially dispersed. This event has also changed how many companies think about remote work and this has great potential to improve many lives, as well as having environmental benefits (less commuting = less pollution).
Geoff Considine on Finance and Economics 