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In remote work the winners take most.

In remote work the winners take most.

What does remote work mean for smaller businesses?

MPS
MPS

COVID-19 has helped us realize remote work is a viable way to get stuff done. People can productive from their home, a coffee shop, or at the beach.

Remote work cuts down commute time, saves on fuel costs, is probably better for the environment. As long as it’s an option, it’s probably better for everyone than not having the option.

But is remote work good for a small business?

Well, your local bakery, which requires workers to be present at the bakery to function, won’t care. But what about your Local Entrepreneurial Digital Widget Company? Is remote work good for them?

On the one hand, remote work means they can spend less money on offices and office perks. No office, no endless caffeine supply. On the other hand, people worldwide can potentially work remotely for a company anywhere else in the world.

In the past, your Local Entrepreneurial Digital Widget Company could rely on having access to a workforce located in the area. So what happens if the people in the local area can work for a company 5,000 miles away? All of a sudden, your local entrepreneurial digital widget company is feeling a bit more pressure from the bigger companies.

Global Tech Conglomerate Co. and all the money and resources they have can start to attract people they couldn’t attract before due to location constraints. Remember, some people don’t want to live in a particular area. Now that barrier is gone.

So instead of working at Local Entrepreneurial Digital Widget company, this person can work with better compensation at Global Tech Conglomerate Co. Meanwhile, Global Tech Conglomerate Co. will now have to compete with Super Duper Global Tech Mega Conglomerate Inc, which has even greater access to resources and can swoop and get talent from all around the world.

With increased connectivity in a system, you start to see more winner-takes-all effects. We’ve already seen what happens when domains like music became more globally connected. While anyone anywhere can get noticed, most of the rewards are concentrated in a few artists.

Before increased global connectivity, you may have supported your local musician because they were your area’s best talent. That musician might have been able to scrape together some kind of living from that. Now you’d rather go see Billie Eilish and buy her albums. Why listen to the top local musicians when you can listen to the top musicians in the world? So Billie Eilish makes tons of money and accrues tons of fame, while your local musician gets to bus tables and play in the evenings for fun.

Remote work will introduce these heightened winner-takes-all effects into the realm of employment. Expect to see a few dominant companies get access to most of the skilled labor.

Now, labor and wealth are not exactly the same thing. You can accrue wealth without worrying about if you need it. You’re not paying for it, as much as some might say you pay for it in fame. Billie Eilish doesn’t need to use up all the money she earns to make it worth her while.

Labor is different. Companies only need so much of it, or they can only afford so much of it. So there will be some natural limit to how much the winners can take.

Still, I suspect smaller companies might have a tougher time getting access to the kind of employees they need. Because a winner may take most of them, if not all of them.