Let’s Get Real Ep 13: Commuting & the Future of Work
Discussions on the Workplace and Corporate Real Estate Podcast
Some of the highlights of the show include:
- Exodus from urban cities and impact on the future of work
- The concept of tele-travel
- Transportation optimizes at zero
- The future of urban cities with commute aversion gaining ground
- If there’s no commute, do employers have the option to reduce pay?
- Globalization of the workforce
Hey everyone, welcome to Let’s Get Real with Sandra and Friends, a workplace consortium podcast brought to you by Relogix. I’m excited to be sharing conversational musings about current events and how we envision the ever-changing world of work. I’m Sandra Panara, Director of Workplace Insights at Relogix. With 25 years of hands-on experience, I help value engineer global workplace portfolios and employee experiences by aligning workplace analytics with corporate real estate needs.
Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].
Mitch Turck is a self-proclaimed Outsider-in-Residence, producing thought leadership and change advocacy to address the conversions of industries, ideas, and opportunities. He conducts social experiments in virtual work, and in 2017, conceived legislation to make telecommuting a civil right.
Welcome, Mitch, glad to finally have you on as a guest! Before we get started, why don’t you go ahead and introduce yourself?
Thank you, Sandra, my pleasure to be on! I really need to work on figuring out how to introduce myself, so I’ll keep it brief at the expense of informing anyone on anything useful. I tend to work in sectors where change management is appealing, or at least at the time, and in this case, it’s anything around remote work, virtual productivity, and telecommuting. I’d been spending time in that space pre-pandemic, and it’s very much come to a head now, and so I’m still spending quite a bit of time in that space. I’m mostly just pontificating and yelling at executives as to how they should do things, which is a great job! And that’s about it.
That’s great! I was listening to your podcast “Telekinetic” earlier this morning, and I was looking at how you describe the podcast. I loved what you said—there’s a trip being made by knowledge that used to be made by people. We’re here for it. And I thought, that’s a really cool way of summarizing what you do. We’re used to the whole idea of “transportation”, how we commute, and people going places, and that was really what the world of work was all about. And now it’s a mindful trip, versus a physical trip, which I thought is very appropriate for the discussion that we’re about to have.
So, you and I met on LinkedIn earlier this year, and we’ve shared our points of view on a number of different topics. The first one, as I said, was more along the lines of transportation and commuting, back at the very beginning of when the pandemic started. There was a lot of discussion around the exodus from urban cities and the impact that was going to have on the future of work. So why don’t we start there—maybe give us your thoughts on what you’re seeing and hearing from different people that you’re interacting with in that regard?
As far as the future of work, this is one of the things I just ranted about this morning! I think ironically, knowledge work, or white-collar work, work that used to be though to be done in the office, is not that interesting or challenging, or even less so challenging of a problem to consider in the space of virtualization and augmentation and hybridization. Especially when compared to sectors where physical presence actually has a lot of utility, like healthcare, education (although decreasingly so), construction, retail, manufacturing, things of that nature. So in that sense, it’s not surprising, but it’s actually kind of interesting that we have so much emphasis on, what is the new office going to be, or what is the hybrid environment going to be?
To me, if there was one big pile of money we were working from, I would absolutely not recommend that we put our investment dollars into how the office will look. If you can teach a student or heal a patient or build a structure in a hybrid or augmented or virtualized environment, then you can certainly hold a budget meeting. So, in that sense, I think it’s kind of funny that we’re spending so much time thinking about how the future of work is going to look, when we’re looking at the knowledge worker. Because we could all just be remote and that would be fine, whether the work is slightly better or worse when produced that way.
That’s interesting, I agree 100%. There’s a lot of focus on the physical space, the design, what needs to be changed. And there’s a lot of focus and effort and emphasis being put on this question of, how can you entice people to come back into the workplace. I’ve voiced my opinions over time that there really isn’t anything that you can do to entice someone to want to come back to the physical space. There are obviously different reasons why people might want to go into a space, but I doubt that it’s because of the way a space is designed. You get that “wow” factor when you walk into a space and it’s really cool, but that wears off really quickly. If the culture is not there, or the mindset, the values, and those types of things which are much more sticky, then you could have the most beautiful office and it’s not going to guarantee anything.
