Walls, Nelson, Safirova
Telecommuting and Environmental Policy
1. Introduction
Although the concept of telecommuting has been around since the 1970s, only in the middle of
the 1990s has it become a part of everyday life. With arrival of broadband connection, the idea of
remote work has become much more operational. Yet, even the most optimistic accounts of the current
scale of telework have left its proponents at a loss. The “fathers” of telecommuting predicted that by the
year 2000, 50% of US workers would be telecommuting1, yet only a small fraction actually does. While
many companies implement telecommuting programs for their employees because such programs allow
them to reduce turnover, increase productivity and cut down on energy and even real estate costs, many
workers enjoy increased flexibility and travel time and cost savings. At the same time, it is be now clear
that telecommuting is not for everybody, and not only because of the nature of some jobs.
Telecommuting tends to increase management costs for employers and could deprive workers of social
interaction with co-workers and even negatively affect their careers.
Because of these costs and because telecommuting can provide social benefits in the form of
reduced traffic congestion and emissions, it might make sense for the government to provide incentives
to telecommute. In the 1980s and 90s, the only significant incentive government agencies provided were
telecommuting education and training offered by many US states. Also, some states had telecommuting
programs for state employees that were supposed to serve as examples to be followed by other
employers in the states. However, as time went by, telecommuting approached a saturation point - while
most employers and employees have become familiar with telecommuting, only a small percent of the
US workforce actually works remotely, and that percentage is stagnant.
Only a few states provide financial incentives for telecommuters. The Oregon Department of
Energy has been offering firms that employ telecommuters tax credits. More recently, some other states
have made moves in the same direction. Georgia, New Jersey and Virginia are already providing or
seriously considering financial incentives to employers of telecommuters2.
In 2000 such an incentive was proposed at the Federal level. Sen. Rick Santorum's bill, the
Telework Tax Incentive Act, offered to provide a $500 tax credit for every worker who telecommutes at
least 75 days per year. The credit was supposed to go to the party that pays for setting up the home
office -- either the employee or employer. However, government agencies at all levels are so far
reluctant to provide significant incentives to encourage more telecommuting. In the meantime, recent
interest has arisen in telecommuting’s potential to reduce emissions. Many metro areas include some
emissions reductions from telecommuting in their state implementation plans (SIPs).
The ecommute program started with “National Telecommuting and Air Quality Act”, signed
into law in 1999. The Act started a pilot program supported by the Department of Transportation (DOT)
and the Environmental Protection Agency (EPA). According to the legislation, the purpose of the
ecommute program was to develop and evaluate methods for calculating reductions in emissions due to
telecommuting. Then, as a part of the pilot project, employers who encouraged their workers to
telecommute, were supposed to receive credits reflecting the amount of achieved emissions reductions.
The received credits were supposed to be traded with the firms that, for the purposes of compliance with
the Clean Air Act, would like to purchase such credits. The ecommute pilot program was to be carried
out in 5 pilot cities - Los Angeles, Philadelphia, Houston, Chicago, and Washington, DC. The pilot
program was supposed to test and evaluate the emissions credit mechanism to award telecommuting
efforts3.
An obvious advantage of this program compared to explicit financial incentives - tax credits,
subsidies, etc. - is that the government entity does not need to allocate budget funds to reward
1 See J, Nilles et al. (1976)
2 University of South Florida Telecommuting Clearinghouse www.nctr.usf.edu/clearinghouse/statestatutes.htm
3 However, due to a lack of regulatory basis, emissions trading mechanism has not been implemented in the course
of the ecommute project.