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Technology and the City

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Technology and the City

Working from home has benefits, but the downsides are real, too. September 2, 2020
New York City Reborn
New York
Technology and Innovation

Technology built the world’s great cities. As Lewis Mumford chronicled in his 1961 opus, The City in History, technology played the central role in expanding the metropolis, beginning in the Middle Ages and accelerating with the Industrial Revolution. Technology’s net effect, Mumford wrote, “brought an endless flow of distant foods and raw materials into the metropolis, along with workers and intellectuals, traders and travelers drawn from remote areas.”

But will digital technology—specifically telecommuting, in the wake of the Covid-19 pandemic—finally hollow out New York and other big cities? Certainly, without the ubiquity of the Internet, and tools like Zoom and Microsoft Teams, the effect of widespread stay-at-home orders on employment and the economy would have been far worse. Tech companies reported epic increases in traffic on digital networks in recent months. Microsoft CEO Satya Nadella says that we’ve seen years’ worth of digital transformation in just a few months.

Forecasters now claim that one of those transformations, aside from demographic and cultural shifts, will be that Work From Anywhere (WFA) becomes customary for huge swaths of the workforce. A recent Harvard Business Review article encapsulated the proposition with a headline question: “Is It Time to Let Employees Work from Anywhere?” Collaterally, others claim that these trends portend a massive decline in transportation fuel use.

Pre-Covid, according to Census data, just 5.2 percent of all employees were full-time telecommuters. Note that this is much lower than the 25 percent figure often given for those who say they work from home occasionally. The wildcard in the post-Covid world is how many people convert permanently to WFA.

For many, that answer was revealed, and widely cited, in a July 2020 study from the University of Chicago, which found that 37 percent of all U.S. jobs might be amenable, in theory, to remoting. The authors arrived at this estimate based on an upper bound that ignores efficacy, productivity, and practicality. That share wasn’t derived by considering what, in fact, could be remoted, but rather constituted the remainder after finding that 63 percent of all jobs are impossible to perform remotely for transparent reasons such as those entailing “daily work outdoors” or “operating vehicles, mechanized devices, or equipment.” That doesn’t mean that all the remaining 37 percent are amenable to full-time WFA. Many tasks in that cohort are, at best, ineffectively performed remotely, and some shouldn’t be done remotely even if technically possible.

We’ll soon see how sticky WFA is once it’s no longer forced. There’s no doubt that it will accelerate the formerly slow-growing trend that began two decades ago and stimulate investments in relevant software and automation as well as changes in corporate behavior. But exactly how many jobs can be done remotely with the same efficacy and productivity?

As we’ve seen—and as regulators finally permitted during the pandemic—today’s technology is suitable for medical consultation, though it’s still impossible for a physician to palpate a patient remotely. Distant palpation, and its equivalent in other high-touch jobs, will become possible one day with emerging haptic technologies that enable remote tactile sensing. Once that capability is available it will dramatically improve some aspects of medical “telepresence” as well as other remote capabilities, not least remote training. But there’s no technology in sight to replace being there.

Meantime, with the Covid-induced blizzard of Zoom meetings, we now have a cottage industry of people with opinions and experience about the efficacy of teleconferencing, an activity that vividly illustrates the challenges of remote living and working. Even if a task can be done remotely—including tasks easy to make remote, such as software coding, preparing taxes, or editing documents—is it as effective and productive to do it remotely as in person? Remote education, for example, has proved extraordinarily challenging.

At the heart of the question is the concept of productivity—the increase in output associated with a decrease in inputs of labor, materials, and energy. Advancing productivity underlies societal growth, but there’s lots of overly optimistic talk these days about how WFA improves productivity. One frequently cited paper, for example, from Stanford, reports that WFA led to a 13 percent gain in employee performance. Setting aside whether that’s a significant improvement, and whether such an anemic gain is in fact outside the margin of error inherent in a study’s assumptions, that conclusion came from studying employees at a call center and a travel agency. Another study measured a 4.4 percent increase in “worker output” of patent examiners working remotely. These studies, and others, examine tasks well suited to WFA—tasks not representative of many, indeed most jobs.

In fact, in the pre-Covid world of 2017, IBM made headlines for canceling its generous WFA policy, reverting to making employees show up in person, at least most of the time. Amazon, no technology laggard, recently made clear that, in a post-Covid world, it will continue building more office space in U.S. cities. An enormous body of research exists on productivity and remote work. If the facts in favor of WFA were indisputable, most profit-seeking businesses would have mandated remote work long before Covid-19.

What would be the effect on energy consumption of WFA? Not as greening as proponents suggest. Assuming (unrealistically) that the entire 37 percent of this workforce abandons commuting, WFA would eliminate 1 million barrels per day of oil use. That constitutes just 5 percent of total U.S. petroleum demand and would be neither a green revolution nor an existential threat to oil producers. The data reveal why that number is so small. Transportation accounts for about 80 percent of petroleum use, and light-duty vehicles account for 60 percent of that. Commuting, which dominated personal vehicle use a half-century ago, accounts for just 28 percent of all light-duty vehicle-miles today. Thus, even implausibly assuming 37 percent WFA, the reduced oil use looks negligible.

