This trend continued into the 21st century. According to a 2020 study by economists David Autor, Claudia Goldin and Lawrence F. Katz, most of the increase in income inequality over the past two decades has occurred “within educational groups rather. than between them â. Some college-educated employees – especially those with advanced degrees – were earning more than ever as most of their peers stayed in or retired. Technology has contributed to this increase by allowing companies to produce more and reach more customers while relying on fewer but more specialized employees.
Important as it was, the impact of technology on many professions was limited by geography. When most companies only hired employees who lived within commuting distance of the office, the size of the labor market was capped. This has capped the employment options and earning capacity of employees with the most specialized and in-demand skills. It also put a floor below other professionals who enjoyed a living wage and relative job security because they lived within commuting distance of a central business district or a central business district. office park.
Geographic constraints are relaxed now that Silicon Valley and other industries embrace remote working – gradually, then suddenly. The Economist recently analyzed job postings on Hacker News, a site popular with programmers. He revealed that the share of jobs mentioning “remote” reached 75% in 2021, up from 35% before Covid and 13% a decade earlier.
How will this affect the average tech worker?
There are some early indications. In June, Google told its core workers it would cut pay for those who choose to work remotely or move away from the office. Avoiding the office saves employees money – in travel expenses, for example – but as economist Austan Goolsbee recently wrote for The New York Times, businesses over the past 40 years have typically found a way to recoup the potential earnings for workers.
For most tech workers, working remotely means competing against a much larger pool of equally qualified applicants, many of whom are based in low-income cities and countries.
Should this be of concern to the most requested engineers and product managers? Probably not. For them, working remotely means competing for the highest paying jobs at more companies.
But even many highly skilled and specialized employees have cause for concern.
As Enrico Moretti pointed out in “The New Geography of Jobs”, hiring “is very similar to dating”. Accessing more potential candidates from a larger pool of people increases the chances of finding an ideal match. Matching skilled talent to specific jobs is one of the main reasons innovation, productivity, and wages are higher in big cities.