So, one of the reasons that I’ve heard time and time again for this whole focus on office redesign is the fact that with so many people leaving these urban centers, that there’s going to be a collapse. There are a lot of businesses and support that’s required when people work in these centralized urban locations. So, with people now dispersing into suburbia, going into other cities or bedroom communities where it’s less expensive to live but people are still commuting, is this why there’s this push to reinvent the office, but still in the downtown core? What do you think is the reason for this focus on redesigning the space?
Certainly, peoples’ vested interests, I would assume, are what drive a lot of that. And obviously, just generally the conservation bias of thinking, these buildings were here for this purpose. It’s going to take a lot of movement in peoples’ minds to understand why or whether those constructs should change. And you would know this better than I, I think, around commercial real estate and the interest and incentives there. The way we have habitually prioritized commerce as the “hub” of the urban core, and as the primary factor in how we design our cities, we’re now reluctantly realizing is a bit non-sensical when you’re not operating a silver mine, or something to that effect.
So, there’s the hot take is that people are leaving the city because people have preferences (of course, taking anything that’s happened during the pandemic with a large grain of salt). Obviously some folks would prefer to have a big house and a big yard, and we can get into all the subsidies and incentives that allow them to think that’s possible when it’s not really sustainable—but regardless of that, you don’t need a crystal ball to see what a city looks like when it’s not all about the four or five very large skyscrapers that everyone commutes to and leaves at the end of the day.
I was van-lifing pre-pandemic for a year. We spent a month in each of the cities in America that we really liked. With one exception, those cities were all places where you can count on one hand the number of large commercial buildings in those cities. We’re talking Asheville NC, Boulder CO, Bozeman MT, Santa Barbara CA, St Petersburg FL, and a few others. There’s basically no commercial presence as far as skyscrapers are concerned, or the commuting patterns and infrastructure to support that in those cities. So, before we even get into speculating what will happen, that would be my challenge to folks—where does everyone go to get married? To go on vacation? To have a good time and spend their dollars? They don’t go to Detroit. They go to the cities I mentioned. So, what does that tell you about the death grip that the large corporate structure has on the sustainability and resiliency and economic viability of a city?
That’s really interesting, because even from a general living perspective, even just thinking about downtown Toronto, there are tonnes of buildings, as in most major urban city centres, and then there’s condos everywhere. It’s almost to the point where, at least in my opinion, it’s ruined the experience of downtown, because it’s just skyscraper on skyscraper. The access to the waterfront is somewhat limited, the traffic is terrible, and all of that stuff. Where does the fun begin? On weekends you roam around, and the traffic is all heading northbound into cottage country or the countryside, and whether it’s spring, summer, winter, or fall, it’s very rarely the other way. During the week, absolutely, because you have to commute downtown to work, because that’s where most of the jobs are located. But for rest and relaxation, people avoid the downtown core where the offices are to be in places that can be free of the typical work mindset.
So, along that line, then, how are you seeing the future of urban centers? Do you think that the exodus will remain? Do you think people will go back once the pandemic is somewhat behind us?
Admittedly, it’s not something I’ve tracked early, but as far as what I’ve seen, people have already come back and populations have increased in a lot of these cities where people thought this exodus was happening. But as someone who’s spent a lot of time in transportation and sustainability as far as designing cities, I would say there’s nothing to say for the value of a large skyscraper that houses people less than a third of the time.
And then of course, as you were speaking to, there’s building everything else out like roads and parking garages. It’s easy to forget that wherever there’s a road or a parking spot, there’s a place where nothing else can really exist. Not to pick on Detroit, but they’re a good example of this. I don’t want to misquote the stat, but it’s somewhere between 35 and 40% of Detroit’s urban core is just land for cars to drive on, which means obviously they’re going somewhere else. The more of that you put into that space, the more you have to spread out wherever the actual destinations are. So, in that sense, I think it’s very easy to make a city more viable, more enticing, more liveable, by simply taking that opportunity to say, we don’t actually need people to come in to work anymore, they can work from wherever. Should this parking lot then be a park? Should this road instead be a popup trucks for food, and parklets, and should this street be for biking, rather than parking? Should the commercial office building be residential, which would resolve a tonne of issues around housing affordability? Should we have mixed used in there, or retail? Should we have community welfare in there? Which obviously is super important and tends to not get a lot of prioritization.
