Not long ago, I called customer service at the big Canadian telco that delivers my home internet service. The person on the other end of the line was in the Philippines. No surprise there: Companies have been offshoring call centres for decades.
But a few minutes into our conversation, I heard something new. From 13,000 kilometres away, a dog was barking. “Can you hear that?” asked the agent. “It’s my neighbour’s dog. He is always barking at the garbage truck.” She wasn’t working in a call centre. She was working from home.
Remote work – office work minus the office – was something that until three years ago few employees were demanding, and even fewer employers were offering. Outside of a futurists’ conference, it was difficult to imagine. Then COVID-19 happened, and the unimaginable became the everyday.
The pandemic’s biggest long-term impact may be on where we work. Forced to adapt to the previously unthinkable, millions of people discovered they rather liked it. For example, though this week’s strike by more than 150,000 federal public servants is in part about pay demands, the Public Service Alliance of Canada has also said it wants the flexibility to continue working from home written into any collective agreement.
It’s not hard to see why remote work has gone from imposition to desire. It comes down to the two things nobody ever has enough of: time and money.
In 2016, the census found that the median Toronto commuter lived 10.6 kilometres from work. The distances were 9.2 km in Ottawa, 9 km in Calgary and 7.6 km in Vancouver. In Toronto, nearly one in five workers lived more than 25 km from the office. That’s a round trip of at least 50 km.
According to the travel app Moovit, the average one-way commute in Greater Vancouver was 48 minutes in 2022. In Montreal, it was 52 minutes. In Toronto, it was 56 minutes. That’s two hours of commuting, daily. Ten hours a week. Forty hours a month. Google Maps says that’s how long it takes to drive from Toronto to Vancouver. Who wants to do that 12 times a year?
Then there’s the financial story. Since 2020, millions of Canadians have noticed a lot of extra savings accumulating in their bank accounts. One reason is that they stopped commuting.
If you live in Toronto and take public transit to work, that’s $3.35 a ride. Over, say, 230 working days a year, that’s more than $1,500. Live farther away? A month of GO Train trips from Oshawa to Toronto’s Union Station costs $367.85, or more than $4,000 annually.
In Vancouver, a monthly transit pass for commuting within the city is more than $1,200 a year. If you’re commuting in from Burnaby or West Vancouver it’s more than $1,500; if you’re coming from Richmond or Surrey it’ll be $2,000.
And if you’re driving, the cost will be higher. It’s not just gas and vehicle wear and tear; you’ve also got to provide your car with a comfortable place to nap while you’re at work. Parking in central Toronto or Vancouver easily runs at least a couple of hundred dollars a month.
And once at the office, you’ve got to eat. Unless you’re packing a lunch and a thermos of java, that means dropping at least $20 a day at the food court.
Someone who drives to work, pays for parking, goes out for a coffee and eats a fast-food lunch is likely spending $10,000 a year or more.
The old saying is that a penny saved is a penny earned, but that’s not quite right. Income is taxed – so a penny saved is, depending on your tax bracket, worth as much as two cents earned.
Let’s say our ex-commuter who no longer spends $10,000 a year thanks to remote work lives in Ontario, and has a taxable income of $120,000. Their federal-provincial marginal income tax rate is 43.41 per cent, so cutting $10,000 in commuting expenses was like getting a $17,700 raise. And going back to the office will feel like taking a $17,700 pay cut.
Then there’s the pandemic tax break that Ottawa has given erstwhile office workers since 2020. It incentivizes working from home by allowing employees to deduct the cost of their home workspace – a benefit formerly reserved to the self-employed.
The average Toronto apartment rents for more than $3,000, according to new data from Urbanation. If our hypothetical ex-commuter pays the average Toronto rent and uses 20 per cent of their apartment for a home office, that could reduce their taxable income by more than $7,000 a year. That’s like getting more than a $12,000 raise.
Employers are also doing their own math. Result: Despite the Canadian economy being at full tilt, with nearly 900,000 more people working than three years ago, office vacancies have soared. In downtown Toronto, the vacancy rate in late 2019 was 4.2 per cent, according to real estate firm Altus. It’s now 19 per cent. In Vancouver it’s 14.1 per cent. In Montreal it’s 18 per cent.
The average Canadian company has a bigger payroll than three years ago, but a smaller office space. The difference ends up on the bottom line.
Done wrong, remote work could make things worse for both employers and employees. It could make management less effective, and remove creativity, knowledge transfer and teamwork from companies. But done right, it just might be a remarkable efficiency tool – delivering more output in less time, with less overhead. Economists have long searched for the big productivity payoff from the internet. Maybe this is it.
The Globe and Mail, April 21, 2023