The future of remote work
Make the case for working remotely — but not so much that your job gets outsourced
WHETHER you’re a remote work booster or a skeptic, there are lots of unanswered questions about what happens next for remote work, especially as Covid-19 restrictions continue to fade and as fears of a recession loom.
It turns out there’s a dangerous line between arguing for remote work and arguing yourself out of a job. And since remote work makes employees less visible, they will have to find other ways to let higher-ups know they exist or risk being passed over for pay raises. Remote work will also have long-lasting effects on the built environment, requiring office owners to renovate and allowing employees the potential for a higher quality of living. Finally, what happens during a recession largely depends on whether your company decides to save money by reducing real estate or laying off the employees they never met.
One thing that’s clear is that remote work is not going away. There are, however, a number of ways to make it better and more commonplace, and to ensure that it doesn’t harm you more than it helps.
To get a better idea of what could be coming, Vox asked some of the most informed remote work thinkers — people who study economics, human resources, and real estate — to make sense of what to expect in the future of remote work. Their answers, edited for length and clarity, are below.
Five years from now, what percentage of the US population will work remotely?
Johnny Taylor Jr, president and CEO of the Society for Human Resource Management: I think that number will never exceed 30 per cent fully remote. What percentage will have some remote work? Probably 60 to 65 per cent. There are some roles that will never be remote. But even in retail, employers are trying to figure out how to give that worker population some ability to work remotely. One retail company I talked with is going to make it so that the people who work in the store five days a week now do one day a week in customer service remotely.
Nicholas Bloom, economics professor at Stanford University, co-founder of WFH Research: Currently, 10 per cent of the US workforce are fully remote and 35 per cent are hybrid remote. In five years, I think both numbers will be pretty similar. Pushing this up is continued technological improvements in working-from-home technology. Pushing this down is the pandemic ebbing from memory.
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What has to change for more people to be able to work remotely?
Matthew Kahn, economics professor at the University of Southern California and author of Going Remote: How the Flexible Work Economy Can Improve Our Lives and Our Cities: Firms must have clear performance metrics — ideally ones that can be verified using quantitative data, so that remote workers understand in real time how they are performing. Firms must also figure out how to configure “virtual watercooler” interactions so that remote workers are less likely to feel like they are out of the loop.
Arpit Gupta, assistant professor of finance at New York University Stern School of Business: Companies need to have better ways to onboard new workers and get them involved in corporate culture. They also need to improve remote workers’ ability to connect with different parts of the organization and create better ways to manage new idea generation and creativity. Finally, they need to ensure improved promotion prospects for purely remote workers and the ability to go completely remotely from one firm to another.
Bloom: The main driver of working from home is whether it makes business sense for the organisation, and if employees are happy doing this. This is driven by technology and the job task. Over time the technology is slowly improving to support working from home. Twenty years ago, working from home meant telephone calls and emailing or mailing small files. Now it’s all video calls and the cloud. Within 10 years, I predict new major technologies will arise to make this far better. In terms of job tasks, these are also changing to support working from home. For example, my neighbour is a doctor and pre-pandemic was in the office every day, but now sees patients remotely two days a week, as her job tasks now include televisits.
How might remote work affect jobs that aren’t remote?
Gupta: Changing consumption patterns will create more demand for goods and services — and the people who provide them — in the suburbs and remote-friendly destinations, relative to office central business districts in current metropolitan areas.
Bloom: Many non-remote jobs interact with remote workers. Think of retail and food service workers in city centres. If office employees move to remote work, these service workers have to change their location of work, too.
Taylor: More jobs might become partially remote. For a nurse, we’ll give them three days in the hospital and two days as a tele-nurse. So we are thinking a sharing of responsibilities to get to hybrid, even in those roles that absolutely, at the end of the day, largely have to be in person.
Will remote workers find it harder to advance than their in-person colleagues?
Julie Whelan, global head of occupier research at CBRE: There is a risk that those people who get more face time are naturally at an advantage to advance faster than others. However, if an organisation truly supports flexible work, then behaviour around promotions and compensation gains needs to be discussed early, observed closely, and action should be taken if desired outcomes are not met. Just because people may work remotely some of the time — or all of the time, depending on company policy — that doesn’t mean they cannot be visible. So it is incumbent on everyone, including the employee themselves, to make sure people remain visible, front-of-mind, and reviewed based on job performance despite a remote status.
Kahn: The answer to this key question hinges on whether a given firm promotes based on a type of nepotism or based on objective value added to the firm’s core goals. Face-to-face interaction does build up trust and friendship. If bosses play favourites, then the remote workers will have a disadvantage in getting promoted. Those bosses who seek to promote based on a meritocratic criteria will emphasise the value of the quality of face-to-face interactions over the quantity of face-to-face interaction at work. Such an emphasis of quality over quantity of face-to-face interaction will alleviate concerns that remote workers are second-class citizens, as they may visit the headquarters just a few days a month.
Those firms that figure out these new work configurations will have an edge in attracting and retaining a more diverse workforce.
