Who wins and who loses when companies can hire from anywhere? Some employees and freelancers who can work remotely will have vastly expanded opportunities and the possibility of significant increases in pay, but remote workers in general figure to face more competition and have a higher dependence on luck.
One thing that seems unavoidable, research suggests, is an intensification of inequality. In his 1981 paper, “The Economics of Superstars,” Sherwin Rosen described the impact of recording and broadcasting on the incomes of athletes and entertainers. As technology enabled individuals with specialised skills to reach a giant market — one hour of work in a single location could suddenly reach many people across the country — fewer stars captured more of the rewards. Professor Rosen expected that over time many other professions would follow a similar pattern. A teacher’s income, for example, was traditionally limited by the number of students who could fit into one classroom. But today on Udemy, an online learning platform, teachers like Chris Haroun have earned millions from courses they created, especially after Covid-19 lockdown pushed enrollments on the platform up by 425%. The vast majority of teachers on Udemy don’t come close to Haroun’s earnings, resulting in an extremely unequal distribution of income between superstar teachers and everybody else.
A meaningful shift in the distribution of income can also be seen in platforms where remote instruction is more similar to traditional teaching. On Outschool, an online marketplace for virtual classes for children, hundreds of teachers earn more than $100,000 a year, and dozens earn over $230,000. But most Outschool teachers earn far less, partly because they treat online teaching as a hobby or side hustle, and partly because they haven’t yet figured out how to attract students. The adoption of remote work is also affecting more traditional institutions. Scott Galloway, a professor at N.Y.U.’s Stern School of Business, told me in April, “Because all my classes are remote now, the school asked me, ‘Can you go from 160 — dictated by the size of Stern’s largest classroom — to 280?’ That’s 120 fewer seats for the other marketing professors to fight over.” Similar dynamics can be seen in professions that were assumed to be inherently “in-person.” During the lockdowns, most fitness instructors were out of work. But a handful were thriving — especially those who worked for Peloton. By the end of 2020, Peloton had about four million members — equal to the number of gym patrons in New York State. Unlike New York’s fitness industry, Peloton did not employ 86,000 people in a single state. Instead, the company’s millions of members were served by several dozen instructors who could live anywhere they liked. While most fitness instructors could not work at all, some Peloton instructors earned more than $500,000 — more than 12 times the median salary of their peers. When a market expands, the benefits tend not to accrue equally to all participants, a dynamic true in fields beyond teaching and instruction. As early as 1995, the economists Robert H. Frank and Philip J. Cook observed that payoff structures previously common in entertainment were becoming more prevalent in a variety of other professions. Some lawyers, doctors, consultants, bankers and managers were making more than ever, while fewer of their colleagues occupied middle-income jobs. The two economists attributed these changes to “the revolution in information processing and transmission,” which provides “increasing leverage for the talents of those who occupy top positions and correspondingly less room for others.” Poleg is the author of Rethinking Real Estate.
