Why labor economists say the remote work ‘revolution’ is here to stay

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Remote work surged in the pandemic era — but this trend, borne of necessity for public health, has now become a fixture of the U.S. job market, one that’s likely to remain entrenched, according to labor experts.

Almost 10% of online job searches in September mentioned “remote work,” a nearly sixfold increase relative to September 2019, before the Covid-19 pandemic, according to a recent report published by Indeed and Glassdoor.

Employers are advertising work-from-home opportunities more frequently, too. Almost 9% of online job listings did so, up threefold over the same period, the report said. ZipRecruiter, another job site, found a fourfold increase in job listings mentioning remote work, to a 12% total share.

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“This is going to be an enduring feature of the employment landscape,” said Aaron Terrazas, chief economist at Glassdoor.

The pandemic spurred a work from home ‘revolution’

Working from home wasn’t solely a pandemic-era phenomenon — the share of remote workers had been doubling every 15 years prior to 2020, according to data compiled by Jose Maria Barrero, Nicholas Bloom, Shelby Buckman and Steven Davis, economists who have studied remote work.

But the subsequent increase during the pandemic amounted to 30 years of prepandemic growth, they said.

At the peak, more than 60% of total workdays were from home, largely a result of stay-at-home orders. Though that share has fallen to 29.4% of workdays, researchers expect the decline to stall.

Much of the shift to working from home “will stick long after the pandemic ends,” Barrero, Bloom and Davis wrote in April 2021. They expect about 20% of full workdays to be from home in the postpandemic economy — about four times the pre-Covid level.

Nationally, the share of employees who have worked from home has been stable over the past year, at around 29%, according to a new Lending Tree survey.

“The pandemic has started a revolution in how we work, and our research shows working from home can make firms more productive and employees happier,” Bloom, an economist at Stanford University, wrote in June 2021. “But like all revolutions, this is difficult to navigate.”

Why it’s tough to ‘put the genie back in the bottle’

Workers cite time savings as among the most significant factors in favor of remote work — it means they have no commute, more flexible work schedules and less time getting ready for work.

Working from home two days a week, on average, saves employees 70 minutes a day commuting, Bloom said. Almost half — 30 minutes — of that time savings is spent working more, which in turn translates to benefits for employers in the form of more productivity from their labor force, Bloom said. In all, remote work translates to roughly 4% more hours worked during a 40-hour week.

Employees value the benefits of remote work similarly to a roughly 5% to 7% pay increase. As a result, businesses can theoretically reduce their payroll costs by a similar amount, Bloom said.

Further, worker retention improves among businesses that offer remote work, and the dynamic allows employers to recruit talent from across the country instead of a narrow geographic pool, said Julia Pollak, chief economist at ZipRecruiter.

“People really, really want remote work,” Pollak said, adding: “It’s difficult to put the genie back in the bottle.”

‘Significant variation’ in remote work opportunities

That said, most jobs in the U.S. economy can’t be done remotely.

About 37% of jobs in the U.S. can plausibly be done entirely at home, according to a 2020 study by Jonathan Dingel and Brent Neiman, economists at the University of Chicago.

Survey data compiled by Barrero, Bloom, Buckman and Davis suggest nearly 14% of employees worked from home full-time as of fall 2022. About 29% had a “hybrid” arrangement, and 57% were fully on site.

There’s “significant variation” in who can and can’t work from home, based on factors such as occupation and geography, Dingel and Neiman said. For example, most jobs in finance, corporate management, and professional and scientific services can be done from home; conversely, very few workers in agriculture, hotels and restaurants, or retail can work from home.

People really, really want remote work. It’s difficult to put the genie back in the bottle.

Julia Pollak

chief economist at ZipRecruiter

Those who can’t work from home are disproportionately lower-income, lack a college degree and are people of color, Dingel and Neiman said.

“The benefits of a persistent shift to [work from home] will be broadly felt but flow mainly to the better educated and the highly paid,” Barrero, Bloom and Davis wrote.

Some workers do see benefits to being in the office, including face-to-face collaboration, socializing and boundaries between work and personal life.

There may also be unintended diversity impacts. For example, women tend to prefer remote work more than men — about 66% vs. 54%, respectively, according to ZipRecruiter. While this may help recruit more women, it also poses a worry, Bloom said, since evidence suggests working from home while colleagues are in the office can be “highly damaging to your career.”

It’s also unclear how businesses may change their tune to become less accommodative if the job market cools. The Federal Reserve is raising borrowing costs to slow the economy and tame persistently high inflation; the job market is expected to cool, too, as a result, and workers may lose the bargaining power they enjoy right now.



Source : CNBC