January brought us not only the third anniversary of the COVID-19 pandemic, but also the huge jump in working from home that the pandemic has spurred. Workers, businesses and the economy are still trying to figure this out. Recent analysis by a leading expert suggests that a “hybrid” model – spending some time at home, some in the office – is emerging and will be the future for many workers.
It is worth noting the depth of the pandemic's shock to the economy as a whole, and especially to some industries and professions. The federal Bureau of Labor Statistics estimated that before the pandemic, between 9.7% and 10.7% of all workers did some telework, and full-time telework was much lower.
Remote work was — and still is — higher for some professions and industries. Workers in information, finance, business services, government (including education), and those with higher education in administrative and clerical occupations were more able to work remotely.
The pandemic has been a huge shock to these professions and industries. Offices were closed, while many workers resisted returning to their offices when faced with uncertainty and fear of the virus. By October 2020, the Pew Charitable Trusts found that 71% of workers who could work from home were doing so, up from 23% before COVID-19.
There has been a lot of hype around this wave of working from home, including assertions that offices are dead, and false claims that large numbers of workers are fleeing major cities. But many observers (myself included) were skeptical that working from home would continue to the extent it has now.
Nick Bloom, an economist at Stanford University and a leading work-from-home analyst, recently released a detailed slideshow on where he sees things going. Bloom believes that working from home is “stabilizing at about 28% of (work) days” economy-wide, which is a “5-fold jump” from pre-pandemic levels in 2019.
Although this is a big jump, most workers do not have the option to work from home. Bloom's data shows three groups of workers: entirely on-site (58.7%), hybrid (29.3%), and entirely working from home (12%). The last group, which attracts a lot of attention, has multiple specialists – IT support, payroll and HR – who are often contractors. So their relative isolation from the office does not represent a radical change.
These workers are divided by industry and profession, but in fact by education and income. Bloom shows that the highest-paid workers — those making more than $250,000 a year — make the biggest jump in telecommuting (measured by distance to work). In contrast, those who earn less than $50,000 annually “saw little change” in remote work.
These low-wage workers often work personal jobs in retail, transportation, warehousing, hotels, and food services. High-paid and highly educated workers are concentrated in information and technology, finance, and professional and business services, such as managers, accountants, and human resources.
Greater work from home isn't just associated with higher wages. Good job characteristics go hand in hand with higher wages – health care, retirement plans, and working in less risky occupations.
Bloom finds monetary value in working from home, saying employees “prefer hybrid work with up to an 8% pay increase.” But this 8% average is based on an unequal distribution of wages and benefits, so it is easier for higher earners to trade the extra pay for the flexibility of working from home. In light of this, working from home is just another job benefit for higher-paid workers.
Has work from home stabilized or will we see it grow? Bloom sees it growing. He correctly points out that technology has improved dramatically (remember those awful early Zoom meetings?) and predicts further innovation. Bloom sees a “long-term future boom,” which he calls the “Nike wave,” with the current stability in working from home giving way to faster growth.
Bloom strongly believes that working from home benefits everyone – companies, workers and the economy as a whole. His views are strongly grounded in data and analysis, but he sometimes tends to take an encouraging stance that downplays or ignores the problems associated with this change.
Let us mention three challenges. First, a serious economic downturn would enhance the relative bargaining power of employers over workers. Jack Kelly, a senior contributor to Forbes, tells us that even now, “not only do remote workers receive fewer promotions or raises, but they are more likely to be terminated than their office counterparts.”
Second, Bloom's data shows uncertain productivity impacts related to working from home, which troubles managers. In part in response to the lack of work in offices, employers are stepping up electronic monitoring, which employees do not like. A study from Resume Builder found that “96% of employers use employee monitoring software,” with a big jump following the pandemic.
Finally, Bloom himself noted that the rise of AI will threaten fully remote workers, especially those who perform more repetitive and routine tasks like data entry or payroll.
Bloom's research shows that employers expect upticks in remote work, not the “NikeNKE slogan.” In a 2023 Harvard Business Review article, Bloom and his colleagues reported that executives expected a combined increase of only 2% and a 1% increase in fully remote work over the next five years.
Of course, major technical change or shifts in power relationships between employer and employee could change these numbers. But for now, working from home appears to have stabilized, going primarily to higher-paid and higher-educated workers, while the majority of the workforce does not have access to it. This seems to be the most likely pattern in the near future.
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