The Work From Home (WFH) movement has created a ‘crisis’ in commercial office real estate. But it’s also doing the same to long-established labour law.

Workers apparently are to ‘blame’. This is so because they are refusing to participate in the traditional behaviours of the factory-style management systems upon which the central ‘office’ environment has been historically structured.

Make no mistake, this is a revolution of the people. Forget the ‘burn down the system’ protests and riots that mass media outlets crave for attention-getting headlines. That’s small fry. It’s the millions of individual, ‘I’m working from home’ decisions that swamp the ‘revolutions’ of riots and protests.

The immediate, first-base evidence of this revolution is that the global WFH movement is negatively impacting commercial office property values. Eminent analysts are calling the collapse in valuations a catastrophe. In the US, values are reported to have dived between 20 and 40 per cent. There’s talk that US$800 billion could be wiped off office real estate values in key areas. That’s big!

In one example, San Francisco office vacancy rates are reported at a jaw-dropping 31 per cent. Hong Kong vacancies are heading toward 17 per cent compared with 6 per cent in 2019. Whether it’s Europe, or Asia, or the USA, the downward valuation pattern is common.

A similar situation is reported in Australia with predictions of 20 per cent valuation collapses having an impact on superannuation and property funds. That is, ordinary Australians’ retirement superannuation nest eggs will go south if their investments are tied to office real estate.

Workers are doing this and should behave it would seem! After the pandemic, many workers are refusing to return to the office. How terrible! In the eyes of some (presumably) property fund, superannuation managers and assorted property-dependent, high-wealth individuals, ordinary workers should be encouraged (required and forced?) back into the office. It appears that horse has well and truly bolted, leaving only a faint dusty image of the past in the setting sun.

But to be less poetic, the reality is that office property is feeling the effects of that perhaps politically out-of-favour word, ‘markets’. Yes, market forces are at play. Put simply, markets are the billions of decisions made by millions of people. Markets are most frequently discussed and understood in terms of consumer choices.

For those of a Marxist bent, the idea that markets can be driven by workers’ decisions is not possible. The ‘workers are slaves’ class assumption is deeply ingrained in global labour law and even in the very concept of the firm held by economists and management theorists.

The dominant prevailing idea of the ‘firm’ (applicable to any larger organisation) continues to centre around the 1937 Noble Prize-winning thesis by one Ronald Coase in The Nature of The Firm. The reasoning holds that the firm exists because the firm concentrates and manages the transaction costs which would be too high and unmanageable if left to myriads of individuals.

Mass production in the factory was the perfect example of Coase’s theorem, where all units of production were physically bought together, thus lowering production costs. The office was/is the same, where all administrative processes are bought together to enable cost-effective management. This Coase theorem forms the structural assumption of the ‘office’ and in turn investment in office real estate. It aligns with the Marxian assumption that ‘workers are slaves’ to the management process – whether in the factory or the office. Hence there’s a marriage between class ideology, managerialism, and capitalism. It might be a difficult, fraught marriage, but it’s still a marriage.

But technology has hugely diminished the applicability of Coase’s theorem. What Coase observed in the 1930s is not the business, worker, economic reality of the 2020s. Most obviously, technology has shattered the concept and practice of the office being a place that demands the constant physical presence of workers.

The minutiae and even the grandness of vast quantities of managerial tasks and services can now almost be done anywhere, anytime, by anyone competent to complete the task/s. The need to base worker remuneration on time worked is challenged almost to irrelevancy by the demise of the need for physical presence in an ‘office’ to effect management.

This has broken assumptions about office worker ‘enslavement’. Technology has freed workers to exercise their choice as to where, as well as when they work, and even what time they devote to work. This should scare unions because unions’ ‘business’ models are based on the understanding of worker collectivisation generated through the physical presence, in this instance, of the office. If unions sought survival, they’d push to force workers into the office. But membership pressure has led to the reverse.

The Australian Services Union, has called for laws giving workers the right to disconnect from work. That is, the right not to take emails and phone calls when work has ‘stopped’. Principally this pressure for this ‘right to disconnect’ would presumably be a consequence of the work-from-home movement. In a physical office you can walk away. In a home office, work is or can be ever-present.

The union may also be alert to research coming out of the United States that indicates that remote workers work longer hours than office-bound workers. This should give unions great opportunity to campaign against the oppression of the bosses. But research also found that workers work extra time because it is substantially offset by reduced travel time to and from work. That is, workers choose to work extra time because of the convenience of working at home, not because ‘bosses’ required the extra time.

Evidence also exists that work at home workers are more productive than office-bound workers. This may be a productive boom that’s difficult for economic statisticians to pick up in the macro picture. It’s more difficult to collect productivity data from millions of home workers than it is to collect the data when those millions are concentrated in office confines.

For unions, this higher productivity and longer hours should provide opportunity to campaign for higher wages. However, it’s near impossible to get workers to mass demonstrate when there’s no office to demonstrate outside of and workers are spread over vast geographic areas. How do you get people to strike? The idea of being ‘out on the grass’ takes on new meaning, requiring home workers to sit on their front lawns! The strike photo opportunities evaporate.

Are workers upset by this new ‘oppression’ of working from home? It looks as though the answer is ‘no’. Gallup polling in the USA in 2022 found that 94 per cent of workers prefer to work at home at least part of the time. Here, then, is an unstoppable movement, a revolution by virtue of workers behaving like consumers and exercising choice on an individual basis.

This further works against the interests of unions, jeopardising their long-term survival as class-conscious, collectivist, membership-based organisations. It also works against the existing sunk investments of the office property developers and super funds. The market has shifted. Losses seem to be locked in. But that’s the market. Suck it up and adjust!

There’s one more angle to this. The legalities and regulations of labour law are predicated on the assumption of worker-boss relationships being tied to physical presence as described above. These regulations organise remuneration around time spent and the right of the boss to dictate when, where, and what work is done. This is the law and regulation of ‘employment’ contracts.

When people work from home their behaviours and work orientation begin to look a lot more like those of self-employed people. The worker chooses when and where they work and how they allocate their time. For example, do some work, then wash the dishes. Do some more work, then vacuum the floors. Do some work, then take the dog for a walk. And so on. Remuneration systems based on time become redundant in these situations. Instead, common sense starts to dictate that working to achieve a ‘result’ is the sensible way to go. And result-based work is exactly the hallmark of being self-employed – that is, being your own boss. And working for a result is the hallmark of the commercial contract.

As this work-from-home movement seems to solidify, workers start to look and behave both like consumers and self-employed people. They exercise their own work choices. This does not mean the death of the office by any means. Any organisation needs to have people physically together to operate and manage where the organisation is going. There are human dynamics that occur when people are physically together that organisations need in order to operate, particularly in clarifying objectives.

For example, group meetings in person can be a terrible use of time and more to do with office power politics than actual work. Zoom or other online meeting systems can impose a needed discipline on this. But still, when people gather together, it’s most frequently the informal interactions that become significant. Body language, voice tone, a look, a casual comment are significant in how people learn to work together, especially when they are new to each other. Organisations need this. But this does not require the artifice of the ‘office’ as it has been known in the past.

As people become more and more their own bosses, whether in name or behaviour, perhaps it’s legitimate to ask, are we seeing the slow death of employment and the rise of independence? The word ‘employment’ may continue to be used in a generic sense but it’s being stripped of its historical, legal, regulatory, and managerial meaning and relevance. Welcome to the WFH revolution!

Ken Phillips is Executive Director of Self Employed Australia and is on Substack

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