What is causing the rise of remote work? | Friday.app

What is causing the rise of Remote Work?

Posted by Luke Thomas

December 2020 update: I originally wrote this post five months before the Covid-19 pandemic hit the United States. As I'm sure you already know, Covid has dramatically accelerated the rise of remote work. Before Covid, remote work was a nice to have. Now, it's a must-have.

I plan on writing a follow-up post, but the principles mentioned below still remain true. Covid was an accelerant for what was already happening.

With that out of the way, let's jump into the post ūüėé

Over the past few weeks I've spent some time in Boston and San Francisco at technology conferences.I have been blown away at how much mindshare the topic of distributed work is consuming right now. It is much more than I thought.

P.S - this post is chapter three of my upcoming book on distributed work. You can learn more here.

While U.S. Census data suggests that 5% of Americans spent some time working remotely, the number is much higher in the world of technology. How high? I don't know. Right now during Covid, the number is at least 35%.

A quick scan of Google Trends seems to indicate that the topic of remote work continues to grow (shown below). Anecdotally, I've never seen so much interest on the topic.

I've spent quite a bit of time researching the rise of remote work (I've personally worked remotely for 5+ years) and I wanted to document the factors that are contributing to its growth. At Friday, we also have many customers who are partially or fully distributed, so I've had the chance to watch this trend unfold in real-time.

I will seek to use hard data as much as possible, but I'll also outline anecdotes that may be worth unpacking/researching more.

Ideally, after you finish reading this article, you will notice the key tailwinds that are driving this change and can better prepare yourself, your team, and your company for whatever comes next.

P.S.  - this article is written with a specific focus on the tech industry here in the United States, but I believe many of the same principles apply in other parts of the world.

High-level Trends

First, let's look at the factors from a macro-level (as some variables are specific to a team or company). I personally do not believe that a single variable is the culprit, but a combination of many factors.

Out of this list, I believe the major contributors are:

  • Rising cost of living
  • Pace of technological change
  • Remote work success stories

1.) Low Unemployment Rate, High Demand

First, the unemployment rate is as all-time lows, especially for knowledge workers in technology hubs. A few examples of the aggregate unemployment rate:

There's a lot of competition for skilled talent. If a company located in one of these tech hubs wants to grow, they will need to:

  • Hire people who are local¬†- oftentimes competing with large tech giants like Amazon, Google, etc who pay extremely well - relative to competing firms.
  • Hire people and convince them to move to the hub -¬†this is a bit tougher than hiring someone down the street....more on this shortly)
  • Hire someone who lives elsewhere -¬†frequently,¬†this becomes the only reasonable alternative, especially if competent people are applying to jobs, but happen to live in another location)

In a competitive market, hiring great people is the key to growing, which most companies want to do. The question is - are you willing to hire great people outside of a specific geography now or can you afford to wait to find someone local later?

2.) Rising Cost of Living

Secondly, in major tech hubs across the country, the cost of living is increasing with no additional value offered. You pay more for the same product/service. Curbed comparisons paints the picture better than I can:

While the reasoning behind the ever-growing cost of living is up for debate (cough...zoning), the current state is a massive turn-off for someone who might be thinking about moving to the hub to take a job. In fact, I might be willing to take a bit of a pay cut to be able to work remotely. 

It's also a turn-off to watch more and more of your paycheck going towards rent or a mortgage.

Personal anecdote - my wife and I moved away from Boston in 2015 after we realized how unrealistic it would be to purchase a home. We now live two hours North in Portland, Maine (which is not a cheap city, but a bit more reasonable). The house that I live in now would be about 3x more in Boston. Plus, it's beautiful here.

To see more data about what's going on, I recommend this article. I talk more about this in the video below:

3.) Increasing Commute Length

One "solution" to the rising cost of living is to live further outside the city, which unfortunately creates a commute tax. In major cities, the amount of time one has to spend commuting continues to grow. As you might imagine, this has an impact in a variety of ways:

"Longer commutes are linked with increased rates of obesity, high cholesterol, high blood pressure, back and neck pain, divorce, depression and death." - source

I spoke with someone last week who spent almost three hours a day commuting to work. While a podcast can help pass the time, I don't think people enjoy spending hours every day sitting in traffic.

As you can imagine, for someone who spends three hours/day in traffic, the idea of working remotely as least part of the time sounds very attractive.

4.) Millennials are Growing Up & Moving Out

One of my first jobs out of school I ended up working for a tech startup; most of my co-workers were in their early 30s - a small fraction of the company was married and/or in a committed relationship. 

I realize this is anecdotal, but now, most of my coworkers are married/in a committed relationship, many with children on the way. Based on research, it seems that the median age of tech workers is late 20s/early 30s. That's also around the same time when the babies start arriving.

