Microsoft Offers Permanent Work-from-Home Option with Pay-Cuts if Employees Move to Cheaper Cities or Countries

“Hybrid workplace,” it calls it. The trend for many companies with office workers and enough tech savvy to pull it off. A nightmare for landlords.

By Wolf Richter for WOLF STREET.

Microsoft became the latest company to officially build work-from-home as a permanent feature and benefit into its model – a “hybrid workplace,” as it calls it, which seems to be where this is heading for companies with office employees and enough tech savvy to pull it off. But that excludes a lot of companies too. For example, the small company my wife works for doesn’t have the tech savvy to do this, and being in the international trade business, still uses a lot of paper documents that are signed and FedExed back and forth.

But big companies have been prodded by the Pandemic into rethinking how they do business, how offices should operate most efficiently, how money could be saved not only on office space but also on payroll – and yes, Microsoft got into that too, because cost cutting is always a huge priority. So forget the Seattle salary with housing costs in Tulsa.

Microsoft outlined its plans and guidance for a “hybrid workplace” in an internal memo to employees that Verge has obtained.

“The COVID-19 pandemic has challenged all of us to think, live, and work in new ways,” wrote Microsoft Chief People Officer Kathleen Hogan in the memo. “We will offer as much flexibility as possible to support individual workstyles, while balancing business needs, and ensuring we live our culture.”

Specifically:

Employees will be allowed to work from home freely, without manager’s approval, for less than 50% of their work week. The rest of the time, they go to the office. Flexible hours will be available without approval. But switching to part-time hours will require manager’s approval.

Employees can permanently work remotely with the approval from their managers.

Employees who have been approved to work from home permanently can, with approval from their managers, move across the country, or even internationally. In other words, they can work from anywhere.

But his may entail a pay-cut: Employees who move from an expensive area, such as Seattle, to a low-cost area in the US or a foreign country, will see their compensation and benefits change based on Microsoft’s geopay scale.

Microsoft will cover the office expenses of people permanently working from home. But it will not cover the moving expenses of employees who choose to move to a remote location.

Employees who then work permanently from home lose their assigned work space at the office, but they can still come in and use the “Touchdown Space” at the office. Microsoft implemented offices with Touchdown Space over a dozen years ago to make remote working easier, so this concept isn’t new at the company.

But some roles may not be able to transition into less than 50% work-from-home mode, and they will need to continue to show up at their work place, according to the memo cited by Verge, including roles that require access to hardware labs, data centers, and in-person training.

Among Big Tech, Apple CEO Tim Cook dove into the topic of work-from-home (WFH) during an interview in September, where he acknowledged that Apple too, even after building one of the fanciest and most expensive office complexes designed for in-person collaboration, is seeing permanent changes where and how work gets done.

“I don’t believe that we’ll return to the way we were, because we found that there are some things that actually work really well virtually,” Cook said. But he also pointed out that the “vast majority” of Apple employees “can’t wait until we can be back in the office.”

Facebook, Twitter, Okta, Box, crypto-exchange Coinbase, job-search firm Indeed, and many other companies have already spelled out their expectations that WFH will become a permanent feature, benefit, or option for many of their employees. Twitter, no longer needing as huge of an office, has already put 100,000 square feet of space at its headquarters in San Francisco on the sublease market.

Google has remained mum about the permanent aspects of WFH. JPMorgan Chase CEO Jamie Dimon wants to get employees back to the office – “Going back to work is a good thing,” he said – but acknowledged that there “will be permanent changes from this.”

Netflix CEO Reed Hastings has come out hardline against WFH and said he would bring his employees back into the office as soon as possible. But he too acknowledged that the five-day work week at the office might go to four days, with one day working at home. Yes, even he can see the hybrid model on the wall.

And it’s already having a large impact on the office sector of commercial real estate – a “Sublease Pandemic?” In the third quarter, office leasing activity plunged or collapsed, depending on city, and huge amounts of sublease space that companies no longer need got dumped on the market. Read…  Commercial Real Estate Office Sector Crushed by Work-from-Home, Tsunami of Supply in Q3: Manhattan, San Francisco, Houston, Chicago, Los Angeles

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  205 comments for “Microsoft Offers Permanent Work-from-Home Option with Pay-Cuts if Employees Move to Cheaper Cities or Countries

  1. Wisdom Seeker says:

    So we have too many office complexes and too many retail stores.

    Yes, tough on landlords, REIT investors and commercial lenders.

    But I’d argue that in the long term, a world with fewer buildings and less commuting is probably a good thing! Overall a smaller human impact on the environment.

    (But then again, it could just mean more room in cities and on highways for future population and GDP growth, and even greater overcrowding in 10-20y … shudder.)

    • 2banana says:

      World population is still growing. Mega cities being built all throughout Africa and Asia.

      America, without immigration, would have a zero growth population.

      Meaning, theoretically, not one new building or new acre of land would ever be needed and could be left in its natural environmental state.

    • Jon says:

      Over time, I can see the real estate going down more and more on expensive places.

      I work for a big tech in san Diego and the trend is : In a 2 bedroom apartment, 4 young adults are packed in to save $$ on rent as 2 BR apartment is atleast $2K/month to work place which is not downtown.

      I can see these rents hence prices going down.

      Personally, I’d love to move away from San Diego but for my kids schooling at this time.

      It’s a win win for both: employees and employers.

    • Wolf Richter says:

      Wisdom Seeker,

      “a world with fewer buildings and less commuting is probably a good thing!”

      I agree. I do think empty office buildings will be converted to residential. So there may be fewer buildings only in the sense that fewer new buildings will be built.

      I can see a number positive things coming out of this crisis, including that I learned how to cut my own hair in 15 minutes with electric clippers – saves me 1.5 hours and some beer money, and now my hair gets cut every 5 weeks, rather than whenever it gets so scraggly that I cannot stand it anymore, and I have the hairdo I deserve… loving it🤣

      • Joe Saba says:

        sorry WOLF but reality is that it will be HUGE EXPENSE TO CONVERT multi-floor buildings to apartments
        in $$$BIG DOLLAR CITIES fine but not in rest merica

        • Wolf Richter says:

          Joe Saba,

          Sure, it might not work in Omaha or Wichita. I don’t know if there is even demand in Omaha or Wichita for high-rise condos or apartments. And if there is no demand for the converted project, it doesn’t work anyway, no matter what you do.

          But I watched them do it in Manhattan. What are the other options for an empty high rise? Conversion is a lot less expensive than tearing down an empty high rise and building a new high rise on the same spot that you could put to some use.

          The way high-rises are built, it’s fairly easy to remove and rebuild interior walls and ceiling and add wiring plumbing etc. This is done routinely for office build-outs. For example, a company wants to lease 100,000 square feet, and has some special needs, and the landlord agrees to build out the space per tenant’s request and make that part of the 10-year lease.

          In reality, the current owner of an empty office high rise will walk away from it and let the lenders have it; the lenders sell it for a song and at a big loss to a developer, who now has a low cost base in the building and can add the construction costs to the low purchase price and make it work. But there has to be demand for high-rise living, or else it doesn’t work.

      • andy says:

        Same. Also cooking.

      • Lisa_Hooker says:

        Traded $20 haircuts (and the time) for cheap elastic bands and a ponytail. Retirement does have some perks.

      • Lisa_Hooker says:

        Converting a high rise office building to residential condos brings new meaning to work-from-home. No commuting, just stay in the home (office) all the time.

    • Lynn says:

      Some of those office spaces and malls could be converted to residential if they are in good condition. It may mean doubling some internal walls for more main plumbing and electrical lines, or (less appealing) boring into concrete, but if the building is up to code for residential earthquake standards then it could be done. They may not be luxury apartments or condos, but there is certainly a market for any housing. It would take thinking outside of the box to make the numbers work.

