Remote Work Specializes

We seem on track to spend far more preventing pandemic health harm than we will suffer from it, which seems too much spending given the apparent low elasticity of harm w.r.t. prevention. But an upside is that some of this prevention effort is being invested in remote work, which is helping to develop and innovate such capacities. Which matters because remote work (a.k.a. telecommuting) is my guess for the most important neglected trend over the next 30 years. (At least of trends we can foresee now.)

My recent polls put remote work at #24 out of 44 future trends, which IMHO greatly underrates it. AGI, biotech, crypto, space, and quantum computing are far overrated (due to drama & status). Automation matters but will continue steadily as it has for many decades, not causing much trend deviation. Global warming, non-carbon energy, the rise of Asia, falling fertility, and the rise of cybersecurity and privacy are important trends, but their trend deviation implications tend more to be correctly anticipated. However, I see remote work as big and mattering more than and driving trends in migration, aug./virtual reality, and self-driving cars. And remote work implications seem neglected and unappreciated.

Remote work has been a topic of speculation for many decades, so likely somewhere out there is an author who sees it right. But I haven’t yet found that author. I’ve recently read a dozen or so recent discussions of remote work, and all of them seem to miss the main reason that remote work will be such a big deal: specialization due to agglomeration (i.e., more interaction options). The two most formal math analyses I could find actually explicitly assume that remote work, in contrast to traditional work,  produces no agglomeration gains! In contrast, these discussions get closer to the truth:

If rural residents can enjoy the agglomeration benefits of urban life without moving to the city, prosperity can be more widely shared. (More)

If people everywhere can enjoy the benefits of agglomeration without the need to physically cluster together there will no longer be a need to flee the country for the city. If we succeed, not only will we bring rural economies into the virtuous cycle of agglomeration benefits, but we may even accelerate innovation and growth by connecting up the entire country into one digital city.

This is hardly a new idea. At the dawn of the internet era, it was conventional wisdom that the world was flat and the internet would spell the death of distance. It didn’t happen. … So what went wrong? I think we all made the classic mistake of underestimating how long it would take for us to figure out how to effectively use a new general purpose technology. … It may yet turn out that the death of distance is right, but was just ahead of its time. (More)

To see the potential, consider plumbing. Today plumbers are generalists who work for small scale firms. Each plumber does most plumbing tasks, and you usually pick one from among a few small local firms. Now imagine that a plumbing avatar can be controlled well remotely by plumbers a thousand miles away. An avatar comes to do your plumbing job, an avatar controlled in sequence by plumbers who specialize in doing each stage of your type of plumbing problem. Just as factories can be more efficient when each worker specializes in doing one small task, plumbing could also become more efficient via such specialization. And each plumbing specialist could be chosen as the best from all candidates within a thousand miles.

Today bigger cities are more efficient mainly because, via agglomeration, they create larger markets with more/better specialization:

A larger market allows for a more efficient sharing of local infrastructure, a variety of intermediate input suppliers, or a pool of workers. … better matching between employers and employees, or buyers and suppliers. … facilitate learning, by facilitating the transmission and accumulation of skills or by promoting the development and adoption of new technologies and business practices. (More)

With sufficiently advanced remote work capabilities, each worker in a large region could compete for any job in that region, without having to move their home. So whole big regions, continents or even the whole planet could function like single huge cities, with matching levels of work specialization, at least for tasks that can be done remotely. As a result, tasks that workers do remotely in such regions could become very specialized, in part via larger more complicated firms and work task coordination. Many small fragmented labor markets would merge into a few large integrated labor markets.

Of course, we are a long way away from this situation now, and the path to get there is harder than futurists anticipated decades ago. But this pandemic has given us a big push, and in thirty years I think we will have gone far enough that at least one quarter of human work will be done remotely.

Progress here will require us to overcome many obstacles. Many decades ago, remote work was limited mostly by insufficient bandwidth and latency, but these limits are receding. Limits are now more about coordination and innovation. We must find new ways to achieve subtle social job tasks that previously relied on close and flexible physical contact, and we must reorganize which tasks go into which jobs so as to create more remote jobs that only rarely need close physical contact. But pandemic distancing policies are pushing us to work much harder to achieve these changes.

Larger more integrated remote-work labor markets will seek to standardize on work hours, skills, habits, and rules, to let workers from wider regions compete for each remote job. Work hours may be why the whole world doesn’t become one integrated labor market. Local variations in language, education, and regulations may become obstacles, rewarding the places that can most standardize these things. Larger firms will form to support more job specialization and coordination, though local regulations may also block such firms. (Similar problems would appear today if different parts of cities had sufficiently different regulations.)  This might create a push for more global regulation.

In many and even most jobs, no doubt for a long time the extra productivity gains allowed by direct physical contact will beat the gains from larger more integrated labor markets, even considering the costs of commuting and living close enough to work directly together. Especially considering that many workers will dislike remote work, all else equal, and many will want to live close to large urban concentrations for non-work reasons. But note that during the industrial era work methods with large productivity gains have tended to win out in the long run, even when workers don’t enjoy them as much.

Eventually, when a large fraction of office jobs have gone remote, limits will turn to the quality of avatar tele-robots and control haptics, and to finding sufficiently low latency comm. (Bandwidth will probably be plenty big by then.) As those limits get pushed back, a great many ordinary physical jobs can be done remotely. At first shop clerks, receptionists, and inspectors, and later drivers, janitors, plumbers, and even hairdressers.

Note that remote workers will be more willing to move their home for social, weather, political, and other reasons, as their job doesn’t tie them to their location.

Note also that by recording remote work tasks one can create big datasets of how jobs are done, to allow machine learning of those tasks. This will help to automate them, but still my bet is that automation progress will continue to be slow. In addition, a world in which most jobs are done remotely is a world in which ems can more easily replace human workers. No need to work hard to design human-like bodies for ems if remote-worker avatars are already sufficient to do most human jobs.

Interestingly, a vision of larger scale more integrated labor markers already exists in the concept of a “global workforce”. Which many see as a terrible thing:

Global workforce refers to the international labor pool of workers … Implications
Social vulnerability … A high [non-worker to worker] dependency ratio can cause serious problems for a country if a large proportion of a government’s expenditure is on health, social security & education, …
Downward pressure on wages … new entrants to the global workforce since the 1980s brought little capital with them, … cut the global capital-labor ratio to around 55–60% of what it otherwise would have been.… could mean … downward pressure on wages and compensation, particularly in more advanced economies
Race to the bottom … companies searching for the lowest-cost … lowest-cost labor is often found in countries that have the fewest protections for workers. … exploitation and even death of workers in countries that have the fewest protections. … pressure to lower domestic and, ultimately, international labor standards.
Mitigating factors … growing number of multinationals, especially from wealthier areas, are starting to see the benefits of keeping more of their operations close to home. (more)

Yet by this same logic we should lament large cities today, and prefer folks to live in small villages with town governments powerful enough to prevent local labor market competition. Like, say, feudal manors of medieval Europe. But if we celebrate our largest cities, and want other areas to be more like them, then by the same logic we should favor the larger more integrate labor markets that remote work could bring.

Added 10a: Adam Ozimek points me to his recent report:

In a sense, remote work will allow the creation of a massive online labor market that is subject to many of the same forces of agglomeration that cities experience. … A remote labor market that was just over 6% of the labor force would be bigger than any city in the country.