Bloom: Fully remote workers may find slow career progression, particularly those who are early in their careers. As individuals advance in their careers, however, personal mentoring becomes somewhat less important. It is also worth noting most remote workers are not fully remote. They are mostly hybrid, coming into the office for three days a week on average, and as such, they get a good dose of personal interaction. So, yes, fully remote workers may face some career advancement costs, but hybrid workers likely will face little or no costs.
What’s going to happen to all the offices?
Whelan: Offices will still exist — they will just evolve. The most sought-after locations, the most desirable amenities, and the most productive space design will continue to morph as population migration and work patterns settle into a new place. The workplace today is anywhere you have a mobile device and an internet connection. But the physical office as a place to gather, innovate, and connect cannot easily be replaced.
Bloom: In the short run, not much. The reason is scheduling. Most firms are either letting employees choose their working-from-home days, which typically means Monday and Friday, or are scheduling teams or the whole firm to come in on the same days, often Tuesday, Wednesday, and Thursday. As such, they cannot cut space. Nobody sublets an office on Monday and Friday. Office demand will be soft but won’t see major drops.
If you want to look for big impacts on real estate, then focus on city centre retail. With office workers working from home about 50 per cent of days, retail expenditure in central New York, San Francisco, and other big cities has collapsed, and that retail spending, jobs, and space is moving out to the suburbs.
Kahn: In high-quality-of-life cities, these commercial buildings will be converted into housing as well as schools and centres for our population’s aging senior citizens.
Taylor: There is no question that we’re going to have less demand for the traditional office space. Will it go away? No.
To what extent will remote work affect where people live?
Daryl Fairweather, chief economist at Redfin: Remote work is already affecting where people live. Many people who have the flexibility to move have been doing so during the pandemic, often taking their higher housing budgets with them and, in turn, contributing to higher home prices in the places they’re moving. Nowhere is this more pronounced in the US than in popular Sunbelt cities like Phoenix, Miami, and Austin, which have seen a surge of in-migration from more expensive coastal metros like NYC, San Francisco, and Seattle.
How will it affect pay?
Bloom: Working from home is a perk, so it means any individual firm offering hybrid-WFH can pay about 5 to 10 per cent less. But, of course, there are also general equilibrium effects in that firms compete for talent in a labour market. If every firm offers working from home, no individual firm can cut pay without losing employees.
Will remote work cause companies to hire more contractors or outsource?
Taylor: An employee came to me, and she made a really, really compelling case: “Johnny, I don’t need to come into the office.” She literally gave me a three-page memo making the case for why she could work remotely. And I smiled and said, “Be careful what you pray for. In the process of saying, ‘I don’t need to interact with other people, I’m an individual contributor,’ you’ve literally made the case that your job can be outsourced. And now I don’t have to cover your pension plan, I don’t have to deal with a salary increase every year, I don’t have to do any of that.” And guess what? I did exactly that. I outsourced that role.
Let’s face it, most of us could have a fully contracted environment, but what we want is a culture, people who have a long-term commitment. We want to build leadership; we need management. And we do that by having consistent relationships and getting to develop our people, so there’s a lot of upside to employing people internally and reasons that we don’t outsource. But there’s a lot of space between not doing it and doing a little bit.
Kahn: This offshoring is a serious possibility. Those firms that require some monthly face-to-face interaction at the corporate headquarters will be less likely to engage in offshoring.
Bloom: This is already happening in the US, from what firms tell me. Anti-immigration policies initiated by Trump have accelerated this process by reducing the ability of foreign workers to migrate to the US. So dozens of firms have said if they can’t get workers to their jobs in the US, they will move their jobs abroad. Working from home has shown how easy it is to have fully remote employees and teams, and in an era of tight domestic labour markets with restricted immigration, moving jobs overseas is one common solution (the other being automation).
But I should point out currently that this is probably good for most US citizens. US labour markets are incredibly tight, generating painful inflation and shortages of goods and services. Try taking a flight, booking a restaurant meal, or hiring a contractor. It is extremely hard, as there is too much demand for labour right now. So having some foreign workers fill that gap in is good news. Of course, if the US hits a hard recession and unemployment rises drastically, that benefit will be less clear.
What will happen to remote work in a recession?
Gupta: I actually suspect remote work will increase. While firms have bargaining power against employees, they mostly want to cut costs like real estate leases, pushing people remote.
Firms are also less interested in onboarding new employees into corporate culture and long-term innovation — two important use cases for the office. It’s more about keeping things going, which can be handled by existing workers at home.
Kahn: Scenario 1: The boss has discretion over who to fire and is more likely to fire the remote worker, because the boss doesn’t really know this worker and hasn’t built up a friendship with the worker.
Scenario 2: Since remote workers do not bear a fixed daily cost of commuting to the office, such workers can more easily reduce their hours to meet the firm’s new demand for labor. In this case, remote workers may be less likely to be fired.
Taylor: Reversing this — putting this genie back in the bottle — is not going to happen. What I think is more likely to happen during a recession is that productivity will become even more important. And so then you will see employers looking really, really hard at the data because they’re going to have to make choices between employee A and employee B. And so employees who are more productive and more efficient are the people who are going to make it through.
Fairweather: Historically, recessions have lasted longer because it takes time for workers to move to job opportunities. Hopefully this recession is shorter than historical recessions because of remote work. VOX
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