Meantime, most WFA enthusiasts ignore what economists call the “rebound effect.” Eliminating commuting time can lead to increases in other travel. Pre-Covid data show that 40 percent of all consumer travel is associated with errands, leisure, and visiting friends and family. Studies that properly consider the rebound effect find an increase in all those non-commuting activities, which dramatically reduces any net energy savings. In fact, WFA could even lead to an overall increase in transportation fuel use.

A proper accounting would also include the energy appetite of telecommuting. Calculated in terms of one person’s share of the energy used by the digital hardware “hidden” in our networks, we find that one hour of video is equivalent to driving a car one mile. Put tens of millions of employees and students on the “information superhighway” for hours every day, and the math yields an added annual-energy demand equivalent to billions of miles driving. That reality alone offsets, as a Bloomberg headline put it, how the “Work-From-Home Culture will Cut Billions of Miles of Driving.”

An enormous body of research also exists on the effectiveness of proximity, and on the design of physical spaces for enhancing workplace productivity and fostering innovation. The easy, unstructured, and spontaneous exchange of ideas, still impossible to replicate online, is a key factor in innovation. The coronavirus certainly made proximity a challenge, but the existence of a virus doesn’t change the nature of innovation.

As every Zoom user knows, current technology lacks the spontaneity and conversational ease of in-person meetings, and the one-dimensional “flatness” of teleconferencing loses the array of subtle body-language and social cues inherent to human communication, especially among groups. This is hardly a new discovery; it’s a subject of long-standing psychological and human-factors research.

The ideal answer to the problem of remote interaction is a hyper-realistic virtual conference room, or, in tech jargon, a system with “immersive 3D telepresence.” The technology for that is no longer hypothetical. It entails a combination of an array of “smart” cameras and a super-resolution wall-sized screen rendering true 3D, such that the video-wall effectively disappears and all users feel like they’re in the same room. In a nod to nomenclature out of science fiction, the Microsoft Research team talks about the idea of “holoportation” based on technology that will evolve from that company’s HoloLens virtual-reality system. But such capabilities aren’t yet commercial, at any price. Next-generation supercomputing on “edge networks” and 5G wireless opens the path, but we’re not there, much less as a home product.

Nonetheless, for a fraction of jobs—or, for many more jobs, for a fraction of the time—WFA has obvious benefits for both employer and employee. A global survey of over 3,000 employees undertaken earlier this year asked about the work-anywhere features most important to them. Sixty percent cited flexibility of schedule and location as the top benefit; 20 percent cited “no commute” as a key benefit. In a distant fourth place, 11 percent noted more time with family. No one spontaneously cited productivity. Such results are consistent with the trend toward employers offering many employees the benefit of episodic WFA. And, apropos “family time,” after months of enforced WFA, many employees are discovering the logistical and practical problems of physically comingling work and family life.

For employers, WFA can not only offer savings in reduced office space but also a path to reducing salaries. As Facebook CEO Mark Zuckerberg recently said, “if you live in a place where the cost of living is dramatically lower, then salaries do tend to be somewhat lower.” Perhaps in a portent of what is to come, many big tech companies have recently extended all-employee WFA into 2021. In addition, some employers are eager to convert salaried employees with expensive overhead costs (insurance, etc.) into contractors, expanding the so-called “gig economy,” with all its attendant challenges. Whether that’s a net benefit to employees, and what share of employees will trade “flexibility” for reduced salaries and benefits, remain to be seen.

But regardless of what big tech does, and despite the outsize reputation of tech jobs and companies, it is worth keeping in mind that even if every tech employee in the country worked remotely from now on, according to Census data that would constitute a share of national employment only modestly greater than farmers and ranchers. Tech is not a big employer, and it hasn’t significantly increased its employment base over the past decade. The real question for New York and cities everywhere is just how many of those 37 percent of jobs can be effectively performed remotely with the technology that exists.

If half of the 37 percent of workers who could transition to WFA did so permanently, significant consequences would ensue. For starters, congestion would be reduced for the 80 percent still commuting. But given how quickly traffic growth responds to lowered congestion, we might expect the well-known “rebound effect” in this domain, too. Similarly, given that office rents are highly sensitive to vacancy rates, competition for fewer occupants will drive down office costs for employers. That will, in effect, make it harder to justify at-home work if it leads to lower productivity. And the jury is out on whether we see a reversal of the pre-Covid trend of more employees per square foot. In a pathogen-averse future, any drop in employees per building could easily be offset by a demand for increased square footage per employee.

But the crux is: how long will it take employers (apparently other than Amazon) to rediscover the real sources of innovation and productivity? When—not if—we see a revival of economic growth in a post-Covid world, safety and quality of life in urban settings will be the most significant factors driving which cities benefit and which don’t. As we’ve seen in recent months, the fate of cities hangs in the balance—largely due to non-tech factors. Politicians can blame technology all they like, but if their cities die, it won’t be the Internet that killed them.

Photo: Nikada/iStock

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