You can’t telework!!
I’m big on teleworking. Love it. I’m a little jaded on this, as my commute has been usually 90 minutes or more for a good portion of my career. I had one 3 year bout where I had a 26 min commute and teleworked 3 days a week to it. Game changer with telework.
Well, most of the jobs I was at, it would be like “you can’t telework”.
COVID 2020 hit.
“Hold my beer”.
Suddenly, everyone could telework. Mysteriously. As long as they had cameras to watch you on MS teams or Zoom, you’re good. Right?
Many moves ahead
I grew up as a chess player. The whole 7-10 moves ahead thing in big games. I even played in the World Open as a teenager and went 5-2-1 in 1991. I’m a “big thinker” and love to bullshit with people on futurism. I moved to York, PA after a bout living outside of Philly – for a reason. The home prices were ridiculously high for where I was living, relative to everyone else. This was around the years 2000-2002.
I was also going to Villanova around that time, and it was a pain in the ass to go there a few nights a week after work and barely getting a slice of pizza on the way for dinner. When that job dried up, I sold my house for a 50% gain and decided to move back to my college town.
The idea was this – get to a rural area, buy a huge house for half the cost of the big metros, and get a job where I could mostly telework. This was right after the dot com bust, and I figured the worst case, I’d drive to Baltimore 45-60 mins away.
Unfortunately, I was a “few years” early on my concept.
To add to this, when I eventually did get a job as an IT project manager an hour away I was also going to school then at York College. When I moved away from my King of Prussia house, I also had to kiss goodbye my dreams of finishing my Villanova MBA. So – I continued at York College, literally 2 blocks from my house. But then another problem hit – I was working crazy hours in Baltimore and the only YCP classes I could take were 7-10PM. I was waking up at 4:30 to go to work, and by the time 7PM hit, I was ready for bed. Exhausted and out of money, I stopped going to YCP.
So my plan to get in cheap housing worked, but I was doing this long ass commute and my MBA plans were failing due to these long commutes.
A few years later, I heard about an online school through the university of Maryland system for cybersecurity. This was 2009ish. Sign me up!!
So now – I could move anywhere for IT and telework, and no matter where I went, I could continue my online classes.
The chips were set.
- location for cheap housing
- access to school from anywhere
Now – all that was left was to lessen my commute.
Then I had a child. Later, I got married. Bought a house. What happens is the debt trap. You have to chase jobs that pay the most because you have commitments that drive up your cost of living. 99% of the jobs that paid well, you needed “ass in seat time” as a former boss called it.
How COVID will help me, and screw all of you
If you ever looked at real estate prices closely, it’s…all about “location location location”. One of my rental properties I had lived in for 7 years, and had wanted to actually live there for 2 and rent out…but yeah, the whole real estate market died and everything. It was a house in York city. City living is supposed to be where it’s at!!
Well, not this city. This city is filled with crime. I guess most are….but almost everyone with money didn’t live in this city, most money was in the suburbs
In many major cities, you have significant amounts of money living there along with large companies and high paying jobs. The immediate suburbs of these cities are then filled with the elite and high cost housing. The further out you go, the lower the house cost. Smaller cities have less money there – and their suburbs and rural areas are even less valuable with real estate.
Now that we have discussed the heat map – let’s dive in.
The avg apartment cost in NY is over $1 million. All of those high paying jobs require you to be there!!
Well…not so fast.
I read how a lot of NYC firms suddenly had 95%-99% of their staffs teleworking. They used zoom or other types of collaborative software. The employees mostly loved it because it helped their home/work balance. The companies loved it because many of them secretly for years wanted to do telework so they don’t need to rent as much expensive spaces.
This was proof of concept. And it worked, for the most part.
Where I now see this going….
- Many, many companies will, under the guise of COVID, begin to implement a lot more teleworking permanently. Maybe 50% in the office? 10% of people in the office? This helps companies reduce costs of rents
- Less people will need to rent expensive housing in the city. There will begin an avalanche of sell offs, with the first people to get out getting top dollar. Inside of 1 year, between layoffs and teleworking, there will be a glut of housing available in the city.
- Due to decreased lunch activity from people in the office, more teleworking, and more people preparing their own food, more restaurants will go out of business
- Suburbanites will start to move towards smaller cities and suburbs. Many people now want “chickens” and some land to grow things. Suburbanites with means will start to look more rural.
- City dwellers will now start to move to the suburbs and rural areas/small cities
The net effects
- Large city real estate prices to plummet. This will have lots of vacancies and tax revenues will fall off of a cliff. This can reduce city budgets, and in the wake of recent protests, could decapitate police forces and have a net increase in crime.
- Increases in crime could then drive more persons with means out of the city and close entertainment venues (lack of demand), restaurants (lack of demand), and reduce future investments
- Large companies may now fill office parks in suburban areas with reduced footprint. Large REITs that have commercial properties in large cities are about to get decimated.
