Here’s a Win-Win-Win for employer profitability; employee savings, productivity and happiness; and resource conservation and cleaner air: telecommuting including a potential federal refundable tax credit if needed to nudge employers to make the move. The federal government could create a refundable tax credit program (‘Reward Work at Home’) to incentivize employers to move as many desk positions from office to their home so we can reduce gas consumption and costs, reduce wasted office meeting time, improve employer and employee productivity, and reduce carbon emissions. It’s a no-brainer.
As comparison, the infamous Cash for Clunkers program in 2009 cost US government $3 billion and had a net cost per trade-in car of $2,000 to the government. $2,000 was a sufficient incentive to make the program highly popular with consumers. The government was motivating people to simply scrap an old car for a more fuel efficient car, which did provide a 58% improvement in fuel efficiency for the 690,114 cars in the program. The US has approximately 126 million commuters, 119 million of which drive personal motor vehicles of which 105 million are single drivers according to a 2009 Census Bureau Commuter Study. Needless to say, Clash for Clunkers, though widely publicized, did not ‘save the environment’, save the car industry, or improve productivity.
A national widespread telecommuting federal tax credit could have a material and lasting positive effect. Let’s review some key assumptions before defining a tax credit range. The analysis below presents four areas of potential savings from telecommuting: 1. Commuter gas cost savings that tele-commuting eliminates, 2. Wasted meeting time labor costs and productivity losses, 3. Wasted commuter time opportunity cost to the worker, and 4. Wasted cell phone minutes and cost while driving to/from work that could be done via landline or VoIP service.
1. Commuter Gas Costs: According to the US Census Bureau, 119 million workers drive to work, 115 million alone. The average commute is 30 miles round-trip/day. At $3.75 average price/gallon of medium grade gas, commuters consume 47 billion gallons of oil (35% of national gas consumption) at a cost of $176 billion of energy industry sales. The average commuter spends $1,480 of personal cash to drive to/from work/year. As the median US household income is $55,000, tele-commuting (eg work at home) would increase household income 3%/year. Not bad.
2. Wasted Meeting Costs: think of how much time you spend in idle office chatter or meetings where a) there is no decision made or b) your presence did not affect the meeting outcome. I am going to assume the average worker spends 5 hours per work week or 12.5% of a 40 hour work week wasting time. I also assume the total employer cost for an office-based worker is $70,000/year. As a result, my guesstimate is US employers waste $1.276 trillion on idle office conversation or non-outcome meeting time with an unproductive group composition. This equates to $8,750/employee/year on average.
3. Wasted Commuter Time Labor Cost: I use the average 30 mile round trip that takes 48 minutes which equals 200 annual commute hours assuming a 50-week work year and two weeks of vacation. The employee could save 48 minutes/day which they could use for personal lifestyle activities like a home workout or jog. There is not a hard cost here because the employee still needs to work a 40 hour work week, but this does represent $7,000/employee/year or $835 billion of foregone economic contribution value if, for example, the employee were able to work for overtime pay during that time.
4. Commute-related Cell Phone Cost: Let’s assume commuters spend 10% of their commute time on the cell phone trying to be productive. If they were tele-commuting, they could make those calls using an inexpensive land-line or employer provided VoIP service. With 200 hours of commute time/year, that is 20 hours of unnecessary cell phone time which represents $10 billion of wasted cell phone costs or $84/commuter/year. $84 is enough to take your spouse out to dinner to celebrate your tele-commuting anniversary every year!
Solution: Ideally, employers would have enlightened self interest to save facility operations expenses and improve employee morale, and would make the decision to push as many employees to home work as possible. There are millions of desk-based jobs in the US that employees would be delighted to execute at home and be more productive. If required, a financial case can be made for the federal government to provide employers a ONE-TIME refundable tax credit in the range $300-500 to cover the employee costs of setting up a workspace at home with office chair, desk, and computer. The employee could take the computer, and hopefully the desk and chair from work. The employer could require the employee to do all work on the company cloud-based enterprise platform so all documentation is stored on company servers and the company can monitor the employee’s activities during the day.
Tele-commuting would revolutionize the workplace, save money, improve productivity, reduce gas prices, and reduce carbon emissions materially. A no-brainer!