A Blog by Jonathan Low


Aug 7, 2020

Due To Covid, the Workforce Is About To Change Dramatically

As those in big, expensive coastal cities disperse, many of the supplemental jobs that support them will be lost in those cities as well.

But that could mean those cities become less expensive - eventually - and that all those cool restaurants, bars and coffee shops follow their customers to the suburbs and smaller cities. JL

Derek Thompson reports in The Atlantic:

When the pandemic is over, one in six workers is projected to work from home or co-work at least two days a week. Telepresence will increase. As more people work from home, emptier offices mean fewer lunches at restaurants, fewer happy hours and less work for office buildings’ cleaning, security, and maintenance. If business travel falls by 20%, it means fewer jobs across airlines and hotels. As their connection to the office is virtual, more may take on side gigs and start their own companies. Given the okay to go remote, workers in expensive cities may move to cheaper metros.
In march, tens of millions of American workers—mostly in white-collar industries such as tech, finance, and media—were thrust into a sudden, chaotic experiment in working from home. Four months later, the experiment isn’t close to ending. For many, the test run is looking more like the long run.
Google announced in July that its roughly 200,000 employees will continue to work from home until at least next summer. Mark Zuckerberg has said he expects half of Facebook’s workforce to be remote within the decade. Twitter has told staff they can stay home permanently.
With corporate giants welcoming far-flung workforces, real-estate markets in the superstar cities that combine high-paid work and high-cost housing are in turmoil. In the San Francisco Bay Area, rents are tumbling. In New York City, offices are still empty; so many well-heeled families with second homes have abandoned Manhattan that it’s causing headaches for the census.
You live where you work is a truism as ancient as grain farming; which means it’s as ancient as the city itself. But the internet specializes in disentangling the bundles of previous centuries, whether it’s cable TV, the local newspaper, or the department store. Now, with the pandemic shuttering the face-to-face economy, it seems poised to weaken the spatial relationship between work and home.
When the pandemic is over, one in six workers is projected to continue working from home or co-working at least two days a week, according to a recent survey by economists at Harvard Business School. Another survey of hiring managers by the global freelancing platform Upwork found that one-fifth of the workforce could be entirely remote after the pandemic.
If white-collar workers are told the downtown office is forever optional, some will take their superstar-city jobs out of superstar cities. That much is obvious. But these shifts, even if they are initially moderate, could lead to more surprising and significant changes to America’s cultural, economic, and political future.
What follows are three second-order predictions—for our economy, our workforce, and our politics. Because predicting the future is, like dart throwing, easily done and often misdirected, each prediction ends with the best argument I can think of for why it won’t actually come true.

1. The “Telepresence” Revolution Will Reshape the U.S. Workforce

Since 2000, as spending on travel, food, and entertainment has surged, employment in leisure and hospitality—a large category that covers restaurants, hotels, and amusement parks—has increased three times faster than the rest of the labor force.
But the boom times for this super-sector may be over, according to the economist David Autor, a co-chair of the MIT Task Force on the Work of the Future. In a new paper co-authored with MIT’s Elisabeth Reynolds, he forecasts that the rise of remote work—or what they call “telepresence”—will lead to a more homebound life that creates less work for others.
If business travel falls off by 10 or 20 percent, it could mean fewer jobs across airlines, hotels, and restaurants. “Business travel drives a lot of leisure and hospitality spending,” Autor told me. “Business travelers pay full freight at luxury hotels on weeknights. Their companies pay for business-class seats on airplanes. They use corporate credit cards for limos and lavish meals.”
Businesses aimed at locals could suffer too. “Most of us occupy two spaces, a home and a workplace, that we travel back and forth between throughout the workweek,” Autor said. As more people switch to working from home, that will leave a hole in the metro labor force. Emptier offices mean fewer weekday lunches at restaurants, fewer happy hours, and fewer window shoppers—not to mention less work for office buildings’ cleaning, security, and maintenance services.
A useful historical analogy might be retail. In the second half of the 20th century, retail jobs exploded. But Amazon and its kin moved work out of brick-and-mortar shops. What the e-commerce revolution did for physical stores, the telepresence revolution could do for office-adjacent employment: put downward pressure on the laborers who serve white-collar workers when they leave the house. And there are a lot of those: Roughly 30 million Americans work in restaurants, transportation, and buildings and grounds maintenance.
Or, you know, maybe not. Perhaps the best argument against the telepresence revolution is not only that people are creatures of habit but also that pandemics have historically done little to arrest the growth of cities and leisure. “The 80-year trend is that the richer society gets, the more it spends on leisure and hospitality,” says Adam Ozimek, the chief economist at Upwork. If more families decamp from San Francisco and New York to smaller cities, they could stimulate the growth of new restaurants and shops in less affluent parts of the country, he adds. Face-to-face meetings might feel even more valuable in a post-pandemic world, restoring business travel with surprising speed.
Despite these caveats, I’m convinced by Autor’s most basic point: Telepresence will almost certainly increase in the aftermath of this crisis, and the history of retail suggests that the transition of huge swaths of commercial activity to the internet has huge economic implications—even if they’re hard to predict beforehand.

