About#Newnormal: Will Workers or Employers Pocket the Profit from #WFH Productivity?
It’s not a zero-sum game.
A Fortune newsletter by Aaron Pressman quoted my post on the 50 hour family work week and then asked: “Trillion dollar question: Will workers share in the savings from remote work?”
His skepticism is illustrated with a story. Last week Fortune published a commentary by Drew Houston, the cofounder and CEO of Dropbox. Dropbox, in case you missed it, is one of the services which has helped to make work from home (WfH) practical. Not surprisingly, Drew is a WfH fan:
“We’ve gone through a one-way door. The shift to distributed work is the biggest transformation to knowledge work since the term was invented in 1959. Its impact will be comparable to the rise of mobile and the cloud. Distributed work will unlock the potential of these technologies in the same way the highway system unlocked the potential of cars and ultimately reconfigured modern life.”
Pressman comments:
“Ironically, the day after we ran Houston’s essay, Houston’s company executed one of the old-fashioned, less desirable ways to become more productive: It laid off 315 people, or more than 10% of its workforce. ‘Our Virtual First policy means we require fewer resources to support our in-office environment, so we’re scaling back that investment and redeploying those resources,’ Houston wrote in a memo to employees.”
If the 315 people were engaged solely in supporting the office infrastructure, then this layoff doesn’t mean that Dropbox is doing the layoff because the people who work at home are more productive. This layoff is like terminating the office lease. Drew, himself, is somewhat ambiguous. In the same memo to employees, he says that their focus on “Virtual First” (which I think is more a description of their product line than a description of the way they work) requires them to defund initiatives which don’t directly add to this initiative.
Regardless of exactly why Dropbox had its layoff, who will profit from the increased productivity is still a trillion-dollar question. We can pick away at it:
These gains go to the employee initially.
- The dollars and time spent commuting.
- At least some of the cost of daycare.
- The cost in space/and or dollars of having to live close to work.
- Eating lunch out.
- Flexibility
- Dressing below the waist.
And these to the employer.
- The cost of owning or renting office space.
- The cost of people devoted to maintenance of the office space (see Dropbox above).
- Any subsidy including parking spaces supporting commuting.
- The need to provide free coffee etc.
The savings above are big so will make both WfH employees and employers wealthier.
The elephant in the converted spare bedroom is who gets the productivity savings.
Pressman quotes a study Dropbox commissioned at The Economist which concluded that workers lose 28% of their productivity because of distractions and says this agrees with my estimate that 25 hours at home is equivalent to a 9-5 day at the office (nit, he somewhat misinterpreted the study). The trillion dollars of productivity he writes about is this lost 28% in the US.
I claimed that workers will benefit by either working less or earning more. Pressman cites the layoff at Dropbox as an indication that employers will simply expect more from each employee and lay off those who are not working very well from home. If it happens as Pressman suspects, then employees will still work 35 or 40 hours even though they’re home; they’ll accomplish more; the employer will be more profitable.
The new normal will differ industry be industry depending both on how easy it is to measure productivity in an industry and the balance between jobs to fill and employees available to fill them. Since physical proximity to the office is not required, employers get to pick from a nationwide (or worldwide!) pool of applicants. On the other hand, workers can apply for jobs at companies anywhere. This is globalization without green cards.
WfH is not a zero-sum game. Both workers and employers benefit. The environment benefits from less commuting. Housing affordability benefits from less concentration. Children will see their parents more. But the benefits will be uneven and we must be more sensitive to a growing economic divide than we were during round one of globalization.
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