"The evolution of working from home"

Working from home ("remote work") has been around for much longer than perhaps we all realize.  If you follow the trends since the early 1990's, the number of remote workers doubled approximately every 15 years, as technology began to catch up and provide more options to facilitate working from home (remember, Microsoft Teams, Zoom, Webex, and cloud file-sharing applications like Dropbox didn't even exist until relatively recently).   Without a doubt, the COVID-19 pandemic accelerated these trends, and remote work increased five-fold from 2019 to 2023 (equivalent to about 35 years of pre-pandemic growth), with 40% of employees in the U.S. working remotely at least one day a week. 

Many of the aforementioned statistics came from a working paper by Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis "The evolution of working from home" (now published in the Journal of Economic Perspectives under the same title).  There are a number of key findings reported in this paper.  First, there are three distinct groups of employees in most organizations (and more generally, in the U.S. workforce) based upon their current working arrangements.  Fully on-site employees represent the largest group (60% of all employees in the U.S.) and are, on average, the lowest paid employees due to the types of jobs that require fully on-site work (e.g. front-line retail, food service, cleaning, security, etc).  Even during the pandemic, the vast majority of these employees still worked on-site (during the 2020 lockdown, they may not have worked at all).  "Hybrid working from home" employees typically work from home 2 or 3 days per week and comprise about 30% of the U.S. workforce.  These employees are, on average, the highest paid and include professional jobs, including middle and senior management.  Of note, the most common pattern of hybrid work is to work from the office on Tuesday, Wednesday, and Thursday and remotely from home on Mondays and Fridays.  The last group of employees are "fully remote" and comprise about 10% of the U.S. workforce.  These typically include IT-support, call-center, payroll, or HR jobs that require limited on-site work.  

I was somewhat surprised to see that remote work is highly concentrated in cities and suburbs with high population densities.  Given the fact that industries that typically have higher percentages of remote work (e.g. information and computer technology, business) are located in cities and suburbs, this shouldn't be all that surprising.  However, the cost of living in these areas is also higher, and I would have expected to see more of these remote workers living in rural and suburban areas with lower costs of living.  

The highest percentage of remote workers were college-educated employees in their 30's who have young children.  As a matter of fact, education was the single best predictor of whether someone worked remote or not.  Employees with a high school education spent less than 18% of their days working from home, while those with a college degree spent 37% of their days working remotely.  Some studies have suggested that college graduates greatly value the ability to work remotely, with the ability to work from home 2 to 3 days a week valued equivalently to an 8% increase in pay.  While the percentage of female employees who worked from home was significantly higher than the percentage of males, the difference was small (31.3% versus 29.6%).  Previous studies do suggest that female employees have a greater preference to work remotely than males.  Finally, workers in their early 20's and their 50's-60's spend fewer days working at home compared to employees in their 30's-40's.  Importantly, employees in their 30's-40's are more likely to have young children at home, which was also a factor in whether employees worked remotely.

As I've discussed in previous posts (see "Everyone's working for the weekend?", "The WFH Question" and "Remote work, again..."), there have been a number of studies that have tried to determine whether remote working arrangements improves or worsens productivity.  Of interest, Barrero, Bloom, and Davis surveyed both employees and their managers on what they thought - employees generally feel that working from home makes them more productive, while managers feel the converse is true.  Most of the studies strongly suggest that the impact on productivity depends upon whether employees are fully remote or hybrid.  Fully remote working appears to lower productivity by around 10% to 20%.  There are several reasons why this may be the case, though we can only speculate at this point.  One commonly cited reason is that fully remote workers are not as closely supervised and may "slack off" as a result.  Whether this is a legitimate concern or not requires further study, though it has led to the increased use of technology by supervisors to monitor productivity in real time (which is the subject of my next post).  Conversely, hybrid working arrangements, in which employees work remotely 2 to 3 days per week, is likely to have either no impact or a slightly positive one on productivity.'

Barrero, Bloom, and Davis end their paper with a prediction that the amount of working from home will continue to grow, primarily as a result of changing norms and continued technological improvements.  To this end, they cited another study that noted that new U.S. patent applications mentioning "working from home", "telework", "remote work", or similar language tripled since the start of the COVID-19 pandemic.   They write, "In 10 to 20 years we could see 30% to 40% of working days being done from home, continuing the long run trend of growing levels of working from home...we expect the rate of technological change in remote work friendly innovations to fuel a new phase of work from home adