An Untapped Resource: Building the U.S. Economy Using Telecommuters

Outsourcing has been a hot topic in U.S. economic discussions over the past several years. Skilled and unskilled positions have been transitioned to countries such as India and China which can cheaply provide this labor for a fraction of the cost. Interestingly, as companies find it more cost effective to employ computer programmers and call-center workers overseas, one thing has not changed greatly - the use of telecommuters (or employees located remotely in home-based offices) has not considerably increased. While corporations are finding economic benefits to having employees located remotely in other countries, they are not finding these same benefits by employing U.S.-based employees who can do the same work out of their homes.

According to the 2000 U.S. Census (the most recent data of this kind), 4.1 million people worked primarily from home. This number grew 14% from the 3.4 million that worked from home in 1990. This would seem to be significant growth on the surface, however, the overall employment pool increased by 11.8% during this same period, so telecommuting job growth only kept up with overall job creation. Further, 60.5% of these workers were self-employed (either in an incorporated or unincorporated business), leaving only 1.6 million workers, or 1.25% of the overall workforce, actually employed with an external entity in a role in which they worked primarily from their homes. This compares with the 32 million Americans ages 25-64 who were not in the workforce in 2004, the majority of which (22 million) are women who are often at home because of family responsibilities. Certainly, some of these people chose to retire or may not want to work for other reasons. Note that a number of these non-employed people are highly skilled - 6.5 million of these people are college graduates. Many of these are people who would like to work, if they could do so with some flexibility in locations and schedules.

The demographics of those who currently work from home is not exactly what one would expect. Only 37% are college graduates, with 1.4% of all working college graduates in the workforce telecommuting. On the flip side, the U.S. Department of Labor reported in 2005 that approximately 32% of all college graduates did do some work at home during the previous year, with the majority of this work being unpaid. While companies support employees in working from home in order to "catch up on work", employees are not encouraged to have positions which are based in the home. The same technology which allows employees to keep in touch while on vacation is not used to support employees who seek the flexibility to work from their homes because of family responsibilities or other needs. Thus, it appears that as long as companies do not have to pay for labor completed at home, this type of work is acceptable.

As for outsourcing, no official statistics are kept on how many jobs have been moved from the United States to foreign countries. According to the McKinsey Global Institute, approximately 11% of the 1.46 billion worldwide service jobs could be performed remotely, with only 1.7 million jobs (or 0.1%) of jobs actually located remotely worldwide, with this number expected to rise to 4.1 million employees in 2008. Locating even a small percentage of these jobs in the United States would be an improvement over the job losses we have seen in the move towards outsourcing.

Granted, not all positions can be done from a home-based location. However, many professional and non-professional roles, such as claims processors, computer programmers, and financial analysts, could be completed from homes in the United States versus off-shore locations. This type of arrangement would allow those who from home the flexibility to work while still tending to their other responsibilities. Their work hours would not have to mirror the 9am - 5pm schedule of their counterparts, just as those who complete similar jobs in offshore locations often work according to their region's time conventions, not the corresponding American time zone.

As for the basic economic question - how can salaries for home-based U.S. workers compete with those for off-shore workers - it seems on the surface as though home-based workers are willing to accept less pay for their work, with 36% of these workers making less than $15,000 (as compared with 28% of their more traditionally located counterparts). While this is not an exact comparison, as only 74% of employees who work from home worked more than 35 hours per week, as compared to 80% of the more traditional employees, those employees who are located remotely can save employers through reduced utility and real estate expenditures. Employing U.S.-based remote workers would boost the overall economy through increasing family incomes and the overall tax base. Further, converting office-based employees to telecommuting workers would also help to reduce overall energy consumption through eliminating lengthy commutes, which has become important during this time of high gasoline prices. To encourage this conservation effort, perhaps the government could provide incentives to those companies who hired U.S.-based home employees.

Many logistical questions come up in the discussion of employing remote workers, such as training and accountability. These are important questions to consider, with answers such as web-based training courses and programs which track the output of remote employees. In the end, the question must be asked: If U.S. corporations are willing to locate skilled or unskilled labor in other countries, why aren't they willing to source more of these same roles from U.S. based employees who work out of their homes?