Inequality and Remote Work

Inequality and Remote Work

"If you can do your job from Boulder, it can be moved to Bangalore." This tweet from Scott Galloway makes a common argument regarding why employees should rush back to the office. It also taps into a sense of anxiety that one's job is about to be "shipped" away.

The anxiety is justified, even though the job is less likely to get shipped too far. And the remedy the tweet offers — "come to the office to keep your job" — is not going to work. Going to the office will not save you from global competition.

A world of remote work is one in which people from all over the world compete with each other directly. But it is also a market that behaves very differently from the local labor markets we're all familiar with. A truly global market for talent will not just reshuffle the distribution of income in favor of those in cheaper locations, it will also reshape it. The result will be fewer (but bigger) winners at the top, a shrinking middle, and a long tail of participants that earn more than they ever did — but much be less than middle-class employees used to earn.

This will happen for several reasons:

  1. Talented people will be able to reach a larger audience or more customers. In the same way that recorded music and broadcasting liberated local singers, the internet is liberating people in various other professions — from programmers and designers to Peloton instructors and math teachers. As a result, world-class performers in various fields will earn world-class rewards. In contrast, local-class performers will no longer be shielded from competition and will have to accept relatively lower pay or find something new to do.
  2. Talented people will become more productive due to the removal of handicaps. Office-based work tends to hold back the most productive people, at least in jobs that depend on concentration and deep work. Commutes waste people's most productive hours, especially in the morning. The office itself is often (usually) too loud, too hot/cold, and full of people eager to pull you into a meeting or share their thoughts on the latest episode of Stranger Things.
  3. Talented people will become more productive due to better matching. Competing in a larger talent pool increases the odds of matching a specific person to a task that she is uniquely qualified to perform. In creative professions, matching leads to dramatic differences in productivity (10 times and more).
  4. Success will accrue to those already successful at a higher rate. Consumers and customers face an impossible number of choices and too much information to process. Under these conditions, they tend to choose whichever option other people have already chosen. Further, these types of decisions are not just made by humans directly. Since more (and probably most) of our decisions begin with an online search or a scroll through an online feed, what we choose is heavily determined by what algorithms choose to show us. And algorithms tend to show us whatever is already popular and trending.

In short, competing globally will enable top performers to reach more customers, unleash more potential, and compound initial gains at a higher rate. Due to algorithms' role and competition's intensity, high-performers will also become more dependent on sheer luck. One fortuitous match or early success will put them on a path to pull far, far away even from other high performers.

Evidence of the above is already around us. Top talent has already been pulling away from the middle class for several decades. And since 2000, most of the increase in inequality has occurred within the class of people working white-collar jobs. We also know that even offline labor markets (and cities) tend to become more unequal as they grow bigger. Moving to a much larger market for talent will intensify all of these dynamics and probably introduce a few new ones.

These dynamics will affect you whether you're in Boulder or Bangalore. The good news is that everyone has a chance to win bigger rewards. The bad news is that average rewards are no longer guaranteed. In such a world, even the winners have to contend with uncertainty and anxiety. As I told Scott Galloway in our podcast last year, "There is a certain percentage of people every year who are going to make more money than ever before, but whoever belongs to that little pool of people is going to change constantly."