      • Lynn says:

        oops, didn’t read down far enough

        • Joe Saba says:

          single story easy conversion
          when you add in WHAT CITY/COUNTY REQUIRES including sprinklers in multi-floor buildings
          if you get building for $1 maybe numbers work

      • Blockhead says:

        How about converted into vertical farms?

        • Thomas Roberts says:

          Vertical farms are greatly more expensive than normal farms and are mainly only suitable for very densely populated countries or countries where growing food on traditional farms wouldn’t work.

          Over time the economics and environmental factors may improve, but, right now, vertical farms also pollute more and are more resource intensive.

          Also, I don’t think many existing buildings could be converted successfully, you have to build a vertical farm from the ground up for that specific purpose.

    • Robert says:

      The global population growth rate peaked in 1962. Future trends in net population growth all point down. Without central banks printing deflation and disinflation will rule the day.

      Global GDP cannot continue to grow at past trends, which means not everyone on the planet can live the American lifestyle.

      • Bobber says:

        Declining GDP could usher in a beautiful new beginning. People would be forced to lead happier and more satisfying lives, based on appreciation, humility, and beauty of nature, as opposed to materialism, superficial media, and environmental destruction.

        If the communication grid would fail, we’d really be off to a great start. You’d actually have to talk and visit with other people, in person, and show them respect.

      • Lisa_Hooker says:

        “Global GDP cannot continue to grow at past trends, which means …” Americans can’t live the American lifestyle.

  2. 2banana says:

    Check on step 1

    1. Salaries adjusted/reduced for cost of living.

    2. You are now competing with anyone with a computer anywhere the world for your job….to include AI.

    3. In a few years it will become readily apparent that those who are in an office and have actual human contacts/relationships get promoted and raises at a much higher rate.

    • lenert says:

      3. does not save you from 2. which has been the norm for about 20 years now.

    • Zantetsu says:

      I think a very motivated and skilled individual can work at home and still be more effective than the average office worker doing the same job. Not everyone will be as skilled or motivated, of course, but for those that are, I think that they will still have opportunities to get raises and may end up much better off financially in a small town working remotely.

      Also, for the record, I’m not trying to say that I’m one of those people. Maybe, maybe not, time will tell.

      YMMV.

      • G89 says:

        “I think a very motivated and skilled individual can work at home and still be more effective than the average office worker doing the same job”

        Working from home generate more distractions Ex Kids, that football game.
        You also lost the touch with the people of your company .Remember a big part of the communication is not verbal
        And finally you might get crushed by routine.
        One or two years from now we will see the results.

        But a full time working from home might not be the best for productivity.

        A 50/50 is better,at least you might not be fully wrong.

    • Zantetsu says:

      By the way, once computer AI can do my job, I won’t care because we’ll all be served by robot slaves and won’t have to work anyway.

      • Jeremy Wolff says:

        Yup. I don’t know why everyone is scared of robots taking the jobs. That would be best case scenario! Then give me my monthly check so I can go ski or play video games or whatever.

    • Engin-ear says:

      I interpret this WFH move as a preparation for large scale shift to “Work On Request instead of “Work on contract with fixed number of hours”.

      In other words, a creation of “Global Freelance International”.

      • Lisa_Hooker says:

        Dutch auctions for laptop labor. Fast. Efficient. Punishing.

      • LB says:

        The most percipient comment I have seen. Overall I think the upshot is likely to be a shrinkage in employment opportunities for office work .so that your “large scale shift ” may be looking at the situation more optimistically than is warranted

  3. Seneca's cliff says:

    This will provide a golden opportunity for companies like microsoft to implement the latest in machine learning to replace employees with bots. Employees in an office have many un-monitored activities and human interactions. In WFH the AI can watch every keystroke the employee makes, every word over audio, and even facial expressions on zoom . The skills the employee has can quickly be incorporated in to a computerized version of that employee. So one day that employee in Tulsa will see his screen go blank, with the message, ” current human employee no longer needed, the HR bot will now wind down your employment.”

    • Zantetsu says:

      You’re in fairy tale land. What you describe won’t happen for hundreds of years, if ever. And if it does, that fairy tale is a great place to live in anyway since nobody will have to work as everything will be done by computers and robots.

      Seriously, people who extrapolate from very specific advances in pattern recognition and generation neural networks (which is pretty much behind every ooh and aah in the ‘deep learning’ field right now) to generalized intelligence are committing the same mistakes that people in the 1960s did who thought that A.I. was just around the corner because “computers were getting so fast and it’s obvious”.

      • buddhahacker says:

        It will come faster than you think. In 2017, about 20% of my old company’s staff accountants (~40 FTE) were replaced by front-end transaction screening software which the vendor called “AI”. Basically, fuzzy logic that correlated and reconciled accounts and transactions. A function to which humans previously performed. It also reduced much of the backend reconciliation work. They are now down 30%. Also, several product development positions were eliminated using “big data” solutions. Last year they targeted customer service and sent 10% of their calls to automated reps. I called their CS to see how well it worked and was seriously disturbed by how accurate and life like it was. I could still tell the difference but it is certainly better than some of the overseas solutions.

        While consulting with a small financial services company earlier this year I learned of their target to eliminate 10% of their staff through automation, “big data” solutions. They hit the target last month. Break even on cost is expected by EoY. They are also going after the automated CS solutions for their smaller customers.

        • Zantetsu says:

          Again, pattern recognition, which you have just described as the AI that replaced those workers, is not the same as general intelligence and thus cannot replace jobs that require general intelligence.

          But you know, I wouldn’t mind being wrong, because like I said, it would be fun to not have to work anymore because computers and robots do all the work for us.

        • MonkeyBusiness says:

          @Zantetsu, he lost me once he said “big data”. I work as a software developer and I deal with translating AI models as part of my job. What you said is correct. Just think about it, the salaries/RSUs/other forms of compensation of software developers are probably the biggest expense component of a software company. If we are so close to this promised land, why are companies consistently bringing in more and more H1B workers?

          AI models are fine as long as the world looks like yesterday or two months ago or last year, but once a trend/something changes for good, that AI needs to be retrained and it’s therefore toast. Remember the mortgage debacle?

          For people who didn’t study Computer Science, here’s my best effort explanation. Our current state of the art AIs do not understand the concept of abstraction and without that you can’t perform higher level reasoning. All AIs up to this point are trained to do one thing and one thing only and that is to give the best answer to a given prompt.

        • Zantetsu says:

          MonkeyBusiness, not sure if you’ve seen this but do a google search for StyleGAN2. It’s unebelievable what it can do. The YouTube video by Nvidia showing it off is mind blowing.
          But it’s not intelligent in any way, it is just a very complex method of “smearing” its inputs around to get a believable output. And yet, it’s still pretty awesome.

          I am totally excited by what these “deep learning” algorithms can do, but in my opinion all they will ever do is augment human creativity and thought. They will not replace it.

          Also you can read about GPT3 which does the same sort of “smearing” of inputs but does it with text, and can generate some pretty interesting text. But again it’s just good at making text that mimics what a human might write, there is no “intelligence” behind it.

        • MonkeyBusiness says:

          AI is just another one of management’s boogeymen. “Work harder or we’ll replace you!!!” I have to admit it, I am kinda enjoying this decline of Western “civilization”

      • jm says:

        Having made my living at times as professional translator of technical Japanese, I’ve been hearing for the last 40+ years how various supposedly fantastic automated translation packages under development would soon make human translators obsolete. But have never seen one that could handle Japanese. A fewyears ago started noticing articles about how Google’s latest AI based translation system was amazingly good. I’ve found it works quite well for Russian, despite it being one of the Indo-European languages farthest from English. But it’s worthless for Japanese, due to the lack of articles (a, the), and even more because pronouns are used very sparingly in Japanese — if the writer believes it’s obvious who or what is the subject or object of a phrase or sentence, they will just omit it. A literal translation will therefore read like ‘telegraphic’ English. So Google translate tries to guess the right pronoun, and fails quite frequently, because to get it right requires true understanding of the context. You’ll find ‘I’ where it should be ‘he’ or ‘her’ or ‘it’, or vice versa. Because subjects or objects may be completely omitted if considered obvious from context, cause and effect may be reversed. Most translations are garbage.