To go back to your point to making it enticing for people to go to the office—how do you make it enticing for people to do anything? It’s not really about making a fancy-looking place. That’s cute, and it’s nice to some extent, but make it liveable. And for a lot of folks, making something liveable is answering the question, where can I send my kids while I have to do this other thing? It’s kind of ironic, we saw during the pandemic just how much we subsidize and incentivize building a world that lets kids be away from their parents safely. Whether it’s the kids going to school or parents having to go to work, just being able to separate families in a safe way is vital and we don’t put a lot of emphasis on that. In a lot of ways we half-assed it by saying, ok, you can go to the office, and that’ll give you some space away from your kids to be an adult and let your brain function normally.
It’s a day out of the house—I need my space, I don’t want to work at home because I can go to the office and be away from my significant other or children or whomever and have peace of mind.
Listen, it’s fair! In one podcast episode I had with Carlos Pardo, who’s a great mind in mobility, he was referencing a study about soccer moms and how the moms need the soccer because it’s a way to get out of the house so they don’t have a certain feeling of accountability to be doing something to make the house more efficient or the like. If they’re out with the kids and the kids are doing something, they can just relax. So, the idea is, soccer moms need soccer to travel to because it’s how you get your kids away from you and don’t have an obligation. The counter point would be, we could certainly make a better society and better world around us in which we don’t require some strange jumping through hoops to create the escapism that’s required for someone’s mind to get back to center.
That’s really interesting. You’ve mentioned Carlos Pardo at NUMO—in that podcast, you talked about the concept of teletravel. Can you tell us a little bit more about what teletravel is?
Sure, so everyone knows what it is without knowing, but telecommuting is a subset of teletravel. It’s the idea that you can commute the ideas or the information or whatever is needed to solve a task or solve a need, through the web, most likely. But in any sense, whether it’s a phone or something like that, do it without actually moving your body or moving vehicles or moving anything that is physical infrastructure, beyond obviously the behemoth infrastructure for telecommunications.
All of these things are called their own thing—telehealth, tele-education, tele-anything, that’s all just teletravel. It’s an easier way to think of it. And arguably, the most important reason to think of it that way is that we’ve been inefficiently pursuing these innovations in their own sectors. So telehealth, even though it has a huge impact on how we decide to build our cities and how we travel within them, and to what degree we need to travel, the travel part is not a huge consideration outside of the actual doctor’s office and what that entails for them—there was never really collaboration between people who were advocating for telecommuting or working in innovations around telecommuting, and people who were working around innovations of telehealth, tele-education—they were all kind of their own sectors. But when you bring that all back to a broader view, we’re really talking about the primary mode of transportation being telco. Being on telco highways, rather than being on actual highways. And that means a lot for how you plan and prioritize your city and how you budget for investments.
When you talk about teletravel, the first thing that comes to mind, and I’m sure it does for our listeners too, is the question of personal contact. Being in proximity of other people. Not necessarily just the meeting of the minds, but the actual physical proximity and how there’s benefits to that. So when we think about teletravel, telework, everything tele, where you’re basically still communicating, still sharing ideas, still doing what you do, when you’re physically in proximity of someone, do you think there’s any impact on healthy living, when the world goes in that direction?
For sure, I think we can all say that we haven’t cracked the nut that is physical interaction with an app or a subscription-as-a-service yet. Maybe we never will. And that’s probably fine. But my two points on that that I would counter with are, first of all (and this kind of pulls back the veil on my main motivations for advocating for teletravel) if you care about the sustainability of the world and specifically around climate change, but even if you don’t care about climate change, if you can at least acknowledge that we have a lot of crumbling infrastructure in the developed world that we need to take it easy on and maintain and repair, then the more you can make trips optional, the better. And that’s not to say you can’t do it, but the pandemic is a great example. You do want to be able to do the task without having to use the infrastructure, if you can. And if everyone says, it’s cool, you can go ahead and use the infrastructure, then go ahead and do it. But if you have a pandemic, or sewer lines burst, or any other thing happens, going back to the idea that transportation optimizes at zero, the less you have to rely on external factors to be able to achieve the task, the better.
