How remote work will create economic winners and losers
By Noam Scheiber
When the pandemic hit and tens of millions of U.S. 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 workforce — 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 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.
DuckDuckGo, an internet privacy company with a well-regarded search engine, formally bases its compensation on salaries at a group of technology companies across the United States, excluding the San Francisco Bay Area. Automattic, maker of the website-building tool WordPress, pays employees based on job responsibilities and qualifications regardless of location. (By contrast, tech companies with physical headquarters often pay workers less if they live in a less expensive area.)
This benefits skilled workers living outside the most expensive markets, and especially where jobs with generous pay are scarce. Jason Caldwell, a marketing manager at WordPress, makes safely into the six figures working from Billings, Montana. He is hoping to buy a 100-plus-acre plot where members of his family can build homes.
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, 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.
By contrast, distributed organizations like DuckDuckGo and Automattic seek to “separate individuals from the information they possess” and create a centralized “knowledge repository,” Stanford business scholar Jen Rhymer has written. This makes it possible for employees to complete their assignments from anywhere, at almost any time of day, without having to check in frequently with colleagues.
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 chief executive of Upwork, which counts Automattic, the Wikimedia Foundation and other fully or heavily distributed organizations as clients.
He added that much of what made this possible was sound management that companies with physical offices didn’t adopt simply because they could afford to be sloppy.
The ease of working as a freelancer can be a boon to many skilled workers, who can command high hourly rates through Upwork and other freelancing marketplaces.
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.
Ozimek of Upwork acknowledged that outsourcing work could reduce wages for low-skilled workers but said this didn’t take into account the lower cost of living for remote workers outside expensive cities and the job creation that platforms like Upwork made possible by allowing new businesses to form and scale quickly. Both he and Kasriel said freelancers on Upwork tended to be relatively skilled and well paid, as a new study from the company shows.
Even highly skilled workers could find less leverage at a distributed company than at one where they work in offices, however. Laurence Berland, a longtime Google engineer who was active in organizing workers there before he was fired last fall, said that digital tools made it easy to coordinate remotely among workers already involved in an organizing effort but that it was often difficult to recruit new workers who were not in the same physical space.
“Some people maybe correctly consider it a big red flag to say to someone on a corporate chat, ‘Hey, can we talk on a noncorporate device?’” Berland said.
One typical way of enlisting co-workers, he said, is to start a conversation after overhearing them complain about a company practice — something less likely to happen remotely.
Sandy Pope, bargaining director for the Office and Professional Employees International Union, which represents workers at the crowdfunding site Kickstarter as well as university and clerical staff members elsewhere, said remote work could create inequality among workers performing the same job because it was harder for them to share information discreetly outside an office.
“There’s a lack of transparency,” Pope said, “the lack of ability to even track what’s going on.”
She said this lack of transparency could also make it easier for companies to outsource work without employees’ knowledge.