Full-time office work is ‘dead,’ economist says

In 2019, about 5% of full-time work is done from home. That share rose by more than 60% in April and May 2020, at the start of the Covid-19 pandemic, said Nicholas Bloom, an economist at Stanford University who has researched remote work for two decades.

That’s the equivalent of almost 40 years of pre-pandemic growth almost overnight, research shows.

The share of remote work continues to decline (to 27% today) but will stabilize at around 25% – a fivefold increase in 2019, Bloom said.

“That’s huge,” he said. “It is almost impossible to find anything in the economy that changes at such a speed, which goes up by 500%.”

At first, remote working was seen as a necessary measure to contain the spread of the virus. Advances in technology — such as video conferencing and high-speed internet — have made such arrangements possible for many workers.

Both employees and companies then find benefits beyond the immediate health impact, economists say.

The happiest employees have a reduced commute, spend less time getting ready for work and have flexible schedules that more easily allow for doctor visits and picking up kids from school, Bloom said.

Some workers indicated that they were reluctant to give up their allowances. Companies such as Amazon and Starbucks, for example, have recently faced backlash from employees after announcing stricter back-to-office policies.

Employers enjoy higher employee retention and are able to recruit from a wider pool of applicants, said Julia Pollak, chief economist at ZipRecruiter. They can save money on office space, by hiring from low-cost areas of the country or by increasing wages more slowly because of the benefits of working at home, he said.

For example, job seekers surveyed by ZipRecruiter said they would be willing to take a 14% pay cut to work remotely, on average. The figure is skewed higher – up to 20% – for parents with young children.

Twitter recently closed its Seattle office in a cost-cutting move and told employees to work from home, reversing the previous position where employees worked at least 40 hours a week at the office.

“The benefits to the employer are substantial,” Pollak said.

Most companies have adopted a “hybrid” model, splitting the work week between two days from home and three at the office, economists say.

The arrangement has resulted in higher average worker productivity, Bloom said. For one, the average person saves 70 minutes a day commuting; about 30 minutes of time savings is spent doing something else, he said.

“Hybrids are pretty much a win-win,” Bloom said.

About 39% of new hires have jobs with hybrid work arrangements, while 18% of new hires are remote, according to ZipRecruiter. Both stocks are up relative to pre-pandemic levels (28% and 12%).

“It’s still a growing trend, but the movement is huge for remote work,” Pollak said.

Of course, not all workers have the option to work remotely. About 37% of jobs in the US can be done entirely at home, according to a 2020 study by Jonathan Dingel and Brent Neiman, economists at the University of Chicago.

There is great variation by occupation and geography. For example, jobs in retail, transportation, hospitality and food services are less likely than those in technology, finance, and professional and business services to offer work-from-home arrangements.

Not everyone agrees that the benefits of working from home outweigh the costs.

Evidence shows employee mentoring, innovation and company culture can suffer if projects are too far away, Bloom said. Workers cited face-to-face collaboration, socialization and a better work-life balance as the top benefits of working in an office, their research found.

Remote companies often have private meetings or retreats as a way to build company culture, Bloom said.

Workers have enjoyed high bargaining power due to a hot labor market characterized by low unemployment and high job vacancies. If the economy cools and bargaining power disappears, it’s unclear whether some employers will introduce stricter work-from-home policies, economists say.

For one thing, employers may see remote work as a useful way to reduce labor costs during a recession, Bunker said. More scenarios are on the horizon: 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 job postings have fallen this year amid industry struggles, but the portion of Indeed job ads that offer remote work benefits has remained steady, Bunker said.

“It’s pretty sticky when the rent goes back,” he said.