        • MonkeyBusiness says:

          You’ll find that Google Translate would occasionally perform flawlessly when it comes to Japanese language, but here’s the secret, it only does so when the text to be translated is very close to its training corpus.

          Japanese is particularly hard to translate because it’s a Context Heavy language, but the language models used in many AI based translation software are Context Free because …. English is mostly context free. A lot of language models will also penalize a translation where the word order is different between the source and the original. Since English is mostly Subject Predicate Object and Japanese/Korean are Subject Object Predicate, one can see why this might be a problem.

          In the first place how an English only speaking engineer is supposed to rate the quality of a translation totally escapes me.

    • Cem says:

      I used to feel just like you. I however have been part of a 6mo. Coding bootcamp where my instructor is one of the guys going to all the AI(ML & DL) conferences and working as a consultant in the field. He is one of the few people I’d consider genius level.

      When ask about robots taking over he laughed and laughed and said not in my lifetime and likely not in yours. So that’s my stance, keep up on technical skills and never worry about losing your job to a bot.

      As a side note if you do some digging, a lot of the big tech companies have open source AI programs that you can play around with for free with some tech knowledge.

  4. Harrold says:

    This will last until mid-level managers realize they can’t get promoted without smoozing with upper management.

    • Tony22 says:

      Mid level managers? That’s what software is for Harrold. All there will be is Peons who must carry a smartphone, plus A.I. that controls that herd and a few owners that attempt to spend the profits.

      Problem is, peons will barely have enough in their social credit cashless credit accounts to be able to buy rice and beans and maybe have payments for their carpartment subtracted.

      They will not support the consumption economy, nor can the owners buy enough to keep their businesses solvent.

  5. Brady Boyd says:

    So when is there going to be a study that having entire offices working remotely are as efficient as pre-pandemic?

    • Harrold says:

      The same folks that did studies touting the efficacies of open plan offices are no doubt busy retooling as we speak.

      • Ed says:

        The early reports from my company, a tech company, is that people were working MORE hours.

        I expect that to have settled down to “same hours” since then.

        Many design technology workers are autonomous when they are at the office. The work takes months. The only real checks happen at two or four or six months intervals when reviews happen.

        Moving these workers remote works fine if they are capable and management knows how to judge work.

        • Zantetsu says:

          Sure if by “working” you mean keeping one eye on slack/email and one eye on the TV, I can believe people are “working” more hours during COVID.

        • Ed says:

          Sure. No doubt you are 100% right if the work is tedious.

          But for people who find their work interesting, they now are at their desk at 8 after seeing the kids off to school instead of 8:30. A whole hour of commute has been zapped for the typical guy who works downtown. Some of that might get poured into work . . .

        • Zantetsu says:

          That is true Ed, but I think those people are in the vast minority. I could be wrong, but that’s what my experience shows. Even in high tech jobs (maybe especially in high tech jobs?) alot of people just want to show as much effort as needed to keep their job, and no more.

          There have been times when I have been a part of both camps personally, I’ve seen it from both sides, I know how to recognize it, and I think I see it in most people.

          Caveat: I’ve worked for the same company for 19 years so my experience is highly limited to one org. Maybe other workers in other companies are vastly different … my knowledge of human nature suggests otherwise, but I could certainly be wrong.

      • Escher says:

        Ah, open plan offices.
        Every manager’s wet dream and every employee’s nightmare.

      • Stevie says:

        As a software developer, working in cubicles was bad enough. Many of my peers wore earbuds as a kind of noise suppression from the constant din of conference calls, nearby conversation huddles, etc. How anyone was expected to concentrate or get work done in an open plan was beyond me.

    • Wolf Richter says:

      Companies are constantly looking at this on their own and are, like Microsoft, coming up with their conclusions.

  6. Javert Chip says:

    Remote work (50% WFH is different) may work relatively short-term (couple of years) for geeky techies with highly perishable skills, but I doubt even a company like Apple can manage a technical product pipeline like this (explaining why Apple restricts this option).

    The vast majority of “remote workers” won’t have the self discipline to maintain interpersonal relationships and keep technical skills current. The situation can (will?) quickly transition from “carer” to “gig” worker.

    There will always be the odd genius that successfully works naked, from a cave on the upper slopes of Mt Everest – so let him. Doesn’t mean the majority of the staff can also pull this off.

    • MonkeyBusiness says:

      Apple already has to work with foreign suppliers pretty frequently in matters of design and development. For example: TSMC in Taiwan, the best maker of semiconductors in the world will build 5nm chips for the iPhone 12, iPad Air, 5G iPad Pro, and any future MacBook or iMac systems Apple launches with its its own custom chips.

      This usually requires back and forth collaboration. It’s not as if Apple has a finished design and it’s up to TSMC to simply produce the final products.

      What’s the difference between TSMC and remote workers?

      • Zantetsu says:

        The difference is the degree of integration into the organization. You can argue about how it plays out, but you can’t argue that there is not a difference between employee working remotely and a separate company.

        • MonkeyBusiness says:

          OP was talking about “technical product pipeline”. Why does that stop at Apple?

          The pipeline extends all the way to the manufacturer, which isn’t Apple. And as I said, it doesn’t work the way you think it does. There’s some initial designs which is Apple only, but designs often have to be adjusted after having been sent to the manufacturer, and it’s worse in this case because said manufacturer is almost on the other side of the world.

      • Javert Chip says:

        Monkey Business

        One of Apple’s explanations for this year’s late iPhone announcement/rollout is Covid travel restrictions between US & Chiina vendors, which delayied various product reviews & approvals.

        • MonkeyBusiness says:

          Earlier in the year, the problem was all China, but now the problem is the entire West. This week was the Golden Holiday in China where 450 MILLION people traveled, whereas over in the West, we are talking about another round of shutdown even in Germany.

          At the beginning of the year, I am sure many people/companies were thinking of moving out of China, but now I am sure the same people/companies are doubling down, and it’s hard to blame them since China does seem to have the problem under control. Heck 3500 corporations have just sued the US Government for the tariffs.

          The West can never rebuild as long as the managerial class refuses to take a pay cut.

    • Apple says:

      200 years ago, everyone worked from home.

    • Ross says:

      When I worked in computer tech, and I go back to the days when it was mechanical, I knew I learned most of what I knew at any stage of tech development, it was directly related to the smarter people in my workplace. NCR

  7. MF says:

    Whelp. Landlords loved it when they could invest their profits anywhere in the world, while milking tenants who were held hostage by their employer’s location.

    Now labor is getting more mobile. Excuse me while I squeeze out a tear for all those unfortunate landlords. Clearly, Chapter 11 is the absolute worst thing that could befall them! How could we possibly understand their plight?

    • 2banana says:

      This has happened all throughout history.

      Even without the internet.

      I can show beautiful stone houses in Trenton and Camden NJ that you can purchase for a song.

  8. Chillbro says:

    These articles always bring out some interesting comments. I wonder if the naysayers are heavily invested in CRE and just feeling salty. No way to tell.

  9. zillow millionaire says:

    What can be done remotely from your suburban home, can be done from Pune. That’s the play here.

    • RightNYer says:

      Yes, but for most fields, the quality of Indian workers is nowhere near what the quality of American workers is.

      • MarkinSF says:

        While true, the same argument was popular regarding the American labor pool when it came to manufacturing. Still went offshore

        • Zantetsu says:

          And lower skilled tech jobs have also largely moved offshore. But the higher skilled jobs have remained here, often by bringing the higher skilled foreign workers here.

          My point? There is a fundamental difference between low skill and high skill and what gets offshored. High skill jobs are not immune to being offshored, but thus far, after decades, the high skill jobs still remain mostly here.