So – I saw this coming with people moving to suburbs and rural areas with telecommuting for many years. However, I may have been a decade or two early on this one. From here – over the next decade, I’m going to get more and more opportunities to work remote and my home value will significantly increase in price. My dreaded commutes will disappear over time. Why?
One net side effect of this….
If you are a company that is no longer paying ridiculously expensive rents, you can potentially pay your people more. And, you are now dangling telework options to prospective new hires.
While the next decade may be scary for a lot of people, what will come out of these ashes is a more “modern” work system that has been held back by 60 year olds who demanded “ass in seat time”. This will be a thing of the past, soon, or companies will no longer be able to compete for new talent. Expect a lot of these 60+ company leaders to be sunset to introduce a new dynamic leader who can utilize telework and electronic communications more effectively.
The business case
Additionally – in the beginning, you can reduce what you are paying your people to use telework as the carrot.
If company A is 90 minutes away and offers me 80k or
company B is offering 95% telework with needing to be in the office one day a month, but they are paying $76,000.
Company B is not only paying people less, but they have less rents. Company B will have higher operating margin. There may be less productivity at first with telework, but governance systems, technology, and dynamic leadership with task-based management can overcome a lot of inefficiencies with telework.
Think about it another way. The usual “9 to 5” or now, rather, “8:30-5” (with 2 hours of driving and eating lunch there) is replaced by:
5:30AM – (2 hrs) Coming downstairs and drinking coffee while checking emails and setting the agenda for the day’s events
7:30-8. Shower, eat
8AM -11AM (3 hours). Meetings, emails, spreadsheets
11AM-1:30PM – Lunch, walk the dog, workout, run, laundry. Maybe run an errand, have a doctor’s appointment scheduled. This is your time every day you are getting your personal and family life in order.
1:30-4:30 PM (3 hours) – work last 3 hours of the day, put some food in the oven for dinner at 5.
You just put in your 8 hours. It’s 5PM. You now have a ton of family time. No commute. Walk with the family after dinner. Help junior with the homework.
I’ve written posts of this going back 15 years, that I feel, eventually, there will be online universities sponsored at the nation-state level. My school was a public school under the University of Maryland system. 100,000+ students. This is then just a scalability thing with datacenters. You can dial up more students or reduce them with cloud computing. I saw this as the future, not only for colleges, but high schools as well.
When you look at what just happened with colleges, suddenly all of them went online immediately. Yes, there is value in some aspects of brick and mortar, but not as much as you’d think. When doing online school, I was able to do my schooling around my life events, not the other way around. For those of us in the work force and needing to earn a living, school around YOUR schedule is far more important than many other factors. Maybe as an 18 year old, you might need to be there to do your work, I don’t know.
My point is that many colleges have begun to offer online classes over the last decade to complement their existing brick and mortar offerings. What I feel this does is stop virtually all brick and mortar college expansion in its tracks. Everywhere. These buildings are expensive to build and maintain.
So why would you now spend $27,000 a year to go to PSU or the like online when you can do an online school for maybe 1/3rd the price?
Enrollments have been decreasing at these institutions for years. I’ve had some friendly debates with friends over the years about this system. I feel it is bloated with costs and there has been zero fucks given towards forward thinking and bringing value to the student. It’s all about bigger buildings and tech to attract more kids who have to borrow $150k for the experience of your “institution”. It should be about giving the student the right tools and education needed to build a career. Somehow, some way, my mom had this at $2000 per year in the early 1970s. I somehow did it for $6500 per year in the 1990s. And now…$25,000-$50,000 per year? Ummm…go fuck yourself.
If I had to do it all over again, and I’d be advising my child….
The first 2 years of college after high school – do online or community college. If college is for you, and you really want to go away somewhere for years 3 and 4, GREAT! Save up for it in your first 2 years out of high school. Maybe take a break year in year 3 to work full time and bank all of that, to then take year 4 and 5 to go away to a college somewhere. Or…maybe in year 3 and 4, you stay home and do an online school?
I graduated a 4 year private school with 14k in debt. This is with scholarships, grants, and borrowing. I partied a lot. I cannot imagine a parent today taking out a loan for $35,000 for their kid to party it away their first year and drop out.
Today – since many “mainstream” colleges have now forced their students to go online, they suddenly and inadvertently now gave stamps of approval for other institutions who have been doing this for 20 years and are much better at it than them. Your $100 million athletic centers do nothing to enhance your attractiveness to this new breed of customers – who have had to finish high school online.
Those giant universities right now who have been dying for more students? Well, if everything is moving online, and many of these schools cost 1/3 what they do – what is that going to do to their enrollment? Bailouts anyone?
I see many of these large institutions collapsing under their own debt. The spent millions or perhaps billions building these campuses with student’s student loan debt for 50 years or more. And now Rome is about to fall.
So – zoom and its compatriots have now inadvertently killed off modern cities. They may have also killed off the brick and mortar university system as we know it.