Now, as far as the actual health and wellness goes, I think there’s a conservation bias to think, if we don’t all go in the office and see each other, we’ll just be at home doing nothing. Well, you could do that, if that was your choice. But what actually happens if you’re not all in the office is that you’re all in places where you could just be somewhere else. For example, I did this experiment where we went around the country and saw all of our friends and family, and I saw more people while I was teleworking (pre-pandemic) who mean something to me, rather than people who were picked by my corporation to work with me, than most people have seen in a decade of their life. So that would be my priority counterpoint. You have such greater ability to spend time with your neighbor, to go to your local café, or store, to spend time with family, to actually build relationships with people based on mutual interest or pursuits, rather than building relationships with people who you have no choice but to build relationships with, and whose interactions are all couched in making something more profitable or building a thing.
That’s pretty much my thinking as well. There’s a lot of discussion around, do you need the office to build community? And a lot of companies have “building community” as one of their values. Having worked from home for such a long time, it’s true, the fact that I don’t have to commute, the efficiencies that I gain as a result of that, gives me the opportunity to volunteer in my community or get to know my neighbors, or go and shop locally and support my community where I live. To me, that has way more value than getting in a car and driving for an hour and sitting in traffic. So, when you think of just the general benefit of that, I think from a healthy living perspective, and how you feel connected to community, I think that makes for a much more progressive society.
People can still feel like they belong, whereas in the office world, we push this feeling of belonging which supposedly you’re meant to believe can only happen if you’re actually in the office or if you go to work. And there is obviously value in connections that you make in the workplace, but as you say, being able to use the technology to stay in contact with people and even more importantly, to have the choice—that it’s not a must, it’s not something that you have to do every day because if you don’t, you’re not productive, you can’t be collaborative, you can’t be innovative, and all this garbage that we hear. As individuals, just like we all learn differently, we also work differently, and we have different preferences. Having that ability to say hey, I need a day to go and meet up with people at work is invaluable. Sometimes you just need a day out. I don’t want to work from home today, so I’ll go downtown and meet up with some people and coordinate that. And that kind of refreshes your mind a little and you feel recharged. So I think there’s definitely efficiencies as a result of not having to commute.
I don’t remember if it was in a podcast episode or a discussion a while ago, but another thing that’s interesting is the question of, if there’s an exodus from the downtown core and people are moving further and further away, there are neighborhoods that don’t have the infrastructure. They have very little transportation infrastructure, there’s no Wi-Fi, and things like that. So again, thinking about work from home, or work from anywhere, and how do you create inclusive communities? Rather than invest in re-designing your office space, divest of the office space, and think about how you as a company can invest in communities. You could sponsor communities, allow a certain amount of money to build infrastructure or to fund something that will help build the community, and then your brand becomes part of that community, because company XYZ donated a certain amount of money or paid for a certain service or feature.
I think there are tonnes of opportunities to rethink urban planning and the whole fact that people can’t afford to live in the major metro areas, which is why a lot of people have moved out into less expensive neighborhoods. They’re all saying that the one thing that they don’t miss is the commute, so obviously the pandemic has afforded that to all of us, you can work from home if you have the connections and whatever it is to be able to do that through technology, and so being in a position where you’re now going to potentially be expected to go back is going to be really hard for people. And I don’t think people are going to want that.
I certainly don’t! It’s been a while since I’ve been in any kind of office myself, but to your point, obviously people are going to want the choice. There’s always an appeal of time away from your home, whether that’s because there are people in it, or because you want to see other people, or just get out of your home. And in a practical sense, you don’t need an office to achieve that. One of the best folks I ever worked for, Adam Paulisick, routinely gave us the nod to use our corporate cards to gather up as a group when we needed to. We all worked remotely for the most part but many of us were based in New York. So probably once or twice a week we might gather for happy hour or a coffee, and that expense paled in comparison to what it would cost to have an office space in New York. And it was much more engaging because people showed up where and when they wanted to show up and the environment was such that it was actually much more collaborative and not so much disruptive, which is always the other half of the interaction equation that no one wants to consider. So, there’s a lot to be said for that.
What’s going to be interesting is whether and to what degree we start having some accountability around the things that we have subsidized and incentivized as a society. The reality is, as a society, when we like something or think something is necessary, we do what we can to get more of it or to mitigate the sense of guilt or expense involved in it. That’s just naturally how we are. So, something like commuting, and the traditional office building, these are bastions of inefficiency and waste, and they have been huge priorities for a long time.