          (in my experience eastern europeans can do some of the high skill work less expensively, but they often are not as concerned about the long term quality of the product and so often will just skillfully ‘hack’ in solutions instead of implementing the more correct and more time consuming long term solution)

        • Javert Chip says:

          I’m an old fart; somewhere in the 1970s, Japanese autos began a streak of far surpassing American manufacturing quality (remember K-cars)

        • 91B20 1stCav (AUS) says:

          JavertChip-a case of the Japanese leveraging the MacArthur Plan by actively adopting American Edward Deming’s manufacturing principles, quality enforced by the MITI, while Detroit looked at Deming, chuckled, yawned, and resumed its happily-dreaming slumbers…

          may we all find a better day.

      • IdahoPotato says:

        U.S. semiconductor companies (Micron Technology, Intel, AMD, etc.) are expanding their teams in India, China, Taiwan, Singapore. These teams are highly skilled and manage key projects.

        You may want to rethink the myth about “the quality of American workers”.

        • Alku says:

          The same I see in software.

        • RightNYer says:

          Believe it or not, there are whole industries out there besides tech

        • Ethan in NoVA says:

          America lost. TSMC is in the lead of chip manufacturing now. Intel is trying to catch up.

          And in some companies the foreigners have moved up and control the hiring now.

          The tech lead is over for the USA.

  10. zillow millionaire says:

    Let’s convert the commercial buildings into apartments. That will be good for the society, no?

    Ha ha ha who am I kidding?

    • Sam says:

      ‘Closer than you might think’:

      Re CBC
      JUST IN: Vancouver city council has approved $30 million to lease or buy vacant hotels, apartment buildings and single-room occupancy buildings to house homeless people.

  11. NoFreeLunch says:

    The idea of someone who can contribute remotely no matter where they live being paid differently, depending on where they live is silly. When I compare similar products to buy, I don’t justify a higher price because it was made in a more expensive place.

    • 2banana says:

      Go try to buy a house in Westchester County, NY for the same price as in Omaha. NE.

    • MF says:

      @NoFreeLunch:

      The U.S. Government (including military) has been doing this for 40 years. Everyone gets a base pay scale, which is adjusted for cost of living in the area they are required to work, whether stationed domestically or overseas. Housing is, by far, the largest component in pay variance between locations.

      The underlying concept is equalization of buying power. The employer (U.S. government) is competing for skill sets on the basis of providing roughly the same standard of living no matter where they are deployed.

      • LB says:

        The Procrustean Principle for levelling down and you all thought it was a principle only operating Russia and China.

    • Sea Creature says:

      So then someday when a round of layoffs inevitably come… other things being mostly equal, it will be the people in the expensive cities getting the sack first.

      If anything, that is a reason to move from an expensive city (or country) to a cheaper but nice one if you can (and there are lots of those actually).

      This will be interesting to play out over the years. Until now, manufacturing was global, but now labor will be too. Lots of low cost cities and countries will be welcoming to highly skilled US, UK labor (that will still usually earn good money relative to cost of living in that local) that can now move around globally.

      Sucks if you have real estate in an expensive city or country though..

      In the long run, I figure places like the USA will get way cheaper, and places that are also nice to live in like Czech..etc. will get more expensive as everything balances out and people move around.

      Someone who needs to bill $150 hourly in an expensive US city can bill way cheaper than that if they are in some nice city or country that’s way cheaper.

      It will make them more employable too, as the cost difference between an American (say in IT) living on the beach in a cheap country and Indians in India will be much less. Most companies will pay a small premium to get a real American who went to a western school over an Indian who went to a diploma mill in India, where they wouldn’t have if the premium was big like it is now.

      This will make for many big changes.. hmm.. as well as probably a lot of side effects that haven’t been thought of yet.

      Landlords in otherwise not so nice expensive cities that people are forced to live in due to work (SF comes to mind) are toast though..

      • MarkinSF says:

        San Francisco is not so nice? It’s only the most beautiful city in America.

        • MonkeyBusiness says:

          If you are lucky enough to live in certain areas.

        • Sea Creature says:

          Yes that is true, it is and I visit SF often as it is close by.

          But there are other cities like Prague, Budapest, Moscow, Singapore, Quebec City & Montreal that are also very nice and cheaper (well except Moscow and Singapore these days that got expensive).

          With WFH, being the nicest in the US isn’t really enough anymore, its now ‘nice’ versus cost, and cities will be competing more globally now.

        • Lynn says:

          It’s still pretty but not as vibrant. Many of the people who made it vibrant had to leave because of the high cost of living- many artists; painters, sculptors, videographers, photographers, dancers, musicians, poets, writers. Some of them are now living in Detroit. Same with NYC. Our cultural centers have suffered for decades.

        • LeClerc says:

          An old retired SFPD once told me,

          “There are 54 neighborhoods in San Francisco, but only 11 or 12 are livable.”

          @MarkinSF has never visited Sunnydale.

        • MarkinSF says:

          @LeClerc Sorry but this comment is so ridiculous and the conclusion so far fetched I just had to respond. First I’ve lived here for about 37 years now and I’m pretty familiar with every neighborhood in the city. I don’t know if there’s 54 or 154 but pretty much every one of them is livable (about half of them highly desirable). Sunnydale is a very small subsidized housing complex that’s maybe 3 square blocks and virtually isolated from other neighborhoods. So there are probably 3 or 4 bad neighborhoods that are geographically small and relatively constricted that are basically on the outskirts of town. It may have been a bit different in the 60s & 70s when this working class town began it’s transformation into the city it has become but it was nothing compared to the East Coast ghettos and rundown neighborhoods of NY. DC or Philly. where I grew up. Sorry to burst your bubble.

        • MonkeyBusiness says:

          Tenderloin is livable? Like seriously? I live in the Bay Area too and I work in the city (or used to till WFH). Some areas in the Mission are known for high crime, and I wouldn’t want to live in Bayview, Visitacion Valley nor the Western Addition.

          Beauty is in the eyes of the beholder.

          Now life would be different if I were to live around the Presidio/Pacific Heights or Russian Hill. But then again life’s great when I were rich, which I am not.

      • Jeremy Wolff says:

        In “Factfulness,” it was argued that cost of living differences are highly correlated to the desirableness of an area. People are competing for scarce homes. 75 and sunny tends to be more expensive. So when things even out, there will still be more expensive places.

        If rent goes down, their is surplus for employer and employee. However, if pay goes down, then the employer gets all of the surplus and employee gets none. However, I don’t believe that the employer has that advantage. Good workers, knowing that the employer has the surplus, will demand some of the pay. Not spending it on rent, they may get sport tickets, eat out, etc. So it may end up the surplus is split in the middle.

        As far as workers competing with each other to be in least expensive area, I do believe that your best workers will congregate in more expensive towns. Your best worker knows that he has the most leverage for pay, so I hypothesize he will try to be near good food, sports team, entertainment, recreation, etc. You can argue that workers will be evenly distributed (talent wise) across all cities regardless of COL, but I’m guessing you will still find better workers in more expensive cities. The traits that make a worker better are likely to be the traits that can pick the best city to live (and by my paragraph 1 definition, will cost more).

        So unless all workers have no leverage and its a fight to the bottom, there should still be upward pressure on wages as employers have to compete for workers.

    • Wolf Richter says:

      NoFreeLunch,

      It’s very common. Lot’s of big companies do it. Microsoft has done done it for a long long time.

      • NoFreeLunch says:

        OK then, I will WFH from Honolulu, so I would get a raise moving from Seattle. Or maybe Zurich. Better yet, let’s form a tiny town, make huge rents (10x Seattle), where the residents can be the landlords, get a big salary and kickback from the rents.

        • OutsideTheBox says:

          WFH means employee salary and benefits will be cut.

          WFH income for the self employed will remain the same.

          Choose your poison.

    • Dan Romig says:

      I justified a higher price yesterday; two 8″ non-stick sauce pans at Target. One from Thailand was a couple bucks more than one from China. My pot rack has a new addition from Thailand. Granted, a couple bucks is no big deal, but as a matter of principle it’s my policy.

