Corona Daily 394: Compensating Workers From Home

In recent weeks, a Switzerland Supreme Court decision has been hotly debated, not only in Switzerland. The court had ruled that if an employee was required to work from home, his company must pay a share of his rent. In that particular case, it was determined as $150 per month. The verdict was given on 23 April 2019. But the judgment has become very relevant now.

This compensation is comparable to an employer reimbursing business-related expenses incurred on an employee’s personal car or phone. Currently, many employees are happy saving on the commute, in some jobs productivity has gone up; introvert workers are enjoying working solo. This is the first major pandemic where working without leaving the house is possible. Are the employers taking over the workers’ living spaces without compensating them? Andy Merrifield calls this parasitic capitalism, where companies are trying to increase corporate profits by squeezing the public and employees, rather than generating new value.

Companies like Shopify have announced their workforce will work from home even after the pandemic. It is estimated the company will save $10,000 per employee per annum by converting his bedroom/kitchen into office space.

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If it’s remote work anyway, why should the worker live in an expensive town? He can move to a cheap city, or rent a shack on the beach.

Mark Zuckerburg, being Mark Zuckerburg, has warned that if a Facebook employee moves to a cheaper location, his salary will be proportionately reduced. Salaries have a relationship with the cost of living. Employees are asked to notify FB by 1 Jan. 2021 about any change of residence. Zuckerberg has asked them to be honest about it. (Even if they are not, surely he can easily trace their location.)

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Work from home was thrust unexpectedly this time. Many unprepared employees are working at their kitchen table, or in bed. In future, if it becomes the norm, an employee may need to rent or buy a house with an extra bedroom. The office space at home needs to be maintained, heated or air-conditioned, made soundproof. In a survey, employees mentioned their top three requirements: ergonomic chair, dual monitor and faster wifi. This is followed by a long list: Standing desk, office equipment, food allowance, garden office, childcare and noise-cancelling headphones.

Australian tax authorities have come up with a short-cut calculation. Australian employees are allowed to claim 80 cents for each hour they work from home between March and July 2020.

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Co-working space near the employee’s house is an interesting compromise. A residential building can have office space in the lobby or a particular floor. Residents can rent a desk for their remote work. That way they avoid home distractions, save on the commute, and still be among people who work for their respective companies. Such co-working happens quietly in a Starbucks or McDonalds, where buying a cup of coffee or a hamburger gets you a working space, wifi and air-conditioning. On their laptops the salesmen sell, the traders operate the stock market; analysts prepare and dispatch their reports.

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Rents in San Francisco have started falling. What happens if companies move a large chunk of work to their employees’ homes? The commercial real estate will crash. Buying a house in California requires a good ten years’ salary for a well paid executive. Why live in California if you are working from home?

The pandemic promises a real upheaval in the real estate market over the next ten years.

Ravi