(personal anecdote - I had a child last year and am glad I don't live in the 500 square foot apartment in Boston anymore)

As anyone with kiddos knows, they force you to prioritize different things. Maybe you move out of the city into suburbia. Maybe you want more room for activities.

This is an area where I'd like to see more research. Anecdotally, this factor rings true, but there's not a lot of data here to build a great argument. Perhaps this should be grouped into other categories?

5.) The Pace of Technological Change

As the internet continues to permeate our lives, the backbone that supports a remote workforce is getting better. More and more people have access to high-speed internet, which paves the way for broader technological improvements that impact how we work, some of which are listed below:

  1. Zoom is a wildly popular video conferencing tool that exceeded 5 billion monthly meeting minutes earlier this year. 
  2. Slack (a popular workplace chat tool used by most distributed teams) has over 12 million daily active users.
  3. Microsoft Teams (a Slack competitor) is used by 13 million daily active users.

There's also rapid growth of project management tools (Jira, Asana, Trello, etc), which is supposed to be an online representation of the current state of work in a team, department, or company. I've added a bit more color in the episode below:

In other words, the work is being done online at an increasingly rapid pace. Files are stored in Dropbox/Box. Meetings are happening online in Zoom. Work chatter happens in Slack.

All this technological change begs the question that I've heard several people ask: 

"If I show up to the office and spend my day behind a computer, why do I need to come to the office at all?"

6.) Remote Work Success Stories/Resources

Next up, there's a growing body of evidence that remote work can work, even when scaling an organization. For example, there's a few fully-distributed companies that have about 1k employees, including:

Even a few years ago, it would be difficult to point to a company that was fully-distributed over a couple hundred employees.

Many of these companies see distributed work as a competitive advantage, so they share everything they know about the topic as a means of perpetuating the trend and attracting great people to work there.

For example, Gitlab's company handbook (3k pages) is online and available to see. This content makes the idea of remote work much more approachable, especially for an early stage company. 

Company-Specific Factors

With the high-level factors out of the way, let's zoom inside the company to see if there's anything we can learn that might contribute to the growth of the remote workforce.

1.) Remote/Distributed Offices

A common playbook in the tech world is to scale office locations as the company grows. When you serve a global customer base, it makes sense to setup a location where you've achieved some level of customer density. Now, many fast-growing technology companies have offices in SF, Boston, Denver, Nashville, Dublin, etc. 

Out of all the factors listed in this post, I'd argue that disparate offices accelerates the pace of change in a way that the others do not.

For example, Google recently shared a stat that almost 50% of meetings involve employees working from two or more buildings. As you might imagine, this requires reconfiguration of how work gets done. In short, this "co-located" organization ends up behaving in a similar way to a distributed company. It's almost like training wheels for working remotely.

Please note - I'm not suggesting that Google will become a distributed company in the future. I do believe this reality is helping build a case for why remote work is growing in popularity and will continue to do so in the future.

2.) Perk + Network Effect

A recent Dice survey indicated that remote work was one of the top perks a company could offer its employees. If this perk is offered to some employees, but not EVERYONE, it's just a matter of time before something gives way.

Additionally, this perk appears to create a bit of a network effect and the transition is a slippery slope that looks something like the following:

  • Everyone works in the office, company policy prevents people from working from home.
  • The engineering team allows remote work 1-2 days/week.¬†The world doesn't end.
  • The engineering team allows FT distributed work for their department (due to hiring issues, finding talent, etc).
  • Other departments see this happen: some managers offer a similar benefit, while others don't.
  • This continues to permeate and soon, the "new normal" is that people can work remotely (either fully or a couple days a week). Executives create guardrails/policies around it to ensure that people don't abuse it.

I'm sure there are other intra-company variables that contribute to the rise of distributed work, but offering remote work to some employees creates FOMO for the people who don't have the option to WFH.

3.) The Open-Office Disaster

Another contributing factor to the rise of remote work is the current state of the office. In the world of technology, the rise of the open-office floor plan is loathed by many, especially engineering teams who need long periods of uninterrupted time.

I've heard co-located coworkers say things like, "I'm working from home today because I need to be able to focus on this project."

In other words, people are forced to commute to the office where an environment exists that makes it tough to do their job.

If you'd like to dig into this more, here's some research on how open-offices are driving people to work remotely.

Wrapping up

As you might imagine, I believe this trend has major tailwinds driving its growth. With that being said, there are restraining forces that prevent distributed work from becoming more prevalent. Update: here's a new post on remote work roadblocks.

If you like this post, you might like the remote work book I'm writing. I'll go into a ton of detail on everything I've learned over the past five years. I've also written some guides you might like on:

If you have feedback on this post, feel free to reach out on Twitter.

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