Maybe people don’t necessarily realise this, but transportation planners don’t really design roads for everyone to use. And they don’t even design them for general day-to-day use, on a workday. They design them for peak capacity for commuting. What happens when you realize that you’ve been wasting money on this—or more so that it is a waste of investment to continue to support this model of peak travel? You’re bringing a tonne of people in to one space and then moving a tonne of people out.
What happens? Will cities say, we’re not going to incentivize this anymore, we’re not going to subsidize this? When it comes to location-based jobs, governments often incentivize corporations to come and bring jobs. Newark, New Jersey, paid I think $7B to get Amazon HQ2, which was more than the cost of Amazon’s actual project to develop HQ2, just so they could have those jobs in Newark. They didn’t actually win the bid of course. There’s a really good organization called Good Jobs First that tracks a lot of these subsidies. But in a lot of these cases, especially the bigger deals, you’re talking about 6 figures per job that taxpayers are paying in incentives to bring a job locally to a place.
If we start looking at that more critically, we could say, why are we spending money to bring jobs here when anyone could just be here with their job—then we could start thinking about how we could re-prioritize those investments. And there’s a lot to be said for all the expenses that go into how we build and operate our cities today that are really structured around commuting to an office, being in an office, having an office be empty when it’s not office-time. And you would know a lot more about this than I would, as far as the actual inefficiencies of the buildings. But it’s ripe for disruption, and not in a corny start-up way, but in a really substantial line-item and budget consideration way from a taxpayer standpoint and investment standpoint.
You raised a lot of really good points. The first thing that came to mind is, do you ever really solve for it? The example that you gave of Amazon HQ2 or corporate headquarters coming into a city center, and suddenly you’re adding an extra 1000, 2000, 3000 jobs—the infrastructure obviously has to be able to support that. You’re constantly seeing the expansion of roads where you go from four to five to six lanes every couple of years. And it seems like craziness—are you ever really going to achieve an optimal state where you’ve arrived? Instead there’s this constant push of jobs and headquarters and the like, and always into the downtown core.
That brings me to kind of the next point about sustainability. I often think about, understanding that there’s this decline, potentially, in urban city centers, you’ve got these thousands of buildings sitting there half empty, some of which might not have anybody in them at all, and you’ve got people that have now moved into the surrounding neighborhoods, and who don’t want to do the commute. There’s a lot of conversation around coworking spaces, and I’ve heard in the earlier parts of last year about using B- or C-class buildings, more industrial type locations that are ground-level so that you don’t have to deal with elevators, and this revamping of these spaces so that you have still offices, but they’re not towers. Now they’re just expansive one-level offices. When you go into suburbia, some of the examples you gave of some of the cities you mentioned that don’t have office towers, they probably have more retail, maybe a couple of head offices or whatever, but more small scale. But—you certainly don’t want construction to be starting in these suburban cities in order to accommodate people to work in an office in the neighborhoods where they live. Because that seems contra to me, with respect to sustainability. You’ve got these buildings that are going to sit downtown empty, now you’re going to be building new locations in the suburbs. Again, it’s that concept of “work happens in a building”, vs “work happening anywhere”.
Hopefully we make good decisions around how we spend our dollars and make our policies, but it’s going to be interesting. I think that’s really going to have a large say in it. We already have a tonne of space, even though people might say otherwise. We have bars that are not functioning until 5 PM, restaurants that aren’t functioning until 5 PM. We have parks, and if we don’t have enough parks there should be more. If there are civil services like libraries and things of that nature that aren’t well equipped, then they should be. All of these things do or can exist, to house people who would like to ad hoc collaborate and co-work. And I think that’s easy enough to achieve without having to build entire structures.
It’s not only concerning to think that we’re going to specifically build structures for co-working or invest dollars in that. That, again, is the least compelling case to me, as far as teletravel is concerned. Communicating the ideas of knowledge work and the problems of knowledge work, and white-collar work, is so easily absorbed by what you could solve in almost any other sector. But I really do hope that we will be able to push the commercial building owners and real estate investors to move towards mixed-use and residential. It solves so many of those problems, like the affordability of transportation and access to hospitals and universities and libraries and other civil services. Police and fire and things of that nature, they don’t scale well when you build out a huge suburban sprawl environment. It’s much easier for those to operate in an urban core. Verticalization is great, as long as we make good use of that space. But if the space is only being used 1/3 of the time for work purposes, and in many of those other occasions when it’s not, it’s still eating up emissions as far as HVAC and lighting, and things of that nature, then that’s going to be obviously suboptimal, is maybe the nicest way to say it.