2. Remote Work Will Increase Free-Agent Entrepreneurship

Work does not necessarily make for the ideal community. But in the past few decades, the office has served, for many people, as a last community standing. In an age where various associative institutions are in retreat—such as religious congregations, bowling leagues, and unions—there is one place where the majority of adults ages 25 to 55 have kept showing up, almost every day, of almost every week. At work.
Now many companies, thrown headfirst into the remote-work experiment, have had to hurriedly retrofit their office practices for a new world.
Depending on where you look, managers say this experiment is going either surprisingly well or quite dreadfully. If those same managers interrogated their white-collar workforce with a truth serum, I suspect many would discover that their employees feel overworked and under-productive, emotionally depleted, and existentially exhausted. Although some of that is COVID-19 fallout, it’s also the case that people feel more alone in part because, literally, they are.
What’s more, for many workers, their emotional relationships with colleagues have changed because their spatial relationships with those colleagues have changed. Many white-collar companies have become virtual group chats punctuated by Zooms. This is not business as usual. Online communications can be a minefield for mutual understanding, as Bill Duane, a former Google engineer and a corporate consultant, told me. Silly office interactions, Duane says, can be “carrier waves” for productive office work. Without them, our lovable yet complicated colleagues can be reduced to annoying abstractions.
Working from home, our connection to the office weakens, and our connection to the world outside the office expands. At the kitchen counter, hunched over your computer, you are as close to the people and communities on LinkedIn, Twitter, and Instagram as you are to the Slack messages and chats of your bosses and colleagues. By degrees, the remote experiment can weaken the bonds between workers within companies and strengthen the connections between some workers and professional networks outside the company.
As people realize that their connection to the office is virtual, more Americans may take on side gigs and even start their own companies. The very tools that co-workers use to stay connected—such as cultivating online a polished version of yourself to a group of people you don’t see particularly often—can be repurposed to go solo. Ambitious engineers, media makers, marketers, PR people, and others may be more inclined to strike out on their own, in part because they will, at some point, look around at their living room and realize: I am alone, and I might as well monetize the fact of my independence. A new era of entrepreneurship may be born in America, supercharged by a dash of social-existential angst.
Or, you know, maybe not. If companies find that remote work is a mess, they might decide to prematurely scrap the experiment, like IBM and Yahoo famously did. It is certainly curious that the most prestigious tech companies now proclaiming the future of working from home were, just seven months ago, outfitting their offices with the finest sushi bars, yoga rooms, and massage rooms. If many companies find that remote work attenuates the cultural bonds of the workforce, offices could stage a furious comeback. It might already be happening: This week, not three months after its work-from-home announcement, Facebook leased a massive 730,000-square-foot office in Midtown Manhattan.
The “death of distance” hypothesis has been wrong before. But the sight of New Yorkers flocking to the Connecticut suburbs is a sign that the path toward a more distributed work culture is already being blazed. For the first time ever, the world’s largest companies are telling hundreds of thousands of workers to stay away from the office for a full year, or longer. If, in five years, these edicts have no lingering effects on office culture, that would be awfully strange.

3. A Superstar-City Exodus Will Reshape American Politics

Today’s Democratic Party is inefficiently distributed across the country. In 2016, Hillary Clinton won Manhattan and Brooklyn by about 1 million votes—more than Donald Trump’s margins of victory in the states of Florida, Arizona, Georgia, North Carolina, Michigan, Wisconsin, and Pennsylvania combined. In election after election, liberals dominate in cities, running up huge margins in downtown areas while narrowly losing in sparser places.
As I’ve said, if Democrats abandoned liberal enclaves and spread into Red America, they could more easily win elections. And that’s happening now.
Even before the crisis, America’s three biggest metro areas—New York, Los Angeles, and Chicago—were already shrinking. Downtown areas were already losing population. And a constellation of metros across the Sun Belt and the Northwest were adding thousands of new Millennial movers.
The pandemic could accelerate these trends. Given the okay to go remote, workers in expensive cities may use their freedom to move to cheaper metros where they can afford more space, inside and outside. In political terms, this would reallocate the Democratic bloc. The 15 most expensive metros are all in blue states. Of the top 10 counties for population growth in 2018, seven were in states that voted for Trump in 2016, led by Phoenix, Houston, and Dallas. Meanwhile, the movers—young and middle-aged, college-educated, white-collar workers from urban areas—are in the demographic sweet spot for liberal voting behavior.
This demographic shift could reshape American politics. A more evenly distributed liberal base could empower Democrats in the Sun Belt; accelerate the Rust Belt’s conservative shift; strengthen the moderate wing of the party by forcing Democrats to compete on more conservative turf; and force the GOP to adapt its own national strategy to win more elections.
Or, you know, maybe not. If a vaccine arrives by early 2021, we could quickly revert to a status quo ante coronavirus. The superstar-city exodus might be completely overrated. Those who do leave might just want bigger houses with outdoor space within commuting distance to the same downtown areas. This would suggest a migration to nearby suburbs rather than long-distance moves. But, remember, population declines in big liberal cities and migration to red-state suburbs were both already happening in 2019.
Nothing is certain, and every new trend incurs a backlash. Telepresence could crush some downtown businesses; but cheaper downtown real estate could also lead to a resurgence in interesting new restaurants. Working from home could lead to more free-agent entrepreneurship; but if companies notice that they’re bleeding talent, they’ll haul their workforces back to headquarters.
Still, even a moderate increase in remote work could lead to fundamental changes in our labor force, economy, and politics. Remote workers will spend more money and time inside their houses; they will spend more time with online communities than with colleagues; and many will distribute themselves across the country, rather than feel it necessary to cluster near semi-optional headquarters. E-commerce, digital entrepreneurship, and red-state migration are all pieces of the pre-pandemic world. The plague is not an inventor. It is a time machine, pulling us forward into a future that was, perhaps, already on its way.


Post a Comment