September 2001     Vol. 2, no. 9

Evolution of the Canadian workplace: work from home

Ernest B. Akyeampong and Richard Nadwodny

As Canada evolved from a rural and resource-based economy into an urban and industrialized one, residences became largely distinct from workplaces. Throughout the 1900s, increased access to cars, improved transportation infrastructure, and growth of public-transit systems combined to change the face of Canadian towns and cities, and further increased the distance between home and work for many. However, in the past decade or two, the trend appears to be reversing somewhat. Technological advances, notably in the information area (for example, computers and the Internet), have made it possible for workers in many industries to work from their homes, or even while travelling. There is a general belief that downsizing, restructuring, and contracting-out practices by corporations and governments, especially in the past decade, may also have pushed some employees into home-based self-employment  1 , but that perception is not supported by empirical findings in a recent study (Lin, Yates and Picot, 1999).  2 

Using various surveys, this study examines the number of Canadians usually working from home over the past three decades. It discusses the advantages and disadvantages of this arrangement. It profiles who these workers are, what kind of work they do, the volume of work they perform, and how they accomplish it—especially their use of computers. It also looks at job quality.

Size of the work-from-home workforce

Estimates of the number of people working at home date back to the 1971 Census. Since then, the Survey of Work Arrangements (SWA), the Survey of Labour and Income Dynamics, the General Social Survey (GSS), and the Workplace and Employee Survey have all collected similar data. However, these surveys differ in their questions, reference periods, and designs (and indeed for some surveys, the questions were different in different years). As a result, no consistent time series exists on home-based workers, making it impossible to be precise on trends over the past three decades.

Nevertheless, similarities in question wording among some surveys permit the construction of two "mini-series" on trends. The censuses of 1971, 1981 and 1991 are fairly comparable, as are the SWA (1991 and 1995) and the GSS 2000. Compared with the SWA and the GSS, the census definition of a home-based worker is more restrictive, implying lower home-based numbers in the census series (see Data sources, questions and estimates).

According to the census, the number of home-based workers (employees plus self-employed) rose from 613,000 to 1,079,000 between 1971 and 1991. However, the increase was in line with that of the overall workforce, so the proportion of persons working at home remained virtually unchanged at around 8%. Both employees and the self-employed saw their home-based numbers increase (from 196,000 to 461,000 for employees and from 417,000 to 618,000 for the self-employed), but the share of home-based employees remained virtually unchanged at around 4% of all employees, while the share of the work-from-home self-employed rose from 39% to 43% of the total self-employed.

The year 1991 presents a classic example of the effects of questionnaire word changes and seasonality on survey results. That year, the census (conducted in June) counted 461,000 home-based employees, while the SWA (conducted in November) estimated 617,000—almost one-third more than the census. (The 1991 SWA did not cover the self-employed.) While some of the difference can undoubtedly be attributed to seasonality, some was due to differences in questionnaire wording: The less restrictive SWA definition contributed to the larger SWA count.  3 

The 1995 SWA and 2000 GSS estimates also show that the number of people doing some or all of their work at home rose from 2,129,000 in 1995 to 2,795,000 in 2000, but their share of total employment remained virtually unchanged around 16% to 17%. Both home-based employees and self-employed saw their numbers rise over the period—from 1,003,000 to 1,426,000 for employees, and from 1,126,000 to 1,369,000 for the self-employed. However, because growth in home-based work was matched by a proportionately equal growth in other work, the percentages of home-based employees and self-employed hardly changed over the period (around 9% to 10% for employees and ranging from 50% to 53% for the self-employed).

Results from the censuses, SWA and GSS also suggest that a large majority of home-based workers put in only a few hours of work at home each week.

Pros and cons of working at home

Working at home has both advantages and disadvantages. For the employee, it permits increased flexibility in scheduling activities; makes it easier to balance work and personal or family demands; reduces expenses for transportation, clothing and food; and cuts commuting time. On the negative side, working at home may reduce one's social circle, stifle career advancement, or even increase the workload.

For the employer, a work-from-home arrangement may increase employee productivity, reduce expenses for work space, improve recruitment and retention of employees, and reduce absenteeism.  4  Among the most commonly cited disadvantages are problems related to co-ordination and communication, lack of control over quality of work, and problems associated with information security.

Many of the pros and cons listed above for employees also apply to self-employed workers. Additional advantages include possible cost-savings resulting from operating a business at home instead of at an outside premise, as well as access to certain tax write-offs.  5 

Society in general can also benefit through reductions in road congestion (and possibly reduced accidents and their associated costs). Air pollution and greenhouse gas emissions would also be less. On the negative side, home-based businesses may contribute to increased noise, traffic and pollution in some residential neighbourhoods.

Who works at home

According to the GSS, 2.8 million people worked at home in 2000, (Table 1). Although this number was equally split between employees and the self-employed (1.4 million each), the former represented only 10% of all employees while the latter accounted for 50% of their group. Employees and the self-employed are profiled separately because the decision for an employee to work at home is generally made jointly by the employer and the employee, unlike the self-employed.

Among employees, the incidence of home-based work is marginally higher for men (10.6%) than for women (9.8%). Core-age workers (25-54 year-olds) are the most likely to work at home (12.0%), and youths (15-24) the least likely (4.6%). The practice was almost equally as prevalent among full-time and part-time workers. Married employees were more likely to work from home than their single (never married) counterparts (12.1% versus 7.0%). Part of the difference reflects an age effect. The practice was more prevalent among employees with young children, especially pre-school aged (14.8%), than among employees without children (11.5%).

The likelihood of an employee usually doing some or all of their work at home rises with educational attainment. This is mainly because the occupations most conducive to this arrangement tend to have higher concentrations of highly educated workers, and vice versa. Among employees with university degrees, about 23% usually did some or all their work from home, compared with only 4% among those without a high-school diploma.

Among self-employed workers, the incidence of work from home was around 50% for most of the demographic groups selected. Notable exceptions were lower-than-average incidences among young entrepreneurs (42.3%), entrepreneurs with the least education (38.2%), and the never-married group (40.2%). As well, higher-than-average incidences (over 56%) were found among entrepreneurs with university degrees and the separated, divorced or widowed.

What and how much is done at home

Work from home varies by occupation and industry (Table 2). In a profit-maximization market economy, an employer would allow such an arrangement based on factors such as operational feasibility, effects on the morale and productivity of co-workers, and union demands. Operational feasibility rests partly on whether links with co-workers require an employee to be present on the employer site, and on whether the equipment used at work is available at, or portable to, home. An auto-assembly worker, for example, has to work at the employer's work site; a social science researcher, on the other hand, can more easily work from home.

With these factors in mind, the lowest incidences of home-based work were found among workers in occupations unique to processing and manufacturing (2.9%); trades, transport and equipment-operating (4.0%); and health (4.5%) occupations. In contrast, the highest incidences were found among employees in managerial positions (25.4%) and in social-science and education professions (26.5%).

The picture by industry largely mirrored that by occupation. The practice of working from home was least common among employees in accommodation and food services (3.6%), construction (7.0%), trade (7.1%) and manufacturing (7.4%). Higher incidences were observed among employees in educational services (23.4%) and the professional, scientific and technical industry (22.9%).

The incidence of work from home among the self-employed by occupation and industry was generally similar to that found among employees, except that for each occupation and industry, the practice was much more common among the self-employed.

Incidence also varied by province. These variations reflect in part differences in provincial industry and occupational mixes. The practice was most common in British Columbia (12.0%) and least common in New Brunswick (7.6%). For self-employed workers, those living in Manitoba (55.1%) were most likely to work from home. Those in New Brunswick were the least likely (35.8%) to do so.

As stated earlier, most employees working at home do so for only a few hours each week.  6  In 2000, about 65% of such employees worked between one and 10 hours each week at home. Less than 3% put in more than 40 hours. About 33% of the work-from-home self-employed put in between one and 10 hours of work at home each week, and 17% of them reported more than 40 hours.

Use of computers and information technology

Advances in information technology are generally believed to be among the driving forces behind the growth in home-based work for both employees and the self-employed, especially in the past decade or two. Notably, innovations to telephone systems and the advent of e-mail and the Internet have made it easier to keep in touch with co-workers and clients from practically anywhere. But what evidence exists to support this contention?

Without assigning causality, the GSS shows that the advent of computer and automated technology affected the work of home-based workers more than that of their non-home-based counterparts, and that home-based workers used these new technologies much more. This applied both to employees and the self-employed (Table 3).

Among employees, about 77% of home-based workers compared with 54% of their non-home-based counterparts felt that their work had been greatly or somewhat affected by the computer or automated technology in the past five years. Furthermore, about 83% of home-based employees compared with 51% of their non-home-based counterparts reported using a computer in their main job in the past 12 months.

The frequency of use of computers and other automated technology was also greater among home-based employees. The proportions using the telephone or e-mail every day or several times a week for work-related purposes were 58% and 48% respectively; for their non-home based counterparts, the corresponding proportions were less than half—26% and 19%.

As well, a higher proportion of home-based employees (49%) felt their work had become more interesting as a result of computers, compared to 30% for non-home-based employees.

Job quality

Job quality for home-based and non-home-based employees can be measured in several ways. Data limitations, however, restrict the focus to comparisons of wages and non-wage benefits. Both the hourly wage rate and non-wage benefits data—specifically employer-sponsored pension, medical, or dental plan coverage, and vacation and sick leave entitlements—analyzed in this study come from the 1995 SWA. Although somewhat dated, this survey is the only source of information available.

An earlier study (Pérusse, 1998) found that employees who usually worked at home earned an average hourly wage higher than that of their non-home-based counterparts ($20.15 versus $14.65). The former were also more likely to be covered by an employer-sponsored pension, dental or medical plan, and entitled to paid sick leave (Chart). Nevertheless, since both the wage rate and non-wage benefit coverage depended on many other factors including age, sex, industry, occupation, education, experience, job tenure, union membership and corporate size, the data had to be standardized to arrive at more statistically meaningful comparisons.  7  Standardization changed the picture markedly. For example, standardizing by age, sex and occupation narrowed the hourly wage differential (to $17.07 versus $15.07) between the two groups of workers and reversed the results with respect to pension, health and dental plan coverage. Thus, the standardized results confirmed that wage rates and non-wage benefits are the combined result of many factors, and that the place of work may not necessarily be an important determinant, if at all.

Summary

Working from home offers potential advantages as well as disadvantages to employers, employees and the self-employed alike. Although no consistent time series exist, data from various sources suggest that the number of Canadians doing some or, in a few cases, all of their regular work at home has been increasing over the past three decades. That growth, however, has been matched by similar proportionate increases in the employment of non-home-based workers, leaving the share of home-based work relatively unchanged. For operational reasons, the practice is most common among social science and educational workers, and least common among manufacturing, construction, accommodation and food service, and health workers. Innovations in information technology in the past decade or two appear to have affected home-based workers more strongly. Use of the computer, e-mail, Internet and telephone for work purposes is much higher among home-based workers than among those who work only outside the home. Also, a larger percentage of home-based workers (employees and self-employed alike) felt their work had become more interesting as a result of computers.

The future of home-based work, especially for employees, rests on many factors. From the employer's side, these include issues related to co-ordination and communication with employees, concerns about the security of confidential information, and problems and costs of providing computer technical support at home. From the employee's side, the appeal of a home-based work arrangement is that it is not static and can change according to personal and family demands. For the self-employed, zoning laws will continue to play an important role.

Notes

1. According to the Labour Force Survey, self-employment in the professional, scientific and technical service industry (which includes many consultants) more than doubled (+119%) from 1989 to 1999, much more than the 37% rise in overall self-employment during the same period.
2. The fixed-effects modelling results of the Lin et al. study show a statistically significant but empirically small negative (positive) relationship between self-employment and unemployment (full-time paid employment).
3. The 1996 Census was not used in this study because the definition of the home-based worker was more restrictive: The term usually work at home was defined as most of the time (for example, 3 days out of 5). Not surprisingly, under this tighter definition, the 1996 Census yielded a count of 1,086,000 home-based workers, hardly any different than the 1,079,000 in the 1991 Census. (The 2001 Census also used the more restrictive definition.)
4. Nortel Networks is an example of a large Canadian high-tech company that claims to use work-from-home arrangements (or HOMEbased program, as it is referred to by the company) to attract workers and retain employees. In 2000, about 17% (13,000) of the company's global employees belonged to its telework program. Nortel estimates that adoption of this program has resulted in a 20% reduction in worker absenteeism, a 10% improvement in employee job satisfaction, and a 24% reduction in staff turnover. The company also estimates an annual savings of $20 million in real estate costs due to its telework program, and an annual reduction of 30 million pounds of greenhouse gas pollutants into the atmosphere as a result of fewer employees commuting (Telecommute Connecticut-Research).
5. Canadian tax laws permit persons using their home as a workplace to deduct some home depreciation costs and other expenses such as energy use when filing their tax returns.
6. Though likely more interesting, the survey data do not allow the estimation of proportion of scheduled weekly work time performed at home.
7. Standardization is a statistical technique that makes it possible to assess observed differences in a particular characteristic between one group and another, assuming that these two groups are identical in some respect. In the case of paid work at home, it is of interest to know whether merely working at home is associated with pay that differs from that obtained from working at an employer's premises. To eliminate the effect of age, sex and occupation on their wages, respondents are categorized as home worker/non-home-worker in such a way that each combination of variables is represented in the same proportion as in the overall group of workers.

References

• Lin, Z., J. Yates and G. Picot. "Rising self-employment in the midst of high unemployment: an empirical analysis of recent developments in Canada." Statistics Canada Research Paper Series # 133, Analytical Studies Branch, March 1999.
• Pérusse, D. "Working at home." Perspectives on Labour and Income (Statistics Canada, Catalogue no. 75-001-XPE) 10, no. 2 (Summer 1998): 16-23.
• ---. "Home-based entrepreneurs." Perspectives on Labour and Income (Statistics Canada, Catalogue no.75-001-XPE) 10, no. 3 (Autumn 1998): 31-34.
• Pilon, J. "Alternative work locations: the concepts of working at home and telework." Statistics Canada working group paper (Labour and Household Surveys Analysis Division) September 1998.
• Smith, P. "Assessing the size of the underground economy in Canada: the Statistics Canada perspective." Canadian Economic Observer (Catalogue no. 11-010-XPB) (May 1994): 3.16-3.33.
• Statistics Canada. "Work arrangements in the 1990s." Analytic report (Catalogue no. 71-535-MPB) no. 8 (1998).

Ernest B. Akyeampong is with the Labour and Household Surveys Analysis Division. He can be reached at (613) 951-4624 or ernest.akyeampong@statcan.gc.ca.

Richard Nadwodny is with Census Operations Division. He can be reached at (613) 951-3950 or richard.nadwodny@statcan.gc.ca.

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