By Haanbi Kim
From the debate on a $15 minimum wage to increased frequencies of remote work caused by the pandemic, labor is becoming increasingly important to discuss. There are three points of contention regarding this: super commuting, remote work, and freelance work. In the following article, we will parse through these different modes of work and why they are important for the United States economy.
Super commuting refers to when it takes at least 90 minutes to commute to work one way, and the number of Americans opting for this lifestyle has grown at a significantly fast rate. The number of super commuters has increased by 32% in the pre-pandemic era. This comes down to a variety of different factors. One is the gentrification and concentration of opportunities in major metro areas like New York City and San Francisco (City Observatory, Yahoo Finance). Although these cities provide alluring professional opportunities, most forms of compensation still do not make up for the exorbitant cost of living for many. As a result, many are gravitating towards lower cost areas on the peripheries or entirely out of these metro areas while also maintaining their career opportunities. More notable insight can be drawn by differentiating super commuters based on granular occupational factors. Yahoo Finance releases the following figure in their article, The number of Americans who ‘super commute’ is on the rise:
According to the figure, blue-collar occupation sectors like extraction, constructing, and transportation and material moving consist of some of the higher proportions of supercommuters. These numbers can make more sense when considering the earnings for these occupations and the demand from these services. For instance, construction jobs are more likely to be in urban areas, which house many towering skyscrapers that would require maintenance (case in point: New York City). Keeping this in mind, if construction jobs were to underpay what is a “comfortable” wage with respect to the city’s standards, then there would be a higher probability for these workers to relocate outside of the urban areas where cost of living is more affordable (for New York City: New Jersey or Long Island). This hypothesis can be substantiated with the fact that super commuters primarily rely on public transportation rather than private vehicles. According to the Bureau of Labor Statistics, construction and extraction occupations have a median annual wage of $70,830 in the tri-state area, which is lower than New York City’s average of $88, 036 (New York, New Jersey, and Pennsylvania). Yahoo Finance also reveals that the lowest proportion of supercommuting is amongst white-collar workers, especially for those in social services and education. This is a natural outcome as construction and protective services are likely to be of higher demand in urban areas, whereas the demand for education services are likely to be higher in suburban or rural areas, which will have lower costs of living in comparison to the city. Thus, financial and location constraints can work in tandem to explain why certain occupations may face higher rates of super commuting.
To uproot this demand scheme is nearly impossible, and if done so, this could possibly bring adverse outcomes to society as well as the economy. Instead, the greater conversation for this is the phenomena of gentrification and an increasing concentration of opportunity towards metro areas. Gentrification has been a serious problem in metro areas including New York, San Francisco, Washington, D.C., and so on, yet resolving it will still prevent lower-income families from having to move out and face burdening commute times. Additionally, although an equal distribution of services across the country regardless of where demand is located is not exactly desired and certainly not efficient, there is a problem with super commuting posing extreme opportunity costs. A commute of 90 minutes would translate into around 364 hours, or 15 days worth of time lost due to commuting back and forth during a year. If commute times are even cut down by 30 minutes, this would reduce lost time in a year by more than 140 hours. If lost time resulting from commuting can be reallocated efficiently and effectively based on workers’ discretion, it may boost worker productivity and worker satisfaction.
Remote and freelance work
Work-from-home has become the buzzword for 2020 and 2021. Although a steadily-growing portion of the workforce was working from home prior to the pandemic, this process has accelerated vastly due to social distancing measures. Freelance work (or gig work) is also another mode of occupation that has grown rapidly over the past few years, especially with the rising popularity of apps such as Uber andDoordash, or websites such as Upwork and Fiverr. For the purposes of this article, remote and freelance work will be grouped together in this context because they have similar features: both boast a high degree of flexibility in the hours worked and have become increasingly popular due to the pandemic. The one glaring difference between the two is that freelancers are solely classified as independent contractors or some other form of untraditional work, whereas remote work can also apply to traditional “9-to-5” workers, but we are more concerned with the economics than the law.