      Target just announced that it won’t bring the bulk of its more than 8,500 person ‘corporate’ workforce back into downtown Minneapolis until at least June 2021.

      • Tony says:

        I just bought a digital piano for my daughter. The Japan one cost twice as much as The China one.

        I bought the Japan one without blinking.

    • I totally agree with you @NoFreeLunch – COLA for private companies is a complete disaster. Why should I get paid more if I choose to live in Hawaii where the cost of living is high versus choosing to live in Taft where the cost of living is low? If I am going to suffer living in Taft, I deserve to make that extra money for other purposes than paying rent.

      Yes, I can see paying someone more because they live close to the office but not because they choose to live in an expensive area. This will have the terrible consequence of making nice places less affordable without giving them the economic benefit of being the home to large companies.

      • Jeremy Wolff says:

        You are paying them more because you want them to work for you and they were unwilling to live in Fargo. It’s more about supply / demand for the workers than it is about fairness. If a company could find enough amazing talent in India, they probably wouldn’t hire anyone from anywhere else.

    • Javert Chip says:

      Lunch:

      You don’t get out much, do you?

  12. Rumpled Bemused says:

    My wife has been wfh for the last several months, but due to children now taking their classes online (I am guessing here) our internet has become unreliable. She is now going to her office on those days when she has multiple Zoom meetings.

    We are all becoming more dependent on a satellite system which becomes increasingly fragile with each satellite launched.

    • Rodney says:

      The unreliable service of the internet will push people to NEED the 5G which will do them damage , but now they worl from home, paying the bill for the connection and electricity, they HAVE to have a better connection, and so the AGENDA of the TECHNOCRATS to watch over everything you do and say, comes about by REQUEST… JOB DONE.

    • Javert Chip says:

      If you’re working on satellite internet, you have other problems

  13. Michael Engel says:

    1) MFST H&S got a painful headbutt by the cloud spitz.
    2) MSFT jumped > Oct 1 high, on falling volume, but stopped on the
    Sept 3/4 and Aug 25/ 26 gaps resistance.
    3) MSFT looks tired.
    4) This Sunday Nasdaq Futures 1H might work o/n and flip MSFT to the canvas.
    5) If that happens, MSFT neckline is a target.

    • Javert Chip says:

      NO! NOT THE AUG 25/26 GAPS RESISTANCE!

      SAY IT ISN”T SO!

    • Fat Chewer. says:

      “And in other news: MSFT has just bought Bethesda games, one of the biggest game developers going round. They are also preparing for the release of the new Xbox. Not to mention being the owner of a certain high selling operating system. However, the Aug 25/26 gaps resistance has put a cloud over these developments. Jane, do you know what a gaps resistance is?”

      “No, Michael, I don’t, but it’s looking like the end of MSFT if our correspondent is to be believed.”

  14. Seneca's cliff says:

    I am going to take a deep dive on where we might be heading as this plays out. Young person goes to college online but lives at home with parents because student loans no longer cover living expenses and most dorms have been closed down. Then when he(she) graduates they get a new job, which they find online, but have no need to move out of the room in the basement. They continue working from basement room as nothing in their life really triggers them to move out. Perhaps they meet a significant other online, and they make plans to move to one or the other parents house together. Not a pretty picture for the real estate market as a whole.

    • Sam says:

      Already there.

      Sold my house (PDX ‘burbs) last year, as did several neighbors (one passed on, the other relocated to Tucson), and all buyers (unrelated) are retired with their (adult) children who live in basement & WFH.
      The millennials/Z’s operational model is “My parents live with me.”

      • ft says:

        I’ll be happy to accept “My parents live with me” from my millennial as soon as he starts paying the bills.

        • Lisa_Hooker says:

          A neighbor’s kid has a $130k software job WFH. Remodeled the basement to two rooms, kitchen and bathroom, and outside entrance. Basement is now nicer than upstairs. The entire family gets on quite well.

    • Kurtismayfield says:

      Yeah, waiting for the tears for a real estate market that has not responded to demand (look at new builds 2001-2007 vs today.. the numbers are 50% less) while the Fed keeps inflating the value of the existing inventory while deflating the labor of the kid who has to live in his parents house. Meanwhile food, education , and healthcare costs keep going up.

      It’s the real estate sector we should be crying for…..

      • RightNYer says:

        That’s the Fed’s whole goal. Inflate the assets of the Boomers so they can enjoy a lovely golden years while everyone younger suffers.

    • @seneca’s cliff – I find it really strange that people hate the idea of living with their children. Personally, I think multi-generational living is a beautiful thing – unless you are a real a-hole of a parent who raised real a-hole children. Oh, right….I forgot which generations we are generally referring to.

      • RightNYer says:

        It just doesn’t seem American to me. It’s common in Latin America and in Asia, but in my view, what made America great was the willingness of people to go out on on their own.

      • Apple says:

        Americans are lousy parents.

    • Wolf Richter says:

      Seneca’s cliff,

      There may be people like that. But none of the millennials I know live at home or would ever want to live at home again. They’re out there battling it out every day.

      • carolinus says:

        I think the root of that instinct is the messaging in society that living at home is an indication of failure. But i think the notion that “you’re on you’re own” is creeping into the minds of even young folks like myself (born in ’81). I have moved back to my hometown after roaming the country looking for career inroads oh around 2007 or so. Getting closer knit to my siblings that are back here and my parents that are getting longer in the tooth. I have the impression that my father would still bristle at the idea of intergeneration living on the grounds that his idea and picture of success was moving and resettling for his career. But I expect this will be reconciled with increasing need of assistance as he and my mother age. I personally find a certain peace in the notion. Could be a bit naive on my part.

      • Clete says:

        When I was broke in my 20’s, I still couldn’t wait to get out of the house. I had enough trouble getting the girls without having to sneak them* in to my parents’ house.
        *I wish

        • roddy6667 says:

          I am the oldest of 9 kids. It is a joke in our family that we all got the same birthday gift when we turned 18. A suitcase. GTFO!

      • Javert Chip says:

        Yea, the Barista line at Starbucks is BRUTAL!

  15. Sam says:

    Addendum – “The natives are fleeing their villages”.

    Today’s U-Haul  rental rates….(largest truck)
    PDX to Boise: $1380.
    Seattle to Boise: $1536
    Boise to PDX  or Seattle: $159

    • Seneca's cliff says:

      I can’t dispute this. I travel past a big U-haul center in the western suburbs of Portland. For the last 5 years ( up until 4 months ago) the lot and all the streets around it were packed with trucks which I took to mean that inbound trucks were piling up. But I went by the U-Haul place yesterday and the lot was half full of trucks and the streets were bare. A lot of this is not work from home, but construction workers heading back to the boonies (Boise) from where they first came to work on all the building in PDX over the last 6 years. I can’t wait for the Texas and Idaho License plates to thin out on the road. Most of us in PDX pine for what is referred to here as “Old Portland”. This refers to a time back in the 90’s when rents were cheap and you could bicycle everywhere without traffic or crazy out of state drivers getting in your way.

      • Sam says:

        True. What was will never be again.
        “Contentment is natural wealth, luxury is artificial poverty.” – Socrates

    • N says:

      Interesting Uhaul stats. I’d love to see it for other destinations from Seattle. The thing is, at least so far, prices are up big (10-15% YOY in Seattle). People are moving to the burbs, to far flung towns in the state and to other states but people are also buying in Seattle. Even West Seattle that has been renamed West Seattle Island because of the bridge shutdown for who knows how many years is up 10% YOY. All that said, the rental market as has been reported is down double digits in monthly rental rates so perhaps renters are either moving or buying a house with a home office.

  16. Ahjay says:

    WFH can be abused making someone else to do your job remotely. Also, can work on multiple jobs. Most importantly, security and privacy or proprietary can potentially be compromised.

