National Post (National Edition)
The great WFH debate
A WORK-FROM-HOME TAX AND OTHER ZANY IDEAS FROM ECONOMISTS STUCK IN THEIR BASEMENTS
Last month, Andy Haldane, the chief economist at the Bank of England, declared working from home to be harmful. If you have worked from home for the better part of 20 years, which I have, this kind of claim gets your attention. Haldane's comments turned out to be exceedingly speculative and personal, and he probably never intended them to antagonize a far-off newspaper columnist, but if you're going to carry around a title like “chief economist of the Bank of England,” you're fair game.
Haldane acknowledged that working from home is a necessity, when possible or positively mandated by authorities, in a pandemic. Moreover, some people have found gains in well-being and productivity. And he doesn't miss what sounds like a long train commute to Threadneedle Street.
But, he said, “I feel acutely the loss of working relationships and external stimuli — the chance conversations, listening to very different people with very different lived experiences, the exposure to new ideas and experiences.” These problems “will grow with time,” added a man with the general duty of predicting such things, and will eventually outweigh the permanent and literally everyday benefit of not having a commute.
I am not sure how Haldane could predict how he might adapt to “WFH,” which is what some economists are now calling working from home because they can't resist an acronym. I know where he is coming from: if your job has any intellectual or creative aspect at all, and particularly if it has a sciencey flavour, those “external stimuli” can be helpful. Then again, if you're an unreformed class clown, it sometimes just consists
of interfering with the work of others. In the office economy of ideas, Haldane perhaps sounds like more of a value-extractor than a value-contributor.
And his boast of “exposure” to diverse ideas and life histories as a benefit of working among fellow Bank of England staff seems a bit like privileged nonsense. If only someone could devise some electronic method of chit-chat with friends and unlike (or even random!) strangers …
I've worked at home for a long time mostly because that's how things worked out for me. I have the unusual-bordering-on-heroic courage to recognize that I'm a poor motorist — both absent-minded and severely colour-blind. I perceived the economic, medical and environmental externalities of me owning and operating a motor vehicle, some of which were helpfully internalized by Alberta vehicle insurers, and I dropped out for
everyone's sake. At around the same time I became a freelancer anyhow, and have worked mostly for bosses in Toronto since then. In 2020, the National Post could find a desk for me at the Edmonton Journal office if I cared to have one; it's within easy walking distance. But I can see no earthly reason to change habits, or even to bother anybody about it.
Haldane doesn't think this is good for my well-being — but I stopped being annoyed about that on Wednesday when someone more radically infuriating happened along. Meet Deutsche Bank (DB) economist Luke Templeman, whose chapter in a new DB newsletter declares: “For years we have needed a tax on remote workers — COVID has just made it obvious.”
This is the first time I have heard this “obvious” idea in any setting, but maybe that's me. Telecommuting has experienced rapid growth in the decades I've been doing
it, but before the pandemic it remained more or less at barely detectable levels. Templeman believes that, “Our economic system is not set up to cope with people who can disconnect themselves from face-to-face society. Those who can WFH receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced.”
As Templeman describes it, you would have to have been a crazy idiot not to work from home all along if it were possible. “WFH offers direct financial savings on expenses such as travel, lunch, clothes and cleaning. … Then there are the intangible benefits of working from home, such as greater job security, convenience and flexibility. There is also the benefit of additional safety.”
This would be my own assessment, except for the gibberish parts ( job security?),
but you will notice that this is the opposite of Haldane's October argument. Haldane thinks there are negative externalities and even net costs to the individual in working from home. Templeman thinks WFH is an inarguable optimum … and is hot as a $2 pistol to disincentivize it.
Does this make sense? Not economically. Templeman is making more of a moral argument that the great shift to WFH is permanent, for which there is some survey evidence, and that it is proper to tax the resulting windfall to ease the adjustment for affected sectors (businesses designed to cater to office workers, basically). This might persuade you, if like Templeman you mistake an “economic system” for the arrangements produced by that system; but if it does, wait till you see how he proposes to do it:
“The tax will only apply outside the times when the government advises people to work from home (of course, the self-employed and those on low incomes can be excluded). The tax itself will be paid by the employer if it does not provide a worker with a permanent desk. If it does, and the staff member chooses to work from home, the employee will pay the tax out of their salary for each day they work from home. This can be audited by co-ordinating with company travel and technology systems.”
There is more gibberish here, and at least one idea of Godzilla-scale terribleness — an incentive for employers to “provide” a desk for the purpose of shifting the WFH tax onto the employee. Undeterred, Templeman proposes for modelling purposes that the tax could be a flat five per cent of salary (which is also ridiculous if there's a single eligibility threshold).
“If we assume the average salary of a person who chooses to work from home in the U.S. is $55,000,” Templeman writes, perhaps forgetting that income is already taxed as such, “a tax of five per cent works out to just over $10 per working day. That is roughly the amount an office worker might spend on commuting, lunch and laundry, etc. A tax at this rate, then, will leave them no worse off than if they had chosen to go into the office.”
Absolutely nowhere, by the way, is the environmental part of the WFH calculation mentioned, even though the rest of the newsletter goes on in pub-bore fashion about climate change. I think I see the problem here. Templeman is in London, which has had a cycle of particularly jarring pandemic lockdowns. The poor SOB obviously hasn't been able to hang out in the office with his economist co-workers, who would have brought up obvious objections to his idea if he had been able to chat about it around the water cooler. His intellectual output has been compromised by telecommuting. He has, in short, an extremely serious case of Haldane's disease.