A Blog by Jonathan Low


Jul 29, 2020

How Remote Work Will Create Economic Winners and Losers

Accelerating existing trends, higher paid workers will probably do well, while lower paid and skilled workers will suffer as remote work gives employers the ability to be more selective in how they hire, promote and compensate the work force. JL

Noam Scheiber reports in the New York Times:

The changes that remote work is accelerating “are a disaster for low-skilled labor and could be a good thing for high-skilled labor.” It could significantly affect wages, alter career prospects and restructure organizations. For lower-skilled workers, such as those in customer service or data entry, working as a contractor tends to reduce wages and increase insecurity. While wages for high-skilled workers in the Bay Area could increase less quickly, they could come out ahead. Reduced hiring of affluent workers in the Bay Area would mean fewer bidders for real estate, slowing the rise in housing prices.
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.
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, the maker of the website-building tool WordPress.com, 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.com, makes safely into the six figures working from Billings, Mont. 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, 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.
By contrast, distributed organizations like DuckDuckGo and Automattic seek to “separate individuals from the information they possess” and create a centralized “knowledge repository,” the 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.
At Automattic, which spreads its roughly 1,200 full-time workers across more than 75 countries, managers like Mr. Caldwell often spend about four hours a day reading and writing memos on one of the company’s internal blogs, known as P2s.
They document any development that might be relevant to their co-workers — everything from “Google Chrome just announced a change, here’s what I understand about it,” Mr. Caldwell said, to a description of an effort to highlight the company’s one-on-one training sessions for users.
At DuckDuckGo, which has about 100 full-time workers across 17 countries, all relevant developments are recorded in a software program called Asana. In any given week, employees focus on their “top priority” contribution to a company project.
Gabriel Weinberg, DuckDuckGo’s founder and chief executive, said the company tried to keep the projects small and self-contained, with their goals and scope clearly detailed in a written template, allowing people to work independently without constant coordination.
“This system works best when it continues to be modular — there are not tons and tons of people on a project,” Mr. Weinberg said. “It’s easy to jump in as a new member. You read a one-page document and understand what’s going on with it quickly.”
DuckDuckGo, like other distributed companies, also creates specific opportunities for bonding. There is a weekly “neighbors meeting” in which four or five colleagues who don’t normally work together are randomly assigned to mingle, and an annual companywide gathering that is normally in person but was held online this year.
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, 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.
Mr. 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 Mr. 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?’” Mr. 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, the 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,” Ms. 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.
Whatever the case, it appears that more and more traditional companies, recently forced into remote work, are exploring how to use the setup to better advantage. Upwork’s client registrations have increased significantly during the pandemic, Mr. Ozimek said, though a need for cost savings may partly explain it as well.
Business has also picked up at Tongal, a platform that connects freelancers with video production work, from promotional videos to original programming.
Before the pandemic, many prospective clients seemed reluctant to use Tongal, but things changed markedly after they sent their workers home, said James DeJulio, a co-founder of the company and its chief executive.
“Businesses aren’t set up with distributed knowledge centers,” he said. “And then overnight, every business was forced to distribute its knowledge center to a lot of places.”
“It’s been really eye-opening,” he added. “Any psychological barrier to using a model like Tongal seems to have evaporated.”


Post a Comment