The amount of remote workers prior to the pandemic was largely negligible, fewer than 6% of workers in the United States worked primarily remotely. This figure increased substantially (for obvious reasons) to 35% of the workforce during May of 2020. However, these arrangements are likely to not be temporary as 54% of remote workers want to continue working from home even after the pandemic is over, and even if this isn’t realized, the adoption of a hybrid work model is likely If realized, this would resolve some of the previously mentioned problems associated with supercommuters and save time for both workers and firms alike.
One issue about remote work is the worries of whether productivity would be adversely affected. Intuitively, many may think that remote work can encourage more distractions and shirking, since it can be conducted anywhere in the world and does not involve physical surveillance of the workplace. This assumption can be incorrect depending on the industry that is being discussed. An article released by Harvard Business School notes that the productivity losses and gains differ drastically depending on industry; sectors that are more used to in-person work such as transportation, warehousing, accommodation, and food services are the hardest-hit in productivity, whereas sectors that were already conducted remotely in some form like administrative support saw a dramatic increase. It is important to remember that much of the current recession’s bleeding areas lie in these “in-person” dominant sectors as we have seen numerous small businesses across the country close down due to restrictions, so it is not necessarily the remote work aspect that is reducing productivity. As long as sectors can freely choose the type of work that is conducive to the kind of services that they are providing, productivity concerns will be less of a problem. Additional fears may include the fact that some tasks on the job are in fact better conducted in person, which is also a valid point. McKinsey & Company lists how certain activities such as “coaching, counseling, and providing advice and feedback; building customer and colleague relationships; … negotiating and making critical decisions,” and so on in their article titled What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries. Once again, however, these fears are merely trivial when it is possible for a workplace to be flexible between remote and in-person.
As more individuals leave the office in lieu of working at home and/or working as a freelance/gig worker even after the pandemic, the effects will reverberate across many other parts of the economy. In other words, the implications for remote are more than just within corporate America and the labor market. The McKinsey report estimates that potentially 15 to 20% of the workforce will spend more time working from home for the longer-term. If this is the case, then less will demand transportation services as frequently, as well as gasoline, automobiles, and real estate. Local businesses can also expect to take a hit if business activity significantly consists of office workers (for instance, New York City’s Financial District). Additionally, apartments in large cities such as San Francisco and New York City can be expected to stay vacant, as seen through the pandemic. Thus, it is not only firms that are impacted by remote work, but also the small businesses and real estate that revolve around the lives of these office workers.
- Cover image source
- “47-0000 Construction and Extraction Occupations (Major Group).” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 31 Mar. 2021, http://www.bls.gov/oes/current/oes470000.htm#(2).
- “County Employment and Wages in New York City – First Quarter 2020 : New York–New Jersey Information Office.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 30 Sept. 2020, http://www.bls.gov/regions/new-york-new-jersey/news-release/countyemploymentandwages_newyorkcity.htm.
- Lund, Susan, et al. “What’s next for Remote Work: An Analysis of 2,000 Tasks, 800 Jobs, and Nine Countries.” McKinsey & Company, McKinsey & Company, 3 Mar. 2021, http://www.mckinsey.com/featured-insights/future-of-work/whats-next-for-remote-work-an-analysis-of-2000-tasks-800-jobs-and-nine-countries.
- Savidge, Nico. “Hours Spent Commuting Pre-COVID Added up to Days Wasted. How Many? We Have a Handy One-Button Calculator for That.” The Mercury News, The Mercury News, 29 Mar. 2021, http://www.mercurynews.com/2021/03/29/working-from-home-in-the-bay-area-use-our-calculator-to-see-how-much-commuting-time-youve-saved/.
- “Selected Statistics From the Public Elementary and Secondary Education Universe: School Year 2015-16.” National Center for Education Statistics (NCES) Home Page, a Part of the U.S. Department of Education, nces.ed.gov/pubs2018/2018052/tables/table_04.asp.
- Senz, Kristen. “How Much Will Remote Work Continue After the Pandemic?” HBS Working Knowledge, President & Fellows of Harvard College, 24 Aug. 2020, hbswk.hbs.edu/item/how-much-will-remote-work-continue-after-the-pandemic.Wade, Reggie. “The Number of Americans Who ‘Super Commute’ Is on the Rise.” Yahoo!, Yahoo!, 2019, http://www.yahoo.com/entertainment/the-number-of-americans-who-super-commute-is-on-the-rise-184529879.html.