    • Jeremy Wolff says:

      Not abuse. Just arbitrage. They were willing to pay you more than the job is work. Just taking advantage of a price mismatch in the market for labor.

      That’s like calling it abuse to hire a cleaner and gardener and go out to dinner. You are paying someone else to do the work you could have done yourself, but would rather not. This could because they are better at it, more efficient at it, or your time is just worth more to you.

      As long as the work is good, no one loses. You could argue the boss loses, but he seems content paying the amount he paid for the results he got. Arbitrage usually doesn’t happen long and price discovery will occur. I.E. you will be fired and the subcontractor hired.

  17. Alku says:

    “In other words, they can work from anywhere.”

    If you were hired in Seattle before the pandemics, this is clear. But I am just wondering how this will influence the hiring process globally. If there are other skilled people in this “everywhere” that want to work for Microsoft, what will happen.

    • Wolf Richter says:

      Yes. In that sense, everyone will be competing with everyone. That’s a known side effect. Hopefully, you can compete on the superior quality of your work, not on price.

      • Alku says:

        It appears this policy of Microsoft an other companies will “open the gates” with epic consequences.

        Virtually any IT company I know uses Indian developers. When it was a norm to have all in office (which required legal work authorization) outsourcers were a kind of the “second tier”. But with whf as a “new normal”, the existing legal work formalities seems to become obsolete.

      • Lisa_Hooker says:

        A marketing strategy based on quality is the most difficult of all. If you’re small with few resources it’s the only one that’s affordable.

  18. OutWest says:

    I WFH on a large tech project with state employees and private sector employees.

    Since Covid hit, I hear loud disruptive children of all ages in the background during management meetings and technical work sessions demanding their parents attention.

    I don’t know how parents are able to work professionally from home while they educate/ monitor their kids throughout the day. Somehow they pull it off….glad it’s not me having to do that!

  19. JustMy2Cents says:

    I totally agree with zillow millionaire:

    Once the jobs can be done digitally anywhere in the world, Americans and Europeans will compete with people in India and China. It will give large companies access to a huge global workforce and they’ll buy that workforce where they’ll get the best value for money.

    India and China have such a huge populations and there are many qualified people among them. Two Chinese universities (Tsinghua and Peking University) are now ranking among the top 25 universities in the world.

    Jobs in North America and Europe will be lost, very much like industrial jobs during the last three decades. Or people will have to accept much lower salaries and thus much lower standards of living – confer the situation in the Rust Belt.

    “More flexibility” sounds nice too, but don’t let the companies fool you!

    I also agree that this will speed up the installation of the 5G infrastructure.

    • roddy6667 says:

      More jobs in America will be lost if they have to compete with Chinese and Indian remote workers. These people live in a world where $10,000 US a year buys an upper middle class lifestyle using Western standards.

      • Ook says:

        “$10,000 US a year buys an upper middle class lifestyle”
        Not since 1990, if you’re talking about cities.
        An equivalent-skilled Indian worker command a salary about half of what they would get in a place like Singapore.

        • roddy6667 says:

          Upper middle class is about $32K US and up in India. In China it is $12-16000 US. These are household incomes, not per capita.
          An American employer would do well to recruit from second tier cities where the cost of living is about half of first tier. The same in China. Avoid Shanghai and Beijing, etc.

  20. MonkeyBusiness says:

    There’s another thing at play here. H1B requirements have been revised resulting in dramatically higher minimum salaries.

    Jobs might just head overseas.

    • Alku says:

      This is what I was thinking, too – why even bother with H1B?
      And what principal difference will be between somebody who moved from Seattle to say, Poland, and the local skilled programmers who are eager to work for Microsoft?

      • MonkeyBusiness says:

        It’s poorly thought out. I definitely support paying the American people MORE. But the best Computer Science colleges are filled to the brim with overseas students. The policy only makes sense if the country is filled with local people ready to work because I can tell you that US companies just don’t want to train people. Companies will also prioritize current employers since they are a known commodity.

        • Alku says:

          Current employees – no questions. But big companies hire a lot of new employees all the time. I think that one year down the road there will be considerable changes.

        • zillow millionaire says:

          I work with many H1-Bs. IT is my bread and butter.
          Only 10 to 15% of Indian H1-B’s are worth any salt. Rest, 6 months of boot camp, any inner city kid can do the same job.

          Does the inner city kid has patience to sit in front of computer for 8 hours a day….that’s a whole different discussion.

        • Kurtismayfield says:

          If the working conditions and pay were there in CS you would see many more US students go that direction. They go into finance and sales for reasons.

    • zillow millionaire says:

      That doesn’t mean any thing.

      Courts will reverse that and back to status-quo with cheap H1-Bs.

    • lenert says:

      Microsoft employees have been training their overseas replacements for some years now.

      • Petunia says:

        IBM also has a big presence in India. They build the exact same buildings there, they build here. You can’t tell where they are, even from the staffing.

  21. MarkinSF says:

    Unless your “work” is also your hobby or life passion I can’t understand the desire to actually work in the same place where you live. I mean I can understand it but there’s a part of me (most of me) that wants at least some physical and psychological distance between home life and work life. Even now I come into a mostly empty office and leave problems there after my day is done. And I find myself disturbed when reading work related e-mails (where even empty messages can seem to produce negative feelings) at home. It just disturbs the peace I find relaxing into my private life as distinguished from work.

    • Paulo says:

      Good point Mark. When both my wife and I commuted from our rural home to town, I instituted (with agreement) what I called the “Roberts Lake Rules”, taken from Roberts Rules of Order. Halfway home, 25 minutes into the drive, we would come upon a beautiful little lake called Roberts Lake. No shop talk after that point, or before it on the way in. When we would be getting close I would remind her, “We’re getting close to Roberts”, and she would wind it up.

      If she had a bad day she needed to process it all out in conversation. If I had a tough day I would be totally silent and when we arrived home I would make a great meal and drink a glass of wine or 2-3 while cooking. 25 minutes to Roberts was plenty. The other thing was no work emails at home and absolutely none on the weekend. If there was an emergency people could just phone as need be.

  22. Michael Engel says:

    1) MSFT weekly log channel with a cloud :
    2) Draw a support line from Feb 6 2018(L) to Mar 19 2020(L) // resistance : a parallel line from Mar 12(H).
    3) Feb 10 2020 is an Up Thrust.
    4) Aug 24/ 31 2020 are two throwover that sent MSFT down.
    5) MSFT is back inside the channel hugging support.
    6) Sept 21 2020 is a spring that sent MSFT to July 6 Buying Climax @215.86.
    7) In Dec 24 2018 and in Mar 23 2020 MSFT plunged on top of the cloud and bounced back inside.
    8) In Oct the cloud is skinny above the flatbed.
    9) The cloud might fail to support MSFT in the next time around, unless MSFT will flyover, glide until 2021/22 to the other side of the cloud.
    10) A RSI Bearish divergence with : Feb 10 & July 6 2020 and July 6 & Aug 24.

  23. lenert says:

    Ten years ago Microsoft’s DAILY turnover was 2,500 heads.

    • Javert Chip says:

      Lenert

      Nope; not buying that. Do you have a cite?

      Ten years ago, MSFT had 89,000 employees. A turnover rate of 2500/day for a 260-day year = 650,000.

      Even 2,500/month (30,000/year) stretches credulity (I’m being kind here).

      Absolute worst case, with 89,000 very unhappy (millionaire) employees, I’d guess 6-10% turnover (5,400-8,900/year).

      • lenert says:

        Correct – the company had 89k FTEs – and 91k contractors.

        • lenert says:

          Contractors, who had to break their service for 100 days each year to avoid classification as an FTE.

        • lenert says:

          At the time, FTEs had the best health insurance in the US – no “premium support” payments, no co-pays, no deductibles and no charge at the pharmacy for the employee, spouse, domestic partner or family members.

        • lenert says:

          Contractors were paid benefits, if any, from their contracting firms.

