Telecommuting: What is it Good For? - Weekly Policy Commentary - December 5, 2008

Welcome to the RFF Weekly Policy Commentary, which is meant to provide an easy way to learn about important policy issues related to environmental, natural resource, energy, urban, and public health problems.

When the phenomenon of telecommuting appeared on the horizon in the 1970s, it seemed to be a godsent panacea. For employees, it promised more time to spend with their families and lower commuting costs. For employers, it dangled the reduction of real estate costs and utility bills and an ability to retain and recruit better employees by using telecommuting option as a fringe benefit. For society as a whole, telework promised reduced auto trips, less road congestion, lower energy consumption, and cleaner air. Telecommuting seemed to be a win-win solution to everybody, and all it required was a steady growth in information-type jobs and perhaps better phone lines. According to some estimates, by the year 2000, 50 percent of the U.S. workforce was supposed to telecommute. And all that government seemingly had to do was educate both employers and workers about telework and its benefits.

Fast forward to the 21st century. Although the percentage of workers who telecommute has been steadily increasing, it is way lower what was predicted in the 1970s (according to different estimates, anywhere between 10 and 45 million of U.S. workers telecommute at least once a year, but only a small fraction telecommute at least once a week). At the same time, information technology has undergone significant transformation and is now significantly more advanced than in the wildest futuristic dreams of the past decades.  Limitations to telecommuting It turns out that the great virtues of telecommuting are often offset by less desirable features. Combining telecommuting and caring for small children at home frequently proved to be impractical and was opposed by most employers. For some employees, telecommuting removed the boundary between work and leisure and increased work stress levels. For others, telecommuting has lead to feelings of isolation and lack of social interaction with co-workers. Last, but not least, telecommuting tends to reduce workers’ visibility in the organization and is likely to decrease their promotion potential. Employers also found that managing a telecommuting workforce can be quite challenging, especially when worker productivity is hard to measure. When a telecommuter works at home once a week or less, realizing sizeable real-estate and utility savings turned out to be quite hard. Also, institutional implementation of telecommuting programs and resolving issues related to workplace safety at home place additional burdens on employers and make promoting telecommuting much less attractive. Finally, the benefits for the society as a whole don’t seem to be as desirable as hoped for. My early research has shown that in the long run, the presence of telecommuting options is likely to make our metro areas larger and more congested than before. In effect, there is an “induced demand” effect – when an opportunity to telecommute arrives and some workers in the metro area start telecommuting, roads become less congested and attract new workers to the urban area until congestion climbs up to the original levels again. Just as we cannot build our way out of road congestion, we cannot telecommute our way out of it either.

Elena Safirova is a fellow at RFF. In her current research, she focuses on economic modeling and policy analysis related to transportation and urban land use.  In particular, Safirova is analyzing transportation policy alternatives with respect to outcomes for transportation demand, location decisions, urban sprawl, interaction with other policies, as well as the effects on economic welfare and environmental quality.

Although in the long run, the prospects for telecommuting to reduce traffic congestion are bleak, in the short run there could be some room for reduction in vehicle miles traveled (VMT), traffic congestion, and air quality. That said, the exact environmental and transportation benefits of telecommuting remain an open question. For one thing, research studies have shown that when telecommuters work at home they are more likely to make more non-work trips thus eroding overall VMT reductions. Also, our research has demonstrated that telecommuters are more likely to drive newer cars than the population in general and therefore emissions reductions would be lower than expected. Nevertheless, the potential transportation and environmental benefits make a convincing case for a pro-telecommuting policy.

Government initiatives to promote telecommuting

Although the majority of U.S. states have some policy regarding telecommuting, most of them concern either provision of information and educational resources to employers interested in starting telecommuting program or telecommuting programs for state employees. With a few exceptions, such as the Oregon Department of Energy program that offers tax credits to employers with significant percentage of telecommuting workers, states do not provide additional incentives for telecommuting.

For metropolitan planning organizations (MPOs), the goal of most telecommuting initiatives these days is not fighting congestion, but improving air quality, especially in the areas of non-attainment. Many MPOs assume that some fraction of employees in their area will work from home a certain number of days per week, thus reducing the number of work trips and attained emissions. However, the U.S. Department of Transportation recently announced its new comprehensive National Strategy to reduce congestion on the nation's roads.  Metropolitan areas would commit to pursuit of aggressive strategies under the umbrella of "Four Ts" – tolling, transit, telecommuting, and technology. The goal is to use all strategies simultaneously to achieve the best results. How well these various measures work together is not well understood; for example, promoting telecommuting can potentially undermine other alternatives, such as public transit and carpools, and vice versa. 

The most recent attempt to institute national telecommuting policy occurred in June 2008 when the House of Representatives passed the Telework Improvement Act (HR 4106) that would require government agencies to develop a program allowing employees to telework at least 20 percent of every two-week work period. A counterpart bill in the Senate, the Telework Enhancement Act (S. 1000), has won the approval of the Senate Homeland Security and Governmental Affairs Committee, but is still pending. Unlike other policy attempts, the Telework Bill is driven more by national security concerns rather than transportation and environmental goals and affects only federal employees.

At the same time, in order to promote telecommuting, a dedicated telecommuting policy is only one strategy among many. People’s propensity to telecommute very much depends on their industry and type of work, and therefore targeting particular industries may be a better strategy. Because many telecommuters depend on communications technology that allows them to move large amounts of data between home and office, a national broadband policy would increase Internet capacity and therefore also boost telework. Telecommuting also rises with education level and so government policies that encourage higher education, such as student loan programs, could have a corollary effect here as well.

Should the government be encouraging telecommuting through these types of programs? Although we lack the evidence to answer this question definitively, any transportation benefits from telecommuting policies are probably modest at best. If local governments are serious about reducing urban traffic congestion, there is no way around an inconvenient truth: the most effective way to do it is to charge motorists for using scarce road space during rush hour.

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Views expressed are those of the author. RFF does not take institutional positions on legislative or policy questions.

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