The Promise of Telecommuting

Ted Balaker

Reason Foundation

www.rppi.org

• Policymakers have been frustrated with the American people for decades.

• They’ve tried just about everything to pry us out of our SUVs and sedans.

Ride the bus

Ride rail

Walk and Bike

But nothing seems to work

How America Gets to Work (2000)

Total Auto Other

Meanwhile, transit spends more, does less.

Transit’s Change in Subsidies and Work-Trip Market Share

(1980-2000)

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Annual Subsidy (133%increase)

Work-trip Market Share(26% decrease)

How about carpooling?

• If you won’t get out of your car, at least put more people in it.

• 2400 miles of carpool lanes.

• PSAs make carpooling look like lots of fun.

But carpooling is like transit …

More carpool lanes,

but less carpool commuting.

More carpool lanes, less carpool commuting

(1980-2000)

-200%

0%

200%

400%

600%

800%

1000%

HOV route miles(868% increase)

HOV work trip marketshare (38%decrease)

• Only commute modes to increase share since 1980 …

• Driving alone• Telecommuting (Work at Home)

Change in Commute Share(1980-2000)

-60%

-40%

-20%

0%

20%

40%

60%

Perc

ent C

hang

e

Work at Home

SOV

HOV

Transit

Walk

Definitional Squabbles

• Some say you can’t call “Work at Home” workers telecommuters.– Some “Work at Homers” are home-based and some

say home-based workers aren’t really telecommuters.– But if they couldn’t work at home would they just stop

working?– Central question: Does the work arrangement help

decrease peak hour congestion?

• Home based workers might be the ultimate tcers.

Why telecommuting’s performance

is impressive …

Growth

• TC is only commute mode besides driving alone to increase since 1980.

• Greatest percent increase.

• Widespread growth.• Big increase in every metro area.

Wait a minute!

TC’s market share was small to begin with,

so it had lots of room for growth.

Yes, but …

• You could say the same about transit and carpooling.

• Both lost market share.

• They also had public policy on their side.

• Policy often hampers TC, but it has grown anyhow.

Why telecommuting’s performance

is impressive …

Impact

• TC is gaining ground on transit, poised to surpass it.

• Remove transit anomaly NY and telecommuters already outnumber transit commuters.

• TCers outnumber transit commuters in MOST metro areas.

Impact

• Areas where TCers outnumber transit commuters by at least 2 to 1:

Charlotte, Raleigh, Indianapolis, Tampa,Kansas City, Greensboro, West Palm Beach,

Nashville, Grand Rapids

• In Oklahoma City, TCers outnumber transit commuters by nearly 5 to 1.

What about rail transit?

Telecommuting vs. Rail

• In areas with rail, rail commuters outnumber TCers in only 5 cases.

(NY, Chicago, DC, Philly, Boston)

• San Francisco has more telecommuters than rail commuters.

• In Portland, telecommuters outnumber rail commuters by more than 9 to 1.

• In San Diego, it's 22 to 1.

But wait!

TCers may avoid the work trip,

but maybe they increase congestion by making more non-work trips.

Nope

• According to a review of TC literature ...

– Most studies find that TC significantly reduces trips and VMT.

– TC reduced trips by 27 to 51%– TC reduced VMT by 53 to 77% (source: Resources for the Future)

• According to an analysis of D.C. area commuting …

– Traffic delays would drop by 10% for every 3% of commuters who work from home.

(Source: Laurie Schintler, George Mason

University)

Why telecommuting’s performance

is impressive…

Cost-effectiveness

Transit vs. Telecommuting

• Impact is similar.

• What about cost?

– There are costs associated with tc (computer, internet access, etc.).

– But these costs almost never fall to the taxpayer.

• On the other hand, transit is heavily subsidized.

• Bottom Line: Telecommuting offers more bang for the buck.

Cost to Taxpayer: Transit vs. TC(2000)

$0

$5

$10

$15

$20

$25An

nual

Sub

sidy

in B

illio

ns

Transit

Telecommuting

Findings like these aren’t surprising.

• UC Davis study:

– Compared to transit “telecommuting appears to be far more cost-effective in terms of public sector expenditures.”

• George Mason University study:

– Telecommuting is “one of the easiest things we can do” to reduce traffic delays.

Let’s look to the future.

The future will frustrate policymakers even more.

• Wealth is increasing …

– Compared to today, workers in 1920 had to work 3 X as long to buy a car.

– Today there are more cars than licensed drivers.

– Even 80% of poor households own at least one car.

• Increased wealth brings …

– More cars, more travel.– Decentralization of housing and

employment centers.– Bottom line: With countless origin

and destination points, it’s difficult for transit to be relevant.

Should policy fight social trends?

• Policymakers want to fight decentralization.

• But this trend is stronger than policy.– Happening everywhere.– Even in foreign cities with

higher gas prices, higher densities, and more transit service.

– Still want to fight this trend? You’ll spend lots of money and lose.

Change in Share of NY State Population (1950-2000)

-50%

0%

50%

100%

150%

Long Island

NYC

Telecommuting can work with social trends.

– Telecommuting can accommodate a decentralizing society.

– Location doesn’t matter much, usually only need a few tools (computer, cell phone, internet).

– And there are other reasons to be optimistic about the future of telecommuting.

Reason for optimism …

Telecommuting tools continue to improve.

Telecommuting tools continue to improve.

• Perform better, cost less.

• Since technological progress is gradual we rarely step back to appreciate how revolutionary it has been.

Computers

• 1970s IBM mainframes: $3.5 M

• Today’s PCs – $500– 1000 times faster

Cell phones

• The first cell phones were huge.

• Cost thousands of dollars.

• Today they’re tiny and companies give them away.

High Speed Internet Access

0%

5%

10%

15%

20%

25%

30%

35%

40%

2000 2001 2002 2003 2004 2005

% o

f U.S

. Hou

seho

lds

Reason for Optimism:

Telecommuting-friendly jobs are growing.

Telecommuting-friendly jobs are growing.

• Shifting to a knowledge-based economy.

• BLS expects tech sector to yield 7 of top 10 fastest growing professions.

Employment Gains (1992-2002)

Occupation Job Gains Change

Architects 60K 44%Financial services sales

248K 78%

Designers 230K 43%Electronic engineers 147K 28%

Reason for optimism …

Workers like telecommuting.

Workers like telecommuting.

• 77% of AT&T TCers are happier with career after starting telecommuting.

• TC helps Sun Microsystems attract and retain good workers.

• Some surveys show that workers will choose the ability to telecommute over a higher salary.

Workers like telecommuting.

• Important for policymakers.

– They can stop trying to force commuters to do what they don’t want to do.

– Particularly significant for rail projects.• Rail is expensive, but transit officials think it’s the

only way to attract “choice” riders.

Who are these “choice” riders?

• Compared to transit users in general they’re wealthier, better educated car owners.

• Who are telecommuters?– Wealthy, educated car owners.

• Instead of trying to get choice riders out of their cars why not ask them to just stay home?

Telecommuting is an easier sell.

• It’s faster.– Average roundtrip commute …

• Transit: 96 min.• Telecommuting: 0 min.

• Workers already like it.

• It’s cheap.

• Allow transit to focus on serving the poor.

Still, rail has one big advantage

over telecommuting.

Better photo ops.

Questions?

Comments?

ted.balaker@reason.org