So, that would be my big push—I don’t think we need to worry so much about what happens when people get into their ex-urb environments or their suburban town centers and things of that nature, so much as, what do we do with these large buildings that just have a tonne of access, and naturally function really well as a center for life and society. That would be my main concern.
I vote for vertical farming! That’s been my thing. Instead of using all the land up when you go out of the city, turn to vertical farming, because it’s pretty central, and there’s a good way to make use of all those empty buildings.
So, given the fact that the future of urban cities with commute aversion is gaining ground, there’s been a lot of talk about how employees are saving money, and that’s giving employers the option to potentially reduce peoples’ pay. What are your thoughts about that?
First off, I continue to be surprised at the level of adoption and engagement that people have with the notion of telecommuting permanently, given that so many of them have only learned it through working from confinement, which is not actual telecommuting. And so in that sense, my point is, if they do get to a point where they realize, things have opened up, and it’s actually really great to walk around my neighborhood and I have access to things—there’s even more savings to be had by reducing your car ownership or usage, and then that builds itself into well, now we should be spending fewer tax dollars on widening highways, to your point. There’s a lot more savings to be had which is worth noting.
To that end, should you be paying someone less because they’re saving money? I guess that all comes down to who’s saying it and for what reason. But I think the unpopular opinion is that we should be aiming to have everything cost less, and not to have everyone be more wealthy. It’s not possible for everyone to be wealthy, that’s not a thing. But it is possible for things to cost as little as possible so that everyone can sustain. And to that end, I think the problem that we’ve seen around the pay issue is the lack of transparency and willingness to interact in a more fair, contractual basis between employer and employee. The employer obviously, for a very long time, had the upper hand. That is still the case, even though thankfully there’s a huge push from the labour side. But I think we need to get to the point first where people have a better understanding of where the costs are being saved, who benefits from that, why the employer pays you one way vs another, and what the value is of that, or whether that maybe is archaic and should be reconsidered.
Certainly, as someone who conceived legislation to make telecommuting a civil right, I can certainly empathise with the notion that someone would argue, I’m doing the same exact job in Tulsa, OK that I was doing in San Francisco. My argument would be, the amount of money that was bumped up to make me a San Francisco employee is not relevant. But then the follow-up to that would be, that money saved by making me a Tulsa employee instead of a San Francisco employee, where does that go? That, to me, is going to be the big issue. If Google or Facebook can save a tonne of money by shifting their talent pools to lower pay bands and pay differentials, then does that result in lower costs of their products? Those are bad examples because they’re both free, but that’s an interesting point in and of itself. But think anything else where you actually pay for the service or product. Is that cost being lowered? Because that is where we should be going, in my opinion. The efficiencies gained from these kinds of innovations should go back into the lower cost of the product or service being produced. And both naturally and justifiably, peoples’ concerns are that the money will just go into the pockets of the investors and executives.
In any case, founded or unfounded, you’re not putting yourself in a good position as a business leader, if you haven’t been transparent about that before. You’re kind of at fault regardless of what you plan to do with that money, if you haven’t been upfront from the beginning about what the organization does when it realizes a cost efficiency by hiring people from a different place. What does it do with that money? The transparency and willingness to have conversations and to collaborate and compromise is really the important thing to me that transcends any discussion about whether someone should be paid less or more.
There’s a lot of really thought-provoking ideas there. Obviously if you’re in the same city, it’s one discussion. But if you start talking about moving to a different state or even to a different country, when you think about it purely from the standpoint of the job that you do, the skillset you have, and the capabilities to do the job, should there be a difference in pay?
I had a conversation with a friend of mine who is Canadian but lives abroad in India. We were talking about whether this applies on an international scale. For example, years ago when contact centers and IT went overseas because labour was less expensive, the services we’ve received from these companies haven’t really changed because the costs are still up there.
So does the reducing of pay equalize based on cost of living where you are? Obviously the cost of living in other parts of the world is very different from in North America. If you’re paying someone 50,000 USD in North America, that same amount of money in some other parts of the world goes a lot further. There’s always the argument that, for lack of a better term, the employer is going to be up in your business, figuring out how you’re going to spend that money relative to the cost of living. But there’s also the affordability part, as you say. If I’m skilled, and I am competing against someone with the same skillset, why should the pay be different? That causes concern, because now we have the true globalization of the workforce—if pay is equal regardless of where you go, what is that going to mean longer term?
