- Part I presented good reasons for pitching the idea of teleworking (working from home) when placing job candidates—from employer, employee, recruiter, national security and microeconomic and macroeconomic perspectives.
The prospect of saving the U.S. more than $650 billion annually through expanded teleworking and the national security implications of teleworking were discussed as macro-economic incentives for recruiters to carefully consider recommending teleworking for the new employee being placed. Part II completes this discussion.
Which Has the Bigger Tax Incentives: Commuting or Teleworking?
Whether a candidate will be interested in a teleworking (a.k.a. “telecommuting”) option depends, of course, on whether, all things considered, it’s a better deal than commuting (the latter defined here as getting to work by any means other than walking).
So, currently which benefits incentive is greater for employees—to commute or work at home? This can be very tricky to determine. For example, although home-based employment can afford the self-employed and employees various tax breaks, such as deductions of mortgage interest and utilities expenses, certain strict conditions may preclude eligibility of the voluntary teleworker.
In a report on telecommuting posted at about.com by Melanie Pinola, an IT administrator and teleworker, she nicely summarizes the established IRS rules for employees, with specific mention of commuting: “telecommuters also have to prove that their work-from-home arrangement is for the employer’s convenience, for example, if the employer is a virtual company with dispersed teams and no office is provided to employees (or they hire you out-of-state). If you work from home for your convenience (to avoid a long commute, for example), the IRS wouldn’t allow the deduction.” (Italics mine.)
Ouch! That’s gotta hurt the wallet and any campaign to promote teleworking as smart, efficient, patriotic or otherwise somehow better than commuting.
So, as it stands, if an employee wants to save some money and be spared the hassle of commuting, by working from home, and possibly somehow help America conserve energy, save the environment, maybe pay down its massive debt, or strengthen national security (through decreased dependency on foreign oil and resource-competition wars), the IRS seems to stand ready to make that a tad more difficult.
Telework Savings: Really a “Good Thing”?
The extended quote that follows is how teleworkresearchnetwork.com arrived at the $650 billion annual telework savings figure cited in Part I. The question is whether or not these savings would be 100% “a good thing” for Americans and America. (My comments, in italics, appear in square brackets.)
“Less than 2% of U.S. employees work from home the majority of the time (not including the self-employed), but 40% hold jobs that are compatible with telecommuting. If those employees worked at home just half of the time (roughly the national average for those who do), as a nation we would:
- save over 280 million barrels of oil (37% of Persian Gulf oil imports) valued at over $23 billion (based on $80/barrel).
[So, the money that would have been spent on foreign oil could be “donated” (through taxation of the cash saved) to the Federal Reserve or foreign creditors, to pay down the national debt.]
- save consumers $15 billion at the pumps (based on $2.60/gallon).
[Nice for the consumer, but fraught with concerns about the impact on U.S. energy companies’ taxable revenues and therefore overall impact on debt reduction.]
- reduce greenhouse gases by 53 million tons—the equivalent of taking almost 10 million cars off the road for a year—that’s over 21% of the nation’s goal for GHG reduction by 2020.
[Great for the IRS, if this is a monetizable and therefore taxable gain. It also raises the question of an adverse impact on U.S. automakers’ sales, if teleworkers’ cars last longer from less use.]
- reduce wear and tear on our highways by over 115 billion miles a year saving communities over a billion in highway maintenance.
[This could adversely impact the domestic highway and bridge construction industries and their revenues that otherwise could be taxed to help meet at least the interest payments on the ballooning national debt.]
- save almost 100,000 people from traffic-related injury or death. Accident-related costs would be reduced by almost $12 billion a year.
[Savings that could be passed on to the Fed as another “donation”—in the form of cleverly crafted and collected direct or indirect taxes on such “windfall savings”, e.g., by taxing the resulting higher health insurance company profits at a higher rate. These savings could also conceivably unfavorably impact U.S. pharmaceutical, medical supplies and equipment, or numerous other companies—not to mention law firms—whose sales and revenue flows might be pinched by fewer accidents.]
- increase national productivity by 5.5 million man-years or $235 billion worth of work.
[Such output increases translate into higher tax revenues, even without new taxes or higher rates—revenues that could help pay down the debt.]
- save businesses over a $200 billion in real estate, electricity, absenteeism, and turnover—together with the value of the increased productivity, that’s more than $10,000 per employee and more than double the average first-year cost per teleworker. Additional savings would result from reductions in other utilities, janitorial service, security, maintenance, paper goods, coffee and water service, leased parking spaces, ADA compliance, equipment, furniture, and office supplies.
[Again, if those savings are not spent on “desirable” alternatives or invested in them, the net effect on the economy and U.S. society might not be positive.]
- save enough in office electricity to power more than 900,000 homes for a year.
[Although good for the environment and conservation, such power consumption cutbacks would free up income for other unpredictable uses, with correspondingly unpredictable impacts, e.g., pay off credit-card debt vs. buy more junk food and a ticket to diabetes.]
- enable employees to gain back the equivalent of 2-3 weeks’ worth of vacation time per year—time they’d have otherwise spent commuting.
[Although probably a good thing, this could backfire—at least from the (national) health (cost) standpoint—if the bulk of the employees totally zoned out in a protracted couch-potato, TV-pop-and chips-laced binge.]
- save employees between $1,800 and $6,800 in transportation and work-related costs. In addition, some would also be able to cut daycare and eldercare costs. Many would also qualify for home office tax breaks”
[Only if the IRS allows the deductions for voluntary teleworkers. Moreover, the transportation savings could cost daycare centers and transit systems lots of revenue, with adverse consequences for business, the IRS, national debt pay-down and transit employee hiring, income, etc.]
So, like penny-preoccupied victims of the Great Depression, modern recruiters are going to have to ask themselves whether saving, in general, and which (of these) specific savings will actually be good for everybody.
Only then will they be in a position to knowledgeably weigh the question of how enthusiastically to embrace and recommend teleworking to employers, candidates and themselves.
Recall that during the Great Depression, a fear-driven propensity to cut consumption triggered mass saving, rather than the kinds of investment that might have ended it earlier. Hence, although on the face of it, “saving” sounds good, it can cut in two senses and in two ways—one of which can really hurt.
In this modern reckoning of the impact of telework savings, positive “economic externalities” such as cleaner air, improved health, conserved resources and world peace will have to be given their due weight.
More direct, yet less easily calculated economic costs and benefits, e.g., actual impact on national debt, changes in net domestic revenue, income or job gains/losses, will, of course, be central to the process of deliberation.
But, in the end, Yankee ingenuity being what it is, everything may turn out fine as U.S. companies, at home (as opposed to abroad), move toward an optimal mix of commuting and working at home (as opposed to at the office).
For sure, Americans, being who they are, will (tele)work it out.
Image: SAVING (FOR) AMERICA (PART II)/Michael Moffa