When Twitter and Facebook announced new, indefinite “work from home” policies this spring, some were quick to hail it as a great advance. The response to this vast Covid-induced experiment has been largely positive, with early remote-work adopters winning employee praise for their foresight. But is this celebration premature? Taken to its natural conclusion, the acceleration of remote-work policies could have a far-reaching—and ultimately negative—effect on American workers.
Nationwide Insurance proclaimed that the recent Covid-19 shutdowns proved that it could meet the demands of its customers with 98 percent of its employees working remotely. It has now committed to closing some of its smaller regional locations in areas such as Florida, Pennsylvania, and North Carolina, with plans to increase the permanent remote workforce to 50 percent of the company total.
Companies like Nationwide are fueling workers’ desire to escape the steep housing prices and high living costs of certain large, successful cities. On the positive side of the ledger: more time to spend with the family, freedom to live virtually anywhere in the world, and little or no commute time. A recent survey found that two-thirds of tech employees would leave the Bay Area if they had the option to work remotely.
But workers may eventually find this dream turning into a nightmare. As corporations discover that they can get the work done almost entirely through remote means, they may follow Nationwide’s example and begin closing smaller regional offices. With a distributed workforce and fewer physical locations, they will also discover, if they have not already, that they need fewer “regular,” W-2 employees—accelerating the hiring of cheaper contract or as-needed workers. And if employers find that the work can be done reliably from anywhere in the world, then there is nothing to stop them from exchanging their current workers for cheaper offshore versions.
Covid-19 has provided the perfect context for large corporations to concentrate their power and resources. As businesses across the U.S. suffer economically from shutdown policies, larger firms have made financial gains. A sharp increase in unemployment has weakened the power of the labor force, and many industries are exchanging full-time, benefitted employees for as-needed contractors. Before we uncritically champion these new remote-work policies, we should proceed with caution. Many who currently dream of working remotely from the beaches of Thailand may find themselves replaced by a Thai contractor.
As the power of labor weakens, short-sighted advocates who hailed these developments as a boon for workers will be left dumbfounded by the long-term consequences of a simple case of labor arbitrage.
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