Today's hot startups promise companies that they can hire from anywhere. America's manufacturing industry and manufacturing jobs were killed by offshoring and globalization. Will America's tech jobs and tech industry be next?
I love remote work. Basecamp's book Remote provides a lot of good arguments about why remote work is better than in person work. I've also seen studies that employees that have to work hybrid, in person and remote burn out faster and are less satisfied at their jobs. Since the pandemic remote work is the new norm. People are happy they don't have to commute or make small talk at the water cooler any more. Remote work is having it's moment. Remote work is the future and I'm here for it.
But in all the excitement I'm starting to see the flip side.
First there's the obvious hits to urban centers. When you don't force people to work from offices they relocate elsewhere. Businesses that provided goods and services in urban areas are going under. Cities tax base errodes. Buildings site empty. This is definitely a situation that needs to be managed but I don't think it provides a good argument that we need to force people back to the offices. Less densely populated business zones can be part of the future as companies shift towards remote and hybrid work.
There's the second argument that remote employees are less effective. This has been announced by the likes of the PayPal mafia -- Founders Fund, Elon Musk, Peter Thiel. This argument goes that in order to really have successful business you need to be sitting elbow to elbow with your peers. Startups are tribes and a tribe dispersed is not as strong as a tribe that sits in the same office and has to deal with each other's physical presence everyday.
I think there's definitely something to this second point and it coincides with Robert Putnam's observation from way back when that American are "bowling alone". We already live in a pretty damn lonely society with record high "deaths of despair". Teams that build camaraderie may be socially healthier and outcompete dispersed teams. This point to me seems dependent on the business needs. A startup of five people with millions in Venture Capital funding to capture a market will have different needs than a profitable lifestyle business will have different needs than a public enterprise company.
For me there's a noticeable third argument pushing back against current remote work trends that's largely missing from today's dialogue -- offshoring.
In the 1990's America lost it's manufacturing industry and the majority of its manufacturing jobs to other countries.
The decimation of the American manufacturing industry was a result of globalization and neoliberal political agenda.
President Bill Clinton signed America into NAFTA. America became a middleman economy of Nike and Walmarts. These firms don't produce anything but instead sit in between suppliers and consumers to extract rents.
Additionally, antitrust law since the 1980s has pretty much been a dead letter. This has allowed private equity and powerful firms to consolidate industries -- buying competitors.
During the 1990s private equity firms engaged in leveraged buyouts, a frankly insane practice where a financial firm can buy a business and the load the business with the debt it supposedly paid for the business.
These leveraged buyouts saddled American companies with debt and ran many like Toys R Us and Blockbuster into bankuptcy.
Other firms that produced things in America faced enormous pressure from financiers to reduce costs. The primary method of this was offshoring.
Today very few of the things we have and buy are made in the United States. We offshored our manufacturing industry and manufacturing jobs to other countries.
Advocates of neoliberalism and globalization acknowledged these jobs were being destroyed but they figured those people would get jobs doing something else.
Instead many people who lost manufacturing jobs or people who live in towns where manufacturing was the primary industry are committing suicide in record high numbers. Drugs like fentonyl numb the pain of a dreary existence. Many work for the firms that have consolidated other industries like Amazon or Walmart.
Let's just say offshoring our ability to make stuff hasn't really turned out good for America. It has turned out great for Wall Street though.
All of this brings me back to "high skilled" tech jobs and the drive for remote work.
New firms like Deel, which has raised nearly $700 million from financiers promises to allow companies to offshore their jobs out of the United States with little to no friction.
They're hardly the only company operating in this space. Remote is their direct competitor and has raised nearly $500 million from financiers to allow U.S. companies to easily offshore their tech jobs. Newer startups like Pilot and Strider promise to provide the same service. There are established brands that allow companies to hire offshore too; UpWork, Toptal and Fiverr all come to mind.
All this begs the question what's to stop America's tech industry from being offshored to other countries like our manufacturing industry was? Is it even a bad thing if most of our tech jobs were offshored to other countries?
To address the second question I think yes it would be bad if we as Americans weren't capable of building our own software or manufacturing our own goods. I've personally been laid off from a company that was bought by a private equity and proceeded to offshore most of the work. I landed on my feet but it did get me thinking that it would not be great for the country to not have our tech work done within our national borders.
As far as the first question, what's to stop all of our tech jobs from being offshored, I think the main response, for now, is that demand for tech workers far outstrips supply. Tech workers like software engineers and product managers are already paid really well. Firms like Deel and Remote would probably argue they are just helping firms "remain competitive" and catch the supply up with demand. I'm not hating the player, just discussing the game.
As a policy concern for the United States though I think we need to be consicous of finance's preference for offshoring. It costs less to hire developers in other countries. Technology is ironing out the problems that came with hiring teams in other countries. Without regulation and a policy framework to protect American tech jobs and educate Americans for those tech jobs our tech industry could go the way of our manufacturing industry, aided by financiers, venture capitalists and today's hottest startups.