This is a complex issue, but if we were to try to simplify it a bit, we could say:

"Any job that can be done from home can also be done from India or Brazil."

Sometimes I say this and people say "India is a different culture and it is a different time zone."

Well, okay, let's say that's true, there is still Brazil, which is only one time zone away from New York City. Brazil has a Western culture, and thanks to a recent political crisis its currency devalued so it now seems like a low cost place to outsource work.

Again, this is a complex subject, but I've been surprised by the number of workers in New York City who don't seem to get the basic underlying facts of the situation. Most of the work that can be outsourced will be outsourced, so most of the work that remains in the USA is work that needs to be done at the office.

I've often heard workers say "Why should it matter if I'm at the office? All that matters is whether I get my work done. I should be judged on that and that alone."

Yes, for sure, that applies to all of the situations where the work can be easily defined, and some concept of "quality" is easy to apply. However, the work that can be easily defined, to the point that it can be written down in a contract, is also the work that is easiest to outsource. There is a famous economist named Coase who wrote a famous thesis on this very subject. He asked the question, why do employees exist? That is, why isn't everyone an independent agent, a corporation of one? He concluded that there is a lot of work that is not easy to define, not easy to write down, and where "quality" is multivariate and composed of intangibles -- in all such cases it is better to hire an employee than outsource the work to another company. But the vagueness of definition that leads to the existence of employees also makes it difficult to allow work-from-home, for all of the same reasons.

Of course, in between outsourcing and work-from-office there are infinite shades of gray, which can be paid a sliding scale of values. That is, there is some work that can be done from home, where the company is willing to pay more than they would pay for outsourcing and less than they would pay for in-office work. There is some middle ground. And that is what I've been seeing in New York City this year. I've seen some companies pay as much as $30,000 extra to get people back into the office.

What is surprising is that most of my work-from-home friends don't see this as a pay cut. As the old saying goes "workers fear losses more than they value gains." Since their salary is not being cut, they don't feel like they've suffered a pay cut. But if your peers get pay raises and you don't, I'd say that is something like a pay cut. And if you don't see it that way this year, you might see it after a few years. Because your peer who gets an extra $30k this is going to be making 100k more than you in about 4 or 5 years. If the big pay raises go to people who work in the office, then a gap will open between those who work in an office and those who work from home.

Again, the fundamental economic issue is this: people who work from home are competing directly with folks in India, Romania, Vietnam, and Brazil, in a way that folks who work in an office are not.

The model that I'm seeing this year in New York City is something like "leadership and top workers in the office, less important workers can work from home." Many workers are grateful to be able to work from home -- they regard this as an enormous perk. Indeed, they forego $30k and considered themselves better off for it. But I wonder, where will this new model take us in 5 years? I think for many workers, if they don't go to the office, they are self-selecting themselves from any future leadership roles. Which is fine, if they just want a good paying job, and they don't aim for a future leadership role. But for folks who do aim for future leadership roles, I think working in an office will remain mandatory.

And even for those not aiming for leadership roles, the issue remains, as the economist Coase would say, can your work be defined so clearly that your manager can say with certainty that you are contributing all that you should be contributing? If your work is that cut-and-dry, then your work can be outsourced. And if your work is not that cut-and-dry, then you can't really work from home on a regular basis.