        • Javert Chip says:

          Lenert

          Sounds like you got me

  24. Paulo says:

    I think the past 20-30 years can safely predict how this will turn out. You take a totally fragmented and non-union group of workers and move them out of the standard office environment to work on their own. Their wages will be adjusted downward, fairly at first to reflect a cheaper resident location, and then just because the company can. Communication on company platform means surveillance and monitoring. Each employee will be competing with others (some yet to be hired), and secure employment will eventually transform into term contracts, then by the job, and eventually paid by the keystroke character with no mistakes or lags. AI will be used to constantly monitor worker ‘effectiveness’, (for want of a better term).

    I’ve seen this for years. It used to be that medical transcription services would be done in house, either in a hospital setting or doctor office. Now it is often contracted out by multi-national companies who then in turn hire remote workers. The workers ‘try out’ for the job and are paid by the word with a correction factor. They can work whenever, but there are a set number of objectives that has to be met or the work dries up.

    This can be done with programming, design, and engineering just as easily.

    My old neighbour used to do medical transcription at our local hospital. Good union job with benefits, excellent working conditions. She hated it. Her next move was to teach the program at a local community college for future transcribers. As a bigger pool of adequate workers arose, the transcription services were contracted out. Fast forward 25 years to my rural paradise. I know a lady whose only source of income is medical transcription, and she is paid by the word. If she complains, her work migrates elsewhere and she receives no contact from the company. She told me that if she works really hard with few mistakes she can earn $15 per hour. She is familiar with a huge amount of medical terminology and concepts in order to do her ‘job’. When she is forced to download work, upgrade to new programs, communicate with supervisors, this is all done on her own time. If she wants the work she keeps her mouth shut.

    The worker lives on Vancouver Island. Her supe is in Toronto. God knows where the company is based?

    • Happy1 says:

      You know someone who still does medical transcription? Voice recognition has completely eclipsed human transcription, I haven’t heard of anyone using human transcription for medical work in a decade.

      • nick kelly says:

        Guess there is a better program than the ones CNN etc. uses to subtitle. Lots of mistakes. A good tool to be proofed is how I’d describe the ones I’ve seen.

      • Escher says:

        Medical transcription jobs had moved to India and the Philippines a long time back, IIRC. Now those countries will also lose these jobs.
        Automation is going to hit the outsourcing and offshoring sectors hard.

  25. MCH says:

    Adjusted via Geo location, I wonder if that means if you moved from Colorado to Seattle your salary gets adjusted upward. 😝

    Somehow I doubt this, and it isn’t because Microsoft can’t afford it.

  26. Bobber says:

    I wonder if rent and housing prices near Microsoft just dropped 5%.

    • zillow millionaire says:

      50% when the covid is over.

    • N says:

      Well YOY prices are up 7% with nearby neighborhoods up 25% and 40% YOY. Just maybe if enough of them move out it will slow the crazy demand brought on by Amazon moving 10k+ employees and Apple buying up more and more real estate in the area.

      • Bobber says:

        Wrong.

        Prices are up a few percent in Redmond YOY. I just saw the stats today. Number of sales TRANSACTIONS may be up 25% or more, but that has nothing to do with prices.

        In fact, if transactions are increasing and prices are not, that indicates to me there could be big price drops when the transaction volume recedes.

  27. Zantetsu says:

    In my experience, smart companies will pay you what your work is worth regardless of where you work from. So I fully expect that in many cases, while you may take an initial pay cut to move to Tulsa, you can eventually make it back through merit based pay raises. It would be a great position to be in.

    You do have to work your butt off to show you are worth it though. Win/win, really.

    • Zantetsu says:

      And I’ll say this also: from personal experience, and from watching team dynamics during COVID, I will say that the vast majority of people are less productive in a work from home situation, to varying degrees. So it will be easier for the motivated to ‘rise above’ the average work from homer and show their worth and get those raises.

    • Shiloh1 says:

      Speaking of “butts” and WFH, every few hours I can do a set of glute bridges to help my running fitness. If I did those in an “open office concept” I’d be fired on the spot.

      • Zantetsu says:

        Because of Covid work at home I decided to try something I never would have tried previously: a standing desk with an under-desk treadmill.

        I have walked 640 miles in the past two months (avg about 13 miles per day, 5.5 hours per day, usually 6 days per week) and lost 18 pounds. I’m about 8 pounds shy of my college weight now for the first time in a long time.

        Recently it’s gotten too easy so I’m starting to add a weighted backpack into the equation.

        If we ever do go back to the office, there is no way I’m not taking my walking treadmill with me.

  28. Lynn says:

    There’s another possibility here as well for a few. WFH is more independent. Those finding for the first time that they have the ability and personality to be more self motivated may strike out on their own when the economy improves. There is also an opening here for more cooperative type working organizations as there would be less overhead.

  29. Michael Engel says:

    1) WFH will create major financial problems. WFH empty commercial RE.
    2) Plenty supply/ no demand.
    3) Commercial RE are banks assets, banks best collateral.
    4) Empty buildings will create deflation. Falling RE assets will bust the banks. When banks do care about falling prices, when their stop losses are taken, they will sell, starting a RE assets avalanche.
    5) WFH overtime will not be rewarded. Workers will become contractors. The corp pyramid above will shrink.
    6) Young employees will be disrupted by children and barking dogs.
    7) Supervising WFH encourage mischief.
    8) Young females will be allocated for work at night. Other will get a wake up calls early in morning by the boss.
    9) China Ming dynasty…

  30. TheDreamer says:

    SpaceX Starlink Beta Constellation is apparently up and running – the base stations now just need to be distributed to those deemed worthy anywhere in North America. I would not be surprised if this trend towards neo-feudalism results in a further move to the countryside. According to the NYT private island sales are off the hook. I guess it’s time to move to the country and get enough land to establish yourself a minor feudal lord while you can before everything falls apart and the authoritarian AI creeps further up in your business and everything else falls apart. ;-)

    • Fat Chewer. says:

      Funny! They had better start training an army, because that’s what the Lord next door is doing. He’s looking to start a feud. He wants your cow paddock. He’s got lots of guns and lots of people to use them. Ah, bringing back the days of the Hatfields and McCoys. How did we ever live without them?

  31. IdahoPotato says:

    Global Traffic Scorecard Pre-pandemic:

    https://inrix.com/scorecard/

    Hours lost in congestion per year

    Chicago: 145
    Austin: 104
    Boston: 149
    Philly: 142
    San Francisco: 97
    Portland, OR: 89
    Akron: 13
    Las Vegas: 17
    Boise: 16
    Omaha: 9

    • Javert Chip says:

      IdahoPotato

      Not going all Bill Clinton here, but I suppose it depends on what “congestion” means.

      The SF figure of 97 hours/year (besides sounding STUNNINGLY low) translates to 22 minutes per day (11 minutes for each leg of round-trip) … so I’m back to wondering what “congestion” means.

      • Wolf Richter says:

        Javert Chip,

        Agree about San Francisco. Maybe it’s 97 hours for people who commute WITHIN San Francisco (sounds about right, given that SF is small). The people who live in Walnut Creek and commute into SF, even if they take the BART, are looking at maybe 1 hr one way during rush hour, 2 hrs total per day if they’re lucky, for a total of 500 hours per year (250 work days). People who live further out may face 2 hr commutes one way, 4 hours per day, or about 1,000 hours per year. Long live WFH!!!

        I have spent over an hour just getting on and across the Bay Bridge.

        But now it’s a lot better than it used to be, traffic is a lot lighter. And the BART is nearly empty.

        • yossarian says:

          traffic has become horrible on new york commuter arteries. i spent an hour 1.5 hrs. yesterday driving from the gwb to tribeca. should take 25 mins. nobody is on mass transit anymore. i eventually gave up and drove down broadway with all the traffic lights because it was faster than the west side highway.

  32. coboarts says:

    Hahahahahahahaha!

