Will Telecommuting Upend Housing Prices?

I was just watching "House Hunters" with my fiancee, and we saw an enormous, gorgeous house in east Bradenton, Fla., for $450,000. "That would get you a one-bedroom condo in D.C., if you're lucky," she commented.

Which got me to thinking: If full-time telecommuting became a substantial percentage of the workforce, it would probably result in plummeting real estate prices in places like D.C.--where many who aren't in love with the city itself move for jobs--and soaring prices in places like Florida and California--where many people would love to live but can't afford to do so because of a lack of local employment opportunities. It would also have an enormous effect on locality pay.

Not that I think mass telecommuting will happen anytime soon. Social capital, such as in-person training and rapport with co-workers, is likely more important than most people realize.

What Determines the Length of Labor Strikes?

I have a recent paper in the Journal of Labor Research, which attempts to model the various factors that influence the length of labor disputes.

No Reimbursement for Opportunity Costs

When a company flies you to another city for a job interview, it might offer to reimburse you for your travel expenses, your hotel, and your meals. But it's not going to pay you the daily wage you would have earned at your current job. Sure, you can just take a vacation day and earn your normal pay anyway, but that leaves you with one fewer vacation day. The prospective employer also won't reimburse you to offset the inconvenience of missing out on a night at home with your family and in your own bed.

An "all expenses paid" vacation similarly won't compensate you for the wages (or vacation days) you'll lose in order to go on the trip.

It's odd that corporations are willing to compensate you for expenditures but not for lost income and the cash equivalent of lost pleasure (your opportunity costs, or next-best alternatives). Maybe the former feels more real because money is changing hands. And most people don't dwell on this analysis, because an exciting job interview is well worth taking a day off and a "free" trip is well worth taking a week of vacation.

Should It Be Easy to Apply for Jobs Online?

The effort required to apply for a job online varies considerably.

For some jobs, you just upload your resume and are done after a few clicks. Or the system scans your resume and prefills the required fields, which you then quickly verify.

Other jobs require you to create an account with that particular company, then navigate a maze of drop-down menus and text fields. You have to manually retype all your information, from employment history to education. Still others will require you to check radio buttons for 80 or so questions, such as "Would other people say that you are a hard worker?"

Although job applicants no doubt prefer the former, which approach suits the companies better?

In the former case, the recruiter spends much of her day sifting through resumes. Resumes are coming from all walks of life, from people who don't have enough experience, aren't that serious about the position, or just plain haven't read the job description. For applicants, though, it's best to err on the side of caution and apply, since it's so easy.

In the latter case, the cumbersome process will discourage many applicants. They'll go back and read the job description more closely, perhaps giving up if they know they don't stand a chance. But those who are qualified and who are serious about wanting the job will probably stick out the process. Now, recruiters have resumes from precisely the people they wanted. Of course, this only holds if the process isn't so arduous as to drive away too many qualified people as well.

Should Child Labor Be Illegal in Poor Countries?

I know it's been Steven Landsburg hour around here lately, but I want to share an idea from his book "More Sex Is Safer Sex: The Unconventional Wisdom of Economics" (not my first choice for a book title, I'll admit).

Landsburg argues that rich nations aren't helping the extremely poor in third-world countries by limiting their choices, such as forbidding them to put their children to work:

Being poor means making hard choices, such as whether to work more or to eat less. Neither alternative is terribly palatable, but it requires more than a bit of hubris to suggest that middle-class American and European demonstrators can choose more wisely than the African and Asian families who have to live with the consequences.

He also cites studies suggesting that parents do truly care about their children and want them to have enough to eat, and he points out that child labor drops dramatically as families exit abject poverty.

I'm not sure if my drive-by synopsis did Landsburg's point justice, but it's well argued in the book.

Are Unpaid Internships Unfair?

Memoirs of an Economics Student opines:

That is when companies and organizations offer unpaid internships they are favoring students who can afford it, so there ends up being a "price" to gaining experience. So those who are already fortunate enough to have a few thousand dollars saved up or who have families that are able to support them are given privilege in obtaining experience in often prestigious corporations or organizations, that may very well influence the trajectory of their future career paths. Unfair. This crowds in students who already were more privileged (by being wealthier) and leaves the rest of students (the majority) with blank resumes and still struggling to make rent as a barista.

First, while of course the rich have an inherent advantage, unpaid internships shouldn't be outlawed. Young adults from rich families also have an easier time paying for college and graduate school without having to work a full-time job at the same time, which seems to be much the same thing, yet this does not cause widespread uproar.

Second, there is a "price" to everything, even if it doesn't involve money. Working any internship or pursuing any other activity prevents you from pursuing alternative activities (this is known as an opportunity cost).

There is a demand for the work of interns and a corresponding demand for internship experience. It's easy to see how setting a price floor that requires some minimum hourly pay would reduce the number of internships available and make both sides worse off.

This argument reminds me of a blog post arguing that journalists shouldn't work for free or for low pay. Because journalism has many nonmonetary benefits (it's pretty neat to see your name in print), many people still get enormous benefits from freelancing, even if their monetary pay works out to less than minimum wage.

Remember, it's not like anyone is being forced into an unpaid employment opportunity. People would not accept such positions if the benefits to them did not outweigh the costs.

Sick Leave vs Comprehensive Leave

I briefly touched on this recently over at S&G, and unfortunately it's still been on my mind this weekend. So I figured now is as good a time as any to write about sick leave.

I'm going to make some generalizations about workplace policies, even though every office is different and there are many policies I've never heard of. But the generalizations will enable us to do some analysis.

Traditionally, workers have been offered time off from two main buckets: sick leave and vacation leave. Sick leave usually expires after a certain amount of time. When a worker leaves his job, he is paid for any unused vacation time but not for unused sick time.

Many employers are beginning to offer comprehensive leave, where sick days and vacation days count the same. Upon leaving their jobs, employees are paid out for any excess comp leave they have accumulated.

Employers want workers to be at work as much as possible but not when they are truly sick, as they can infect the rest of the office. When employees take time off when they're not sick, employers would prefer advanced notice. Employers want employee absences to be spread out, as many offices would be crippled if half of the workers were absent on any given day.

Most workers prefer to have as many paid days off as possible. They'd also prefer to be able to get days off on short notice.

Under sick leave plans, workers have an incentive to take sick leave not only when they are sick, but also for a slew of other reasons. Thirty-five percent of sick days are taken on Mondays, and I have to believe that many of those are by people who want to extend their weekends. The presence of popular sporting events has also been linked to an increase in sick leave requests (at least among men). Because sick time expires and isn't paid out upon employee termination, workers usually use some of it for other reasons besides being sick. They are encouraged not to give their employers advanced notice, even if they've planned their sick days a long time in advance.

Under comprehensive leave plans, workers have an incentive to come to work at all costs, even if means potentially infecting coworkers. A day spent bumming around the house in your pajamas means you have one fewer day available to spend on the beach on vacation. Comprehensive leave workers will be better at giving their employers advanced notice of absences, unless they fear their bosses will deny their leave requests (as the bosses are trying to keep the workforce at critical mass during popular vacation times). Comprehensive leave plans are more expensive, as comp time doesn't expire and must be paid out eventually in some form, whether it be days off or cash.

In theory, rational workers will prefer jobs with more time off to less. Yet I've taken several jobs where I didn't even know the leave policy in advance, and I'm sure many other workers have done the same. Maybe we don't ask about leave policies at job interviews because it would make us look like fickle workers. In any event, it seems that people pick jobs based primarily on salary, the nature of the work, and location.