I’ve been talking about this with folks, and saying repeatedly that I think a lot of the folks who are campaigning for equal work for equal pay from the stand point of geography, are maybe at risk of shooting themselves in the foot. There seems to be an assumption—and I get it—that if a company is willing to pay a San Francisco wage, then that is what they’re willing to pay for the labour, and anything less is discriminatory. I see that angle.
The reality is not that. The reality is usually that when you’re structuring compensation packages and plans at your company, you have a base level of what you’re willing to pay for what you think the value of the job is worth, and then there’s a pay differential that’s usually a bump, if you do want to hire in San Francisco. The reality is, if you’re a US-only employer, you probably have for a software developer a 90K base value that you put on that job. And if you’re willing to hire someone from San Francisco for 140K, that’s a bonus that you’re paying on them.
So to your point, if your argument is “this job can be done anywhere, it doesn’t matter if I’m in San Francisco or Tulsa”, then not only are you making the case that the job can also be done in India, but you’re bringing up, what is the value of the job? The value of the job is whatever the market demand is, so if that wage is a global median, or India’s median wage or something like that, that’s going to be far, far lower than wherever you want to move in America and command a salary. So, what are you actually achieving, if you’re trying to pursue this whole construct?
To your friend’s point, I think it’s a really interesting problem from a macro perspective. I don’t know if you discussed this, but I’d assume she probably has some opinions on what happens when someone can work in India and make 150K USD. That is going beyond financial security. That is getting to a point of having a lot of pull in this community, and that is problematic. Maybe you do good things with it. Maybe you don’t.
But you can see that even on smaller scales, if you move from San Francisco to Tulsa. For example, you’re used to paying $60 or thereabouts for a haircut. That’s 2 haircuts, easily, if not 3, in Tulsa. So, what is the right thing to do, from that standpoint? Is it right for you to pay $60 to the barber, because you’re saying, “this is the value of the haircut I used to get”? This sounds odd to do if you’re moving to Tulsa, and also goes against your idea of why you would want to be moving there in the first place. But also, are you even doing something good for the local community there, if this barber is seeing people come in and spend $60 on a haircut, does he increase his prices and then make it unaffordable for the rest of the community? There’s a lot of macroeconomics to be discussed here and I am by no means even approaching an expert on it, but at the very least, I consider it enough to realize that—you’re not really fighting for equality, on the grand scale, when you’re talking about equal work for equal pay. You’re talking about something for yourself. And I think there’s a lot to be considered there before we go gung-ho on that.
The other part that’s interesting about this is thinking about the fact that labour is the number one cost for most corporations, and real estate is number two, so reducing or eliminating real estate costs will save companies millions if not billions of dollars. So, do you really need to go into the labour bucket? If you’re eliminating your number two most expensive cost, I think the labour bucket can pretty well stay constant as it is, if not maybe improve, because of the savings you’re having.
Turn to the people that do work for your organization and start to re-visit how people are paid, because that’s another topic in itself. Look at how you can improve that so that you do get the level of productivity and engagement that, for years, companies have been saying that they struggle with. That may be tied to the fact that there’s inconsistencies or inequities in pay.
Yes, and to your point about being a good steward of the community, even if it’s not your local community as an employer—you can pay differently. Or rather, compensate and reward differently. If you’re saving money on real estate and you want your people to be as productive, happy, and satisfied as possible, well—one of the gripes is, if we start working from home, we’re seeing an uptick in energy waste at home. So, invest in your peoples’ homes. Here’s money that will go towards buying energy efficient utilities, or here’s money to go towards a community event to learn about gardening, or rain capture, or whatever the case may be. You can use that money to build a more sustainable world, which ought to be a goal within that corporation. There are a million things you can do with that money; it doesn’t have to go into the pockets of employees for discretionary use. And if you want to be a good member of the community as an employer, there’s a lot you can do. And there’s so little that’s been done to date that it’s really a challenge that needs to be addressed.
I love your ideas, there’s a solution for virtually anything if you put your mind to it and think outside the box. I really enjoyed this conversation, Mitch, thank you again for being a guest today, and for sharing your wisdom and insights with our listeners!
Thank you so much for having me, Sandra, it’s a pleasure!