How the Pandemic and Remote Work May Accelerate The Move Away From Pay as Compensation for Time and Towards Sharing Value

The pandemic may have accelerated a change in how we think about work and pay.

When the US was founded, a vast majority of work fell into one of three categories: children, slaves, and indentured servants. In every one of these arrangements, the "boss" owned your time. If you were a child you were expected to work as part of the family until you were old enough to leave home. If you were an indentured servant, you were expected to work (typically) 7 years to pay off the cost to bring you to this new country of opportunity. And, of course, slaves never saw the end of their work sentence, forced to work as long as the slave owner could wring anything out of them.

The word employee didn't enter the English language until the first half of the 19th century, a word that was largely unnecessary to describe the rare arrangements that looked anything like modern employment.

The industrial economy didn't much change the notion that work essentially meant that your employer owned your time. The factory owner needed someone to work a 12-hour (or, later, 8-hour) shift, as did the store owner. Employees were hired to work shifts and paid by the day, hour or month.
Weirdly, one of the terms often used for pay was compensation, as if everyone involved knew that employment was a compensation for lost time. (What did we call time outside of work? Free time, a term that simultaneously referred to the fact was one free to do as she wanted and also that you were spending this time without compensation.)

The information economy began to change this. Stock options at startups became more common and workweeks became longer and more erratic. Startups prided themselves on all-nighters leading up to product releases and employees who were granted stock options made considerably more than any reasonable salary would grant. (Microsoft stock ownership created 3 billionaires and an estimated 12,000 millionaires among its employees.) In this world of startups the tight link between time and pay was loosened. Someone who was part of a team that created great value would be hugely compensated. If you were part of a team that failed to create much value, your stock options might be worth nothing. And how did you get rich? By having a lot of shares. You were sharing in the wealth you helped to create.

Early in the pandemic when millions were sent home to work remotely, I heard of employers who were taking pictures every couple of minutes to confirm that the employee was “at work,” sitting at their monitor. My immediate thought was, Those supervisors don’t have a clue how those employees are adding value so they are instead measuring time spent sitting at a computer.

By some estimates, about one quarter of employees now work some portion of their workweek remotely, up from about 5% before the pandemic. It is more difficult to know whether such employees are putting in 40 hours, 4 hours, or 80 hours a week. Which is to say, it is more difficult to pay them for their time, the default compensation we’ve had since the days of slaves and indentured servants.

I rather optimistically think this will result in a win for employers and employees alike. Why? Given you can’t hold someone accountable just for showing up, you need to get clearer about how they are adding value. Instead of them casually accepting a task assignment of dubious value that nonetheless results in their getting a paycheck at the end of the month, they and their managers / employers are going to spend more time thinking about and defining how tasks add value and (probably defaulting to) some fair split between what portion of that value goes to the employee as pay and what portion goes to the company to cover fixed costs and generate profits to be distributed to shareholders.

I think this change in how we work will accelerate the move away from compensating you for your time and will increasingly move towards value sharing, making employees partners in the larger endeavor of creating value. This will increasingly mean that your time is yours to manage as you choose and the value you create will be something shared with you, your company and your customers. It may be turn out to be one of the more curiously cool things to come out of our response to this, the first post-worldwide web pandemic.