The home-working puzzle

The internet isn't working. This is one inference we could draw from an ONS report this week. It shows that only 1.4 million employees, or 5.6% of the total, work from home*. This is a rise of only 1.5 percentage points since 1998.

This looks like a small rise given that we are supposed to have had a technological revolution since 1998, with broadband internet, Skypeing and mobile telephony making remote working much more feasible.

So, why hasn't homeworking increased more?

Of course, for many jobs it's just infeasible; you can't stack shelves at Tesco from home. And some people claim that we are more productive if surrounded by inspiring colleagues whom we can bounce ideas off, though in my experience this is...

But on the other hand, there are huge costs to working away from home: renting office space, transport costs and the waste of time spent travelling - and this is not to mention the stress and unhappiness of commuting.

Why, then, are employers still keen to incur these costs? There are two possibilities.

One is suggested by Andrew McAfee and Erik Brynjolfsson in The Second Machine Age. They point out that when electricity was introduced into American factories in the 1890s, productivity growth didn't initially change even though electricity was to revolutionize the economy. The reason for this, they say, is that "general purpose technologies need complements" - and the most important of these are changes in organization and business processes. But, they say, it was only after 30 years - when managers brought up on the pre-electricity era retired to be replaced by younger ones - that such changes were made to take full advantage of electricity.

It could be that a similar thing is retarding home-working: bosses accustomed to seeing their lackeys in the office aren't willing or able to make the organizational changes that would exploit new technologies.

There is, though, an alternative theory, associated with Stephen Marglin (pdf). He argues that the early factories supplanted home-working not because they were technically more efficient, but because they gave capitalists more control over the labour process and hence the power to extract more of the gains from the employment relationship for themselves. A similar thing might explain employers' aversion to home-working today. Or, more loosely, perhaps narcissistic managers want to feel a sense of power from seeing employees working.

What's consistent with this view - though not proof of it - is that the ONS finds that workers in higher-paid occupations such as technicians and managers are disproportionately likely to work from home. Some of us have the bargaining power to demand that we work in more pleasant conditions.

I don't know which of these theories is right. Luckily, though, the fact that I work from home has probably improved my health sufficiently to increase my chances of living long enough to find out.

* defined as spending more than half one's working time at home.

Comments

[Luis Enrique]

what is an example of a non technician or managerial job that might be performed from home?

Take data entry. There will be costs involved in distributing whatever it is to be entered (paper forms?) to workers at home, and managing their IT, but let's ignore them.

What will the productivity of a home worker be, compared to the worker in office? If productivity is lower at home - perhaps because of distractions plus lack of supervision - this is a third potential explanation that you don't mention.

This is a separate question from the power to extract more of the gains from the employment relationship. First you have how much workers produce, second you have how much bosses capture.

[Andy]

"general purpose technologies need complements"
As Luis alludes, maybe the workers who are still at work and not at home perform roles which require them to be at work. If the low skilled worker is a general purpose technology, they need to be with their complements (capital and, potentially, bosses).
Also, you have electricty in US factories in the 1990s - just in time for the internet...

[Sean Mulcahy]

Having worked from home for a number of years I would say nearly all administrative tasks can ultimately be done from home, once the companies have caught up with the latest technology. This relates to the point raised in the blog about electricity.

There is a big move to 'cloud' which is based on Internet access and therefore is not restricted to an office.

However, home working does not suit all people as they enjoy the social aspect of working in an office, if not the commute.

I wrote up some ideas on a half-way house here http://zeneasy.wordpress.com/random-thoughts/

[Socialism In One Bedroom]

I don't think capitalists consider me getting up an hour earlier and arriving home an hour later because I am stuck in traffic as being in any way inefficient or a cost to them.

Capitalists are quite happy to be surrounded by inefficiency as long as it doesn't affect their bottom line.

I also work from home, sometimes, the biggest opposition to it are from middle management, who can't get their heads around the idea that we can work without their supervision. Middle management are a great big drag on progress. Many people who should or could work from home do not because managers cannot commit to this cultural shift. It undermines their position.

In my organisation the message was that home working, flexible working was the future, managers would manage based on output and not sight. The subsequent period has been one of quiet middle management revolt.

**It should be noted that middle managers are the most likely to work from home - do as I say and not as I do!**

There are obvious advantages to workers working from home (from the capitalists point of view):

Lower office space costs, smaller buildings etc. lower rents, security, caretaking etc etc

Reduced utility costs

Staff available for longer periods of the day, don't have to shut the building late or open up at weekends.

Less distraction at home than at work, work is a big social network, at home people are not discussing their human interest stories with each other.

Fits in with new technological developments, no longer big in house servers, now servers are hosted off site and people connect via net. Big savings all round.

[James]

Unless I have misunderstood this there is another explanation:

There has been a massive increase in the amount of work done from home just very little of it taking people above the threshold where they spend more than half their time doing it.

Now I spend about 1.5 days per week working from home which I would not have done 5 years ago - but this is still less time than I spend in the office. I also spend more time working on the train than ever before...

[Metatone]

It's only in the last couple of years that broadband has really gotten fast enough and reliable. Indeed, many BT customers would contest the idea that it is even now reliable enough to plan on large scale working from home...