    Nothing new here, baby…

  33. Michael Engel says:

    1) WFH employees compete with Indians & Chinese earning $15K – $25K
    per year.
    2) The pyramid above the Indians & Chines is $50K/y.
    3) They do production, they do R&D, design, marketing…they learn
    everything about your problems, market, industry, competitors…
    4) Sooner or later they will knock u off and land on your own home turf, like locus, leaving nothing behind.
    5) Expand your scope : WFH is a new form of globalism. It will render your co and job irrelevant.

  34. Hector says:

    Interesting conversation as always.

    Another aspect of WFH I have so far not really read about is the risk to the cohesion of the social tissue in modern societies. When going to the office, people are forced to deal with others from all walks of life, the same way military service used to do.

    With WFH as a primary “lifestyle”, I suspect societies will get ever so fragmented, because people will end up hanging solely with their friends/family or like minded people sharing the same hobbies or living in similar socio economic environment. A continuation of the social network induced bubble many people live in, of sorts.

    Btw Wolf thanks for the great content. Could you do a piece about your take on precious metals and its recent rise, I see in your archives you have not touched the subject that much. That would be great.

  35. John says:

    Wolf,
    So Microsoft had about 53,00o employees in Seattle and they added to that campus in 2017 a billion dollars. Total employees just over 150,000? Not much.

  36. Johnny ro says:

    Michael Engel describes Schwinn bicycles and Giant Bicycles.

    However this was not a WFH deal, it was plain old outsourcing.

    • Sam says:

      “No hands”: The rise & fall of the Schwinn bicycle company.

      Step back from picture, and BA [commercial aircraft] is on the same course.

    • Dan Romig says:

      I have a ‘vintage’ steel Paramount made in Waterford, Wisconsin.

      A sad story of a company that did not invest in the future. In 1978, Schwinn was planning to build a new factory in Wolf’s adopted hometown of Tulsa, OK, but the board of directors voted against it.

      History repeats itself though, as my brand new state-of-the-art Bianchi carbon-fiber frame is made in Vietnam. Just rode 40km up and back along the river on it, and she’s worth every penny of the $12.4k (before sales tax, fully built & with Minnesota made HED wheels)!

      Before retiring recently, I would commute on the Paramount: 5 miles through the city @ rush hour on the bike = 20 minutes. In a car = 30 to 45 minutes. The quality of one’s life, IMO, is inversely proportionate to the amount of time parked in a vehicle during the daily commutes, eh?

  37. Sydney says:

    Corporations already have differing pay scales by location. Nothing new here. MSFT is just confirming it still holds true if you choose a location to move to rather than have a forced relo. Normally a pretty small variance of no more than 10% or so between highest and lowest cost cities. You still come out way ahead living in a low cost place.

    As for competing with others around the world – yeah, already true too. Most major corporations already have employees in many countries. And not news to any company that they can hire people anywhere. That’s been the case for decades now. Certain jobs lend themselves to that, but many don’t. Native English language skills, cultural understanding, legal complexity, and time zone issues mean most U.S. based jobs will never be practical to fill elsewhere.

    • sunny129 says:

      @Sydney

      ‘Native English language skills, cultural understanding, legal complexity, and time zone issues mean most U.S. based jobs will never be practical to fill elsewhere’

      That may be true 20+ years ago but no more. Next to USA, English is the largest 2nd language spoken in India, in the World. Look at the CEOs of many mega Tech Cos! My nephew and niece work in Global – Fintech and Health tech sectors. They both travelled back and forth to USA, Germany and Japan. (as consultants!) MY niece’s husband still works in Auto tech (electronic div ) in Detroit and for them from India too, over 3-4 years.

      In digtal economy with modern communications, location is less important. It is about the ‘real skill on hands’ ( NOT just the credentials) for the evolving technology, world wide.

  38. Bobber says:

    Microsoft was forced to go this route because they sell communications and productivity management software (i.e., TEAMS, O365, Azure, etc.) and they’ll sell a lot more of it if people work remotely.

    If Microsoft did not allow its employees to work remotely, that would send a bad message. They would effectively be telling the market they do not believe in the value of their own products.

    • Fat Chewer. says:

      Agreed! Yet having seen huge chasms between what software promises and what software delivers, I still think it’s risky for extensive WFH.

      If my reading of our corporate masters is correct, once civid fatigue deeply sets in, their attitude will suddenly become “The network is down. We need you in the office, pronto. What? You’re worried about covid? Suck it up, princess!”
      That has been the attitude of my bosses since day one of the covid era.

  39. Equal pay for equal work, it’s not just for women. This also speaks to the BS that you can hire a coder in India for less money. That has to end, bring the global workforce into the Equal Pay universe. When a worker in China and the same worker in the US have the same pay, all of the political sniping will end, and multinationals will be forced to respect labor.

    • lenert says:

      India invested in educating a generation of IT workers. Now they’re investing in sanitary sewers.

      • sunny129 says:

        Remember the ‘K’ recovery!

        IT workers ( as a whole) worldwide are on the ascending segment of global recovery in ANY country!

        Any current or future business ‘models of any kind’ just cannot and will not be able to function without the digital workers with high skills!

    • Wolf Richter says:

      What corporate America really wants is pay coders in the US the same as coders in India, not the other way around.

      • MonkeyBusiness says:

        Exactly. Managers are exempt though. They are like the water in NYC, supposedly the secret ingredient behind the city’s famous bagels.

        I am waiting for the day when some company will come up with MAAS i.e. Managing As A Service.

    • sunny129 says:

      @ Ambrose
      ‘When a worker in China and the same worker in the US have the same pay, all of the political sniping will end, and multinationals will be forced to respect labor’

      Dream on!

      Who is going to enforce it? what’s the incentive? US chamber of Commerce? Top 1%?

      Colonial masters from the north, shaped the world of labour to their benefit (NOT the otherway around) over the past several hundred years, accelerated by globalization since 2000! Who made it possible?
      THINK!
      Our two headed, single party system! Trump is disingenius in blaming China but the real culprits are US multi-Nationals – an open secret. No one wants to discuss. NOT the MSM or the politicians.

      This ‘snow job’ was swallowed by American sheeple without any challenge or accountability. Political polorization is just masking this ugly reality!

      • MonkeyBusiness says:

        +1000. It’s either China or Russia. But the real enemies have always been at home.

        Most Americans don’t even know how laws are written nowadays. The lobbyists on K Street write the laws, and it’s the job of Congress to to sell those “laws”.

    • Lisa_Hooker says:

      On the Internet no one knows you’re a 13 year old programmer. What labor laws?

  40. Sam says:

    Jmho, a certain Jewish carpenter will ‘return’ long before your scenario will playout.
    As always, ymmv.

  41. nick kelly says:

    Guess there is a better program than the ones CNN etc. uses to subtitle. Lots of mistakes. A good tool to be proofed is how I’d describe the ones I’ve seen.

  42. Mkkby says:

    Beware of tech companies and their flaky management. Microsoft is famous for shifting office assignments around after employees moved close to their office.

    After the pandemic scare is over, these companies will all order their employees back, and lay off those who cannot. Managers are control freaks at heart. They think nothing of the cost to employees of their changing requirements.

  43. Bosshog says:

    The conversion of office buildings to apartments has been increasingly happening in many UK cities, even before COVID. The quality is not very good in my experience and many are likely to become slums in the future (if not already).

  44. LL says:

    Ok I’ll bite- I am a private multi-family landlord in one of the top 10 largest cities in North America. Rents are down, vacancies are up. As of now building prices seem to be holding firm from 2019 or possibly slightly higher.

    I have very little debt relative to the size of the portfolio. I run my own buildings.

    I can appreciate the urban exodus that occurred and the myriad of reasons for it and am very mindful of the deleterious affects of the WFH shift on large cities. Covid-19 has changed the paradigm the question is how much?

    Do I:

    A) Sell
    B) Buy
    C) Sell 50%
    D Wait and see

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