05 June 2012


Americans spend a ton of time commuting.  According to happiness researchers, commuting is the low point of the typical day.  If you look at the jobs that people actually do, though, it's hard to understand why so many workers continue to commute.  Given a computer and high-speed Internet, most desk jobs could now be done from home - or so it seems.  Telecommuting wouldn't just save workers time, frustration, and fuel; it would also let firms drastically reduce their overhead - and pass the savings along to their customers.  Are we really leaving a trillion-dollar bill on the table?

Other excerpts:

Though telecommuters will eventually be held responsible for measured output, they may be more inclined to shirk if not sharing a workplace environment with a boss and coworkers. A 2011 survey by CareerBuilder adds legitimacy to these concerns. About 17% of Americans who telecommute at least part of the time reported working for less than an hour, compared to 2% among the general working population. Among all workers, 48% reported working for over eight hours a day, compared to just 35% for telecommuters


[O]ther factors could be pushing employees to refrain from requesting to telecommute all or part of the time. For one, scams have cast some stigma on the prospect of working from home. However, more important is the signal to employers. In a recent Ipsos/Reuters poll, which questioned 11,383 people in 24 countries, about half believed that they would be at a disadvantage in earning promotions because of the lack of face-to-face contact (2012). Previous research suggests part-time telecommuters do not communicate less frequently with managers (Duxbury and Neufeld 1999). Even so, more than simple communication matters. Showing up at an office may signal positive attributes to a boss. If a boss leaves work for the day and notices an employee staying late, it could serve as a visual reminder of work ethic. Working in a shared workplace also gives greater opportunity to demonstrate cooperativeness.

I don’t doubt the validity of the signaling model as it relates to commuting being present for work.  Obviously, bosses want to confirm that their employees are actually being productive, even if that means employees spend a good portion of their time putting on displays of busy work, and wasting massive amounts of time and other resources to do so.  Thus, even though it is more efficient to simply allow employees to telecommute to work, employers refrain from allowing workers to do so because employers wish to confirm that they are getting what they pay for.

This issue raises several questions, though.  First off, don’t employers want to reduce their expense?  If so, why haven’t they come up with ways to measure offsite employee productivity?  Robin Hanson suggests that the metrics might be too invasive of personal privacy to overcome status quo bias.  However, this doesn’t account for outcome-based performance appraisals.

Second, what sort of market distortions encourage this inefficient behavior?  I would imagine that many labor laws encourage this inefficiency.  For starters, discrimination laws make firing minority employees inconvenient at best and extremely costly at worst.  Even non-minorities still have a decent set of legal protections.   As such, many companies will find it unnecessarily difficult to fire underperforming employees.  Since it is easier to underperform when telecommuting, employers may shy away from telecommuting because having employees show up at an office ensures that employers can punish slackers.  Additionally, the current tax structure of the US likely discourages employees from working for their companies as contractors rather than employees, which reduces the tie between work and employment outcome.

Third, what about workers’ desires which contribute to this status?  Workers likely prize job security to some extent, which likely means that they don’t want to be fired at will for lack of performance.  They might want to underperform, but they don’t want the negative consequences from it.  In essence, workers are concerned with satisficing, which means that the incentives they face are of concern to employers.  As such, employers will want a show of good faith from their employees in exchange for job security, and that show of good faith is likely displays of productivity.

The ideal market would be one where workers are paid solely on the merits of their work.  They don’t have to drive to an office and sit there for eight hours a day, but can rather take whatever time they need to complete the goals and outcomes set by their employers.  Employees can quit at will or be fired at will.  This ideal market, wherein most people work from home, will never be realized because some minor regulations get in the way, and also because employees are willing to trade massive amounts of resources for something else from their employer, most likely job security.

The difference between the ideal and reality suggests two things.  First, it may be the case that there are massive distortions causing the market function inefficiently.  Or, secondly, it may be the case that the primary goods of exchange are less visible than most think.  Most likely, it’s some combination of the two.  Given how difficult it is to get rid of legislation and regulation , and given the intractability of human nature, it seems unlikely that people will ever stop commuting to cubicle farms.

1 comment:

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