A good deal of the narrative and debate over working from home focuses on workers—what do they get, why do they want it, how they are choosing it. But to work from home, someone has to pay you. Does telework signal a change in the power relationship between employers and employees?
Economist Teresa Ghilarducci told us in a recent Forbes blog that there are 10 indicators of workers’ bargaining power, and only 4 of them are up—quit rates, reservation wages, the unemployment rate, and the number of jobs per unemployed worker. But productivity and profits are rising faster than wages, the labor share of the nation’s wealth has fallen, and real income for workers also is down—all trends that favor employers over workers.
We shouldn’t assume telework is immune from these larger labor market trends. Remember that just because your job could be done from home doesn’t mean it will be. Several analyses of job skills and activities found the potential for homework to be between 37% to the low 40s of all jobs, but levels of actual homework are below that.
Actual homeworking is concentrated among higher educated, higher paid, and more independent workers. A 2021 Census Bureau survey reported that 73.1% of households earning over $200,000 annually did some telework, while only 12.7% of those earning less than $25,000 did so.
Teleworking, like income, tracks closely with education. The same Census Bureau survey found “those with a bachelor’s degree or higher were more than three times as likely as a those with a high school education or GED” to switch to telework—61.7% for the higher educated compare to 19.1% for high school degree holders.
(Of course, focusing solely on education can obscure ongoing discrimination in the job market. In 2021, white high school graduates had an unemployment rate of 5.3%, compared to Blacks (7%) or Latinos (6%) with a two-year post-high school associate degree.)
But all isn’t rosy among teleworkers, even as the frequency stays higher than some observers (including me)predicted. The Pew Research Center has documented an increase in teleworking, but says the reasons are shifting: “more workers say they are doing this (teleworking) by choice rather than necessity.”
61% of those in the Pew survey who could go to a workplace “outside their home” say they are choosing to work from home. That’s a flip compared to earlier Pew research which found 64% were “working from home because their office was closed.”
But the overall amount of telework is still murky. In March, the Bureau of Labor Statistics (BLS) reported that 10% of all workers did some telework “because of the coronavirus pandemic,” down from 21% one year ago. It’s hard to fully square these numbers with other analyses that claim a much higher, and likely permanent, move to telework among the labor force.
BLS’ numbers are consistent with teleworking’s relationship with education. For workers over 25 years old, only 3.2% of those with a high school degree reported teleworking, compared to 18.8% for those with a BA or above.
Another data point to consider regarding increased telework is commercial office rents, down on average nationally by 2.6% compared to one year ago. But some markets (Charlotte, +10.7% and Miami, +12.2%) have large rent increases due to increased jobs, while others have higher rates (Boston, +16.4%) due to life sciences which need laboratories and can’t be done at home.
Much of the telework discussion leaves out the relative power of workers vs. employers. Recent union victories at Amazon
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Educated workers may be gaining some leverage over employers due to a very tight labor market. March’s 3.6% overall unemployment rate was low for many workers, including a 4% rate for those with only a high school degree. But unemployment among college educated workers was only 2%, a level economist call “frictional” unemployment, generated by people changing jobs or moving around, not by a lack of jobs.
Tight labor markets should give workers some bargaining power, and you’d expect that to show up in higher wages. But in March, real wages (adjusted for inflation) actually fell by 2.7% year-over-year. It may be that wages just haven’t caught up with high inflation yet, but it also could be that employers are bargaining with flexibility instead of wages.
It may be that workers who can are “choosing” to telework, especially women with child care responsibilities, although that could change when schools go fully back in session. Employers seem to be allowing more telework in the face of a tight labor market, especially for educated and technically trained workers.
But we don’t know yet if it’s a permanent change, and whether it represents a real increase in workers’ bargaining power. If the Fed induces a recession to fight inflation, we’ll see how much leverage teleworkers retain over their working conditions when unemployment rises.