Article provided by William Dinning, Director at Waverton Investment Management for Beacon Gainer, private wealth advisory services group.

This will bring us all together, they say. Well, yes it will. It will bring all the service people to my home. Just like the old days. Now the middle classes will enjoy the life of the upper classes without the hassle. The latter used to have to house, feed and pay the servants. Now we just open the door and thank them, with the largest angst being how do we tip them? As per a discussion on CNBC’s Squawk Box on 1st April. To paraphrase “I can’t give them cash as it’s potentially got the virus. I feel so guilty”.

The world is, of course, going to change because of what we are going through. But some of the changes were certainly not planned and likely remain little understood, or misunderstood. One of them is that it seems a large majority of people who are experiencing working from home for the first time are enjoying it. This is going to have a profound effect on how we think about work and how we set up our working environment.

For example, if the consensus among professional service firms is that they can let, perhaps, 25% of their employees work from home at any one time, then, all other things being equal, they need 25% less office space. What does that do to property values in “Grade A” London or New York? What does it do to the finances of the transportation infrastructure of big cities? The railway companies servicing London commuter routes, and Transport for London, will be bankrupted by it. The market is aware of this; hence the property and transportation sectors are among the biggest victims of this bear market.

But our initial observation is not just polemical. The chart below is US Bureau of Labor Statistics data based on workers who were paid to work from home in 2017-18. If you are in management, are deemed a professional, work in sales, or support those functions, you can work from home regularly. Indeed at least 25% of Americans on those categories were already doing so ahead of this crisis.

% who can work from home

% who can work from home.jpg

Source:, Waverton

But if you work in maintenance and repair; construction; services (e.g. retail/restaurants); manufacturing; transportation or agriculture you are very unlikely to be able to do your job from home.

This could become a divisive issue. We have already seen workers at Amazon and other firms getting pay increases but wanting more in terms of security from the virus and striking for it.

But more philosophically, offices in particular are a bit like schools. Yes, there are better and worse of each. But there is a commonality between the two in that there is a uniform for each. If I turn up at a school I will see the pupils in the same uniform. If I turn up at a “Grade A” London office I will see people in suits, or business casual. With a trained eye I may know who is Savile Row and who is M&S but for most people a suit is a suit.

Schools and offices are social levellers. So if I visit such a place to perform one of the functions on the right hand side of the above chart, it’s all about the job.

But if 25% of the person hours being spent in offices by management, professionals, salespeople and admin support is now being spent at home, then those doing the tasks that are harder to do from home may have to start providing their services directly to the people working from home. Someone wearing a Savile Row suit lives in a different home from the person in the M&S suit.

Without being melodramatic, those who are working for the people working from home could become more like today’s Amazon workers.

If we were to reimagine the occupations in the above chart for a Victorian audience we begin to see why one was not being polemical at the beginning of this piece.

This is what the annual income of the professional and upper classes looked like, along with the wages they paid to assorted servants, in 1890.

£ per year in 1890

£ per year in 1890.jpg

Source: , Waverton

The people to the right of this chart did maintenance, construction, assorted services, transportation and agricultural duties. Admittedly, they did not do manufacturing.

We are not going back to 1890 in terms of how we organise our economy. But we could be setting in motion lots of things that take us out of the societal norms we have taken for granted for decades.

One of which is that wealth disparity could become more apparent to wider swathes of the population. If it does, we are very likely to move to a more collectivist set of public policies. Arguably we have already done so on both sides of the Atlantic given the UK and US Treasury are going to pay people’s wages if they have lost their jobs thanks to lockdowns, and the Bank of England has just told UK banks how to conduct their dividend policies.

Jeremy Corbyn and Bernie Sanders have lost their respective elections. But those were just battles. One suspects they may be winning the war. We will write more about the economic consequences of this war in coming weeks.

But for now, when you get a delivery, or someone comes round to upgrade your broadband, bear all this in mind. Two weeks ago we reminded ourselves that there is a big difference between working from home and just being at home. Today we say: when working from home becomes “normal”, have a thought for those who cannot do it. And be grateful that at least they are not living with you.

Risk Warnings

The views and opinions expressed are the views of Waverton Investment Management Limited and are subject to change based on market and other conditions.  The information provided does not constitute investment advice and it should not be relied on as such.  All material(s) have been obtained from sources believed to be reliable, but its accuracy is not guaranteed.  There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information.