One further wrinkle, most broadband is still sold asymmetrically (much faster download than upload) but this has historically been bad for VPN connections...

[Strategist]

Yes, James has nailed it - your puzzle solved.

"For the purpose of this analysis, home workers are defined as those who usually spend at least half of their work time using their home."

It would be interesting to see how that pans out through the week. How does the load on the commuter trains vary between the 5 days of the working week?

Taking a middle manager's perspective that working from home = not doing your employer's work, are we getting to the stage where Friday is not really a full strength working day? (Actually, thinking back to the 90s and many hours in the pub, it never was)

[rogerh]

The internet seems to work pretty well so I doubt that is the problem. Perhaps the ONS stats are not worth as much as they seem, I suspect under reporting or mis interpretation. As for waiting 30 years for managers to die off - I doubt it very much. Back in the 1890s factories had just installed huge steam engines and overhead shaft drives, so a huge writeoff and anyway the electric companies soon started arguing about AC or DC - so a big incentive to do nothing for a while. Similarly sceptical re bosses wanting to oversee their galley slaves as a reason to eschew supposedly fantastic productivity improvements, there are easier ways to measure activity.

But I do see a potential problem - what would a strongly home-workered company look like? A multi billion £ company run from a room above a shop - just how do you value such an entity? How easy would it be to takeover such a company or to attract all the workers to a rival outfit. Perhaps the real problem is managerial insecurity, they would miss the big marble entrance hall and the corner office suite on the 45th floor.

[Metatone]

To those who say internet isn't a problem - go talk to SAGA/AA - who do a lot of work through homeworkers. The extra workers they have to hold on standby to even out connection problems (even today, let alone a couple of years ago) isn't a problem for their business model - but you can see how if you need a different category of worker, it could be.

(As an experiment, try Skyping with someone every day for a month and document how often it works as well as you'd need to do work together...)

Still, I've worked with a financial services corp. who do a lot of teleworking and often come up as "a good place to get a job if you want to telework."

Does it work? Yes and no.

People work hard and they split up tasks and do them as efficiently/inefficiently as any other company. The tele meetings are hideous, but real meetings are bad in a lot of other companies too.

Where it all falls down is informal collaboration. And since you, Chris, of all people should know that it is not the formal, managerialist side of the company that produces a lot of the value, then it shouldn't surprise that when informal collaboration gets harder you get specific problems:

1) Problems that are not emergencies rarely get solved. So over time get more emergencies.

2) Creativity and innovation are just deadened. People "get on with the job" and only "top-down" mandated work gets done. But as you always mention Chris, it's not like top management understand all the business.

3) There are subtle culture problems. The company generally pays quite well and works at keeping people involved, so they aren't semi-detached (although I've seen that happen in other places, esp. where competitors target staff for recruitment) but even so I think you can feel the inadequacy of Skype/IM/telephone. We humans communicate non-verbally quite a bit, and even Skype isn't great at transmitting that. It's subtle, but over the years you can see how (for example) it leads to it getting harder for people to address "hard topics." So hard decisions often get put on the back burner again and again.

[Jim M.]

@ Metatone

"So hard decisions often get put on the back burner again and again."

Can-kicking seems to be gaining in popularity right across the political and economic spectrum!

[Dave Timoney]

There are two tendencies at work: the desire of capital to extract the surplus value of labour, and the desire of privileged labour to extract rents (this is as prelavent in the private sector as the public).

The latter depends on social interactions (meetings, politicking, developing tacit understanding etc), hence there remains a strong incentive to spend "face-time" in the office, even though many workers admit they get more done outside.

The higher rate of remote working by senior managers is driven by status in three ways: the performative "always on" of the self-defined indispensable; the executive property right to "manage your own time"; and the early adoption of new technology (a symbol of corporate valuation, as cars once were).

[george smith]

i think the main reason it has not hit off big time is ie: working at home you need to be a certain type of person the qualities you need are to stay focused take regular breaks,be self driven and motivated with out the need of your boss to help you out or drive you on,you also need to be comfortable with your own company as working at home is mostly a solo existence not everyone fits into this category.i have been an ebay seller since 2002 so i am well aware of this role,i have also started a website offering free business start up advice on how to run an ebay business www.workfromhomewhenever.com

[Socialism in One Bedroom]

"working at home you need to be a certain type of person"

I would say most people want to work from home actually, at least a few days of the week, this is my experience in the organisation where I work. There are numerous advantages from the employee point of view:

Less distractions
Better work - life balance
No parking or petrol costs
No sitting in traffic
No need to get tarted up
No eating tea at stupid o'clock
etc etc etc

So I would say that to want to go in and travel to work each and every morning you need to be a certain type of person.

[gastro george]

The management aspect of home-working is quite interesting. It completely changes the management paradigm - from seeking to control the workforce through presenteeism to having to actually measure a home-workers output, and paying by results.

The latter can be applied equally to the bottom-end of the market - a previous poster mentions Saga and AA, don't BT also use home-workers for their call handling? It's pretty easy to monitor people's productivity in call handling whereever they might work.

In the same way, it's easy to quantify, for example, a top-end IT worker's productivity, as the job also has quantifiable tasks.

But the mention of presenteeism brings to mind the old story of the German company where an office worker who was adopting the Anglo-Saxon tactic of only leaving work after the boss had left received a poor appraisal because the overtime that they were doing obviously indicated that they were an inefficient worker. A similar appraisal was given to the worker who refused to take their parental leave after the birth of a child.

Different cultures have different managerial approaches, and we have a lot of bad managers that need to change.

[rogerh]

The homeworker examples cited are essentially an attempt to run a call centre cheaply. But call centres are where the iron law of 'good/cheap/fast -select any 2' meets the equally harsh laws of call handling times. Service levels are usually the first to suffer, the cost v service level curve being rather steep.

What is more interesting is to think where the next marketing directors or finance directors will come from - among the teleworkers? I think not. Homeworking seems just not that good an idea, which is why it has not taken off big time either here or in the US.

[pablopatito]

Outside of the South-East, commuting isn't such a big issue. I'd like to know what the average commute time is in the North of England, but anecdotally most people I know work less than half-an-hour from home and actually quite enjoy the drive there and back.

Without an unpleasant commute, working in an office can be preferable to home. A bit of company, free heating, subsidised canteen, a break from the spouse/kids etc etc.

[ChrisA]

If it were really the case that firms with people working from home were more efficient than ones that forced people to come to offices for "managerial narcissism" reasons, we could expect to see over time these home based firms start to out-compete the ones that insisted on people coming to the office. But we don't see that, even after 10 years of the internet.

The reason is, it is really is more efficient to have everyone in the same office together when you are working on solving problems, somehow the proximity of people to other people causes them to be able to focus and deliver. I see this all the time as I have people working for me at remote locations, it is always tempting to rely on skype and email, but there is always a huge boost to progress when I actually sit face to face with someone and work a problem together. Humans are social animals and we communicate by many channels other than verbal ones, body language, facial expressions, loud versus quiet voices etc etc all provide context. Working with Skype and email is like listening to music on Radio Luxembourg longwave in the old days, sure you can make out the tune, but it is not Hi-Fi.

[Socialism In One Bedroom]

"The homeworker examples cited are essentially an attempt to run a call centre cheaply."

This is rubbish, more and more IT firms have staff working from home. More and more IT departments are effectively home working. It goes well beyond call centres. There is a revolution taking place here as more and more work becomes computer and internet based

"we could expect to see over time these home based firms start to out-compete the ones that insisted on people coming to the office. But we don't see that, even after 10 years of the internet."

This is already happening in many businesses, particularly IT ones. Only recently has the technology made this feasible on a grand scale, the cost is coming down dramatically.

"it is really is more efficient to have everyone in the same office together when you are working on solving problems"

This is largely a myth, people in large organisations tend to work in isolation actually and knowledge sharing is often poor. The real revolution in knowledge sharing has been the internet, where users from all around the world now share knowledge over the net, no face to face required. In my own job the number of times I have solved a problem by going onto an internet forum or simply googling it is incredible. This is the real knowledge sharing revolution.

"but there is always a huge boost to progress when I actually sit face to face with someone and work a problem together."

Home working doesn't mean that people never meet but I suspect you are making this up. I just don't think it works like this in my experience.

"Humans are social animals and we communicate by many channels other than verbal ones, body language, facial expressions, loud versus quiet voices"

the explosion of facebook etc would cast doubt on this way of thinking, seriously cast doubt on it.

I think the proof is the eating though, I expect more and more home working, and I expect most workers would welcome it. If you took a poll at the organisation where I work the vast majority would support home working and would be very put out if it were taken away.

The humans reject the Human theories of ChrisA.

[Stigand]

Let's suppose that some of the benefits of face-to-face interaction really are illusory, but that we're collectively pretending they're real.

In whose interest is this pretence? The most makes the case that it's mainly in management's interest - it allows them to indulge their narcissism and to increase exploitation.

But might it also be in labour's interest too?

An anecdote: in the 1990s, management consultancy firms employed in-house graphics specialist to make all the whizzy PowerPoint charts that everyone loves so much. In the late 1990s, they realised that rather than sitting in expensive office space, they could work from home instead, and be allocated to projects by a scheduler. This was convenient to many of them, since it eliminated their commute, made part-time working easier, etc.

But a few years later something odd happened. The firms realised that remote workers with no particular bond to their teams might as well be in India or Poland as in the US or the UK, so they offshored the entire function.

I'd suggest this was much easier to do once the face-to-face aspect of the job had been eliminated. "Stand not too far from the rich man" etc etc.

[Stigand]

*the post, not the most. D'oh.

[Socialism In One Bedroom]

"But a few years later something odd happened. The firms realised that remote workers with no particular bond to their teams might as well be in India or Poland as in the US or the UK, so they offshored the entire function."

This has nothing to do with home working or whatever bond someone has to the 'team', other than the same technological developments allow for firms to make these decisions and many of these decisions came before the home working revolution.

The answer is for workers to take control of the firms. I suspect if that happened we would really see a growth in home working.