Marissa Mayer's Misstep And The Unstoppable Rise Of Telecommuting

Marissa Mayer’s pronunciamento banning home-based work at Yahoo reflects a great dilemma facing companies and our country over the coming decade. Forget for a minute the amazing hubris of a rich, glamorous CEO, with a nursery specially built next to her office, ordering less well-compensated parents to trudge back to the office, leaving their less important offspring in daycare or in the hands of nannies.

The real issue is how we deal with three concerns: the promotion of families; humane methods to reduce greenhouse gases; and, finally, how to expand the geography of work and opportunity.

For parents, particularly women, telecommuting provides a golden opportunity to balance the challenges of child-raising with those of work. Working at home, full or part-time, shrinks the number of hours wasted commuting and allows greater flexibility that is often critical to maintaining a family. In a country with a deteriorating fertility rate, and ever greater strains on those trying to raise children, telecommuting offers, at least for some, a way to remain in the labor force without cheating the next generation.

Equally important, as the online universe expands, telecommuting allows us to reduce carbon emissions and energy use without forcing people to live in dense communities that most Americans, particularly in their adult years, clearly do not prefer. Greens, planners and many pundits seem anxious to force people to live in crowded housing close to buses and trains, yet rarely mention that it’s infinitely more eco-friendly to not commute at all.

Finally there’s the often ignored issue of geography. If you force people to work in daily commuting distance from Yahoo’s Palo Alto headquarters, you are essentially telling them to live in a region where housing is among the most expensive in the nation. For anyone under 40 who does not have wealthy parents, a large amount of dot-com stock or recently robbed a bank, it’s almost impossible to buy a single-family home or spacious townhouse in the Valley, even in the only modestly attractive parts.

So what’s the beef with the expansion of telecommuting? The conventional explanation usually revolves around the notion that putting employees together every day together generates greater innovation. See the New Yorker’s James Surowiecki for a good summary of this argument.

That’s really not too surprising, since one of the last rationales for many without large financial resources to put up with big city home prices and taxes lies in the idea that, as the great economic royalist Michael Bloomberg maintains, you have to be located in “the intellectual capital of the world” to be successful. Natural allies of the anti-telecommuting crowd include urban land speculators and developers, who prefer that the “talent” remain chained to their particular locations and not wander off to the awful periphery.

There are clearly advantages in face-to-face contact, particularly for younger people and top-echelon executives, who may be more effective minding the store if they hang around the office. But for most employees productivity actually rises with telecommuting.

This is confirmed by broad studies such as one by the consultancy Workshifting that found, on average, a 27 percent rise in productivity among telecommuting employees. Over two thirds of the employers surveyed reported higher productivity among home-based employees, including British Telecom, Dow Chemical, American Express and Compaq.

One of the best examples of telecommuting advantages can be seen at the high-tech company Cisco, which in contrast to Mayer’s assertion, has found telecommuters are effective at communicating and collaborating. It has also improved employee retention and also saved $277 million by allowing its employees to telecommute.

Other companies reporting positive results, particularly in terms of retaining employees, from telecommuting, include IBM and Best Buy.

Equally critical, notes a study by Global Workplace Analytics, are the tremendous environmental savings. Half-time telecommuting could reduce carbon emissions by over 51 million metric tons a year — the equivalent of taking all of greater New York’s commuters off the road. Additional carbon footprint savings will come from reduced office energy consumption, roadway repairs, urban heating, office construction, business travel and paper usage (as electronic documents replace paper). Traffic jams idle away almost 3 billion gallons of gas a year and accounts for 26 million extra tons of greenhouse gases.

But perhaps most relevant, whatever its merits, telecommuting and home-based work seems to be the inevitable wave of the future, whether corporate managers like it or not. Working at home grew faster percentage-wise than any other mode of work access in the United States between 2000 and 2010. In that decade, the country added some 1.7 million telecommuters, almost twice the much ballyhooed increase of 900,000 transit riders.

This tends to be more true in places like Silicon Valley, where workers are computer savvy and housing costs are onerous. Between 2005 and 2009, the Valley workforce grew by less than 10 percent but the telecommuting population increased by almost 130 percent. Tech-oriented places like Austin, Portland, Denver, San Diego, San Francisco and Seattle all rank among the cities with the highest percentage of people working at home.

As workers become more familiar with technology, these trends should accelerate. A survey by the Information Technology Association of America found that 36 percent of respondents would choose telecommuting over a pay raise. These preferences appear to be even greater among millennial generation workers, who, according to a Pew study, tend to seek a “balance” between work and life. Global Workplace Analytics suggests this means they will be more attracted to flexible work throughout their careers , particularly as they start families.

Other trends, including the huge expansion in self employment in the U.S., promise to accelerate telecommuting in years ahead. The ranks of independent contractors have grown by 1 million since 2005, according to George Mason University economist Jeffrey Eisenach. One in five work in such fields as management, business services or finance, where the percentage of people working for themselves rose from 28 percent to 40 percent between 2005 and 2010. Many others work in fields like energy, mining, real estate or construction. Altogether there are now as many as 10 million such independent workers, constituting upwards of 7.6 percent of the national labor force and over $626 billion in income.

This trend will be further accelerated not only by millennials but increasingly by the other big growth demographic, aging boomers. The self-employment rate for adults 55 and older is 16.4 percent, according to the Bureau of Labor Statistics, well above the 10.4 percent rate of self-employment for the total labor force. From 2007 to 2008, the latest data available, new businesses launched by 55- to 64-year-olds grew 16 percent, an increase that was faster than that of any other group, according to the Kauffman Foundation. All told, Boomers in that age group started approximately 10,000 new businesses a month.

Many of these older entrepreneurs are likely to work out of their homes, which many now own outright. In fact, over time, according to Workplace Analytics, upward of half the American workforce could eventually telecommute. Ultimately the issue of whether managers of office developers like this trend is beside the point. Smart managers who learn how to adjust to this path will flourish. Those who do not, like Marissa Mayer, are standing against a historical wave that is likely to prove too powerful for any company or CEO to overcome.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at Forbes.com.

Photo by By Rae Allen, "My portable home office on the back deck"