The Winners of Remote Work

This trend continued into the 21st century. According to a 2020 study by the economists David Autor, Claudia Goldin and Lawrence F. Katz, most of the increase in income inequality over the past two decades occurred “within, rather than between, education groups.” Some college-educated employees — particularly those with advanced degrees — earned more than ever while most of their peers stood in place or retreated. Technology contributed to this increase by enabling companies to produce more and reach more customers while depending on fewer but more specialized employees.

Significant as it was, technology’s impact on many professions was constrained by geography. When most companies hired only employees who lived within commuting distance of the office, the size of the labor market was capped. This put a ceiling on the employment options and earning capacity of employees with the most specialized, in-demand skills. It also put a floor beneath other professionals who enjoyed a decent salary and relative job security by virtue of living within commuting distance to a central business district or office park.

The constraints of geography are loosened now that Silicon Valley and other industries are embracing remote work — gradually, then suddenly. The Economist recently analyzed job listings on Hacker News, a site popular with programmers. It found the share of jobs mentioning “remote” reached 75 percent in 2021, up from 35 percent pre-Covid and 13 percent a decade earlier.

How will this affect the average tech worker?

There are some early indications. In June, Google told rank-and-file employees it would reduce the pay of those who choose to work remotely or move farther from the office. Avoiding the office saves employees money — in commuting costs, for example — but as the economist Austan Goolsbee recently wrote for The New York Times, companies in the last 40 years have usually found a way to claw back any potential gains for workers.

For most tech workers, remote work means competing in a much larger pool of equally qualified candidates, many of whom are based in lower-income cities and countries.

Should this worry the most in-demand engineers and product management? Probably not. For them, working remotely means competing for the highest-paying jobs from a larger number of companies.

But even many highly qualified and specialized employees have something to worry about.

As Enrico Moretti pointed out in “The New Geography of Jobs,” hiring “is very similar to dating.” Access to more potential candidates in a bigger pool of people increases the chance of finding an ideal match. Matching specialized talent to specific jobs is a major reason that innovation, productivity and salaries are higher in large cities.