The economic shift from not going back to the office.

People see shifts, but they don’t always see the ripple effects.

If millions of jobs are now work from home, what are the impacts of that in the economy?

Imagine two workers, an office worker and a manufacturing floor worker, both making $20/hr, both driving and commuting an equal distance, and both having the same benefits.

One day, a pandemic happens, one job becomes work from home, for the other that isn’t possible. All of a sudden, these two workers are no longer equal. The remote worker can possibly sell/drop his car payment, save his gas money, save 1-2 hours per day commuting. He can move to a cheaper area. Let’s say $200 savings on car and gas a month, $200 savings on rent a month and 20-40 hours freed up per month of commute saved. The remote worker now is saving an extra 15% of his pay and gets nearly two full days of leisure time every month extra from a shortened commute. What a raw deal for the manufacturing floor guy.

Economics is a slow wheel, but people talk and the market responds. The manufacturing guys want to be treated similarly. So they want that extra $400/month in their check, and they want it a little higher than that to offset increased taxes. Add another $500/month for them. Then they need the extra hours the commute to make sense too, so add another $750 ($25*30 hours a month) to their paycheck to compensate against their peers. They now need around the equivalent of $28-$30 an hour to match the deal the remote worker now has. That is 40%-50% pay increase. This is where physical goods are heading in inflation. How many years will it take? I’m not sure.

The participants in the market aren’t stupid, but data does take time to collect. If anyone wonders why many companies want people back in the office, this is the answer along with the maintaining the value of the commercial real estate they own. Labor that can’t be done remotely will want a premium to keep their relative status, and rightly so. What went from costing $40/hr for an office worker and a shop floor person, now will cost $50. The problem is the companies don’t hold the power to pull everyone back because many will quit and find remote work elsewhere.

This is a fundamental shift. Something big is happening, and it is the free market at work.