Full-time workplace work is “useless,” says economist
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Workers and companies are seeing the benefits of remote work
In 2019, about 5% of full-time work was done from home. The proportion rose to over 60% in April and May 2020, in the early days of the Covid-19 pandemic, said Nicholas Bloom, an economist at Stanford University who has been researching remote work for two decades.
That equates to nearly 40 years of pre-pandemic growth, practically overnight, his research shows.
The proportion of remote work has steadily declined (to about 27% today) but is likely to stabilize at about 25% — a five-fold increase from 2019, Bloom said.
“It’s huge,” he said. “It’s almost impossible to find anything in the economy that’s changing that fast, that’s growing 500%.”
Remote work was initially considered a necessary measure to curb the spread of the virus. Technological advances—like video conferencing and high-speed Internet—made the arrangement possible for many workers.
Both employees and companies subsequently discovered benefits beyond the immediate health effects, economists said.
Employees enjoy having fewer commutes, spending less time getting ready for work, and having a flexible schedule that makes doctor visits and picking up kids from school easier, Bloom said.
Some workers have shown that they are reluctant to give up these perks. Companies like Amazon and Starbucks, for example, recently faced a backlash from employees after announcing stricter return-to-office policies.
Employers enjoy higher employee retention and can recruit from a broader pool of applicants, said Julia Pollak, chief economist at ZipRecruiter. They can save money on office space by recruiting from lower-cost areas of the country or increasing wages more slowly as workers perceive the value of working from home, she said.
It’s almost impossible to find anything in business that changes so quickly.
Economist at Stanford University
For example, job seekers surveyed by ZipRecruiter say they would be willing to take a 14% pay cut on average to work remotely. The figure is higher for parents with young children – to around 20%.
Twitter recently closed its Seattle offices to save money and asked employees to work from home, a reversal from a previous position that employees work at least 40 hours a week in the office.
“The benefits for employers are quite significant,” Pollak said.
Hybrid working model is a “win-win” situation
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Most companies have turned to a “hybrid” model, splitting a workweek between perhaps two days away from home and three days in the office, economists said.
That agreement has resulted in a modest increase in average labor productivity, Bloom said. For one, the average person saves 70 minutes a day commuting; About 30 minutes of that time saving is spent doing more work, he said.
“Hybrid is pretty much a win-win,” Bloom said.
According to ZipRecruiter, about 39% of new hires have jobs with a hybrid work arrangement, while 18% of new jobs are fully remote. Both stocks are up from their pre-pandemic levels (28% and 12%, respectively).
“It’s still an evolving trend, but the movement is very much towards increased remote work,” Pollak said.
Of course, not all workers have the opportunity to work remotely. About 37% of jobs in the US can plausibly be done entirely from home, according to a 2020 study by Jonathan Dingel and Brent Neiman, economists at the University of Chicago.
There are big differences by profession and geography. For example, jobs in retail, transportation, hospitality and food service are far less likely to offer work from home than in technology, finance, and professional and business services.
Remote work can endure even in a recession
Not everyone agrees that the benefits of working from home outweigh the costs.
There is evidence that employee mentoring, innovation and culture can suffer when workplaces are fully remote, Bloom said. Employees cite face-to-face collaboration, socializing and better work-life balance as the top benefits of working in an office, his research finds.
Companies working entirely remotely often host face-to-face meetings or retreats to build corporate culture, Bloom said.
A hot labor market characterized by low unemployment and plentiful job vacancies gives workers a high degree of bargaining power. As the economy cools and its bargaining power wanes, it’s unclear whether some employers would adopt stricter work-from-home policies, economists said.
For one, employers may see remote work as a useful way to reduce labor costs amid the recession, Bunker said. The more likely scenario is marginal: maybe three or four days in the office instead of one or two, he said.
The technology sector is a useful indicator, he said. Tech jobs have declined this year due to industry struggles, but the proportion of Indeed jobs offering a remote work benefit has remained constant, Bunker said.
“It’s been pretty sticky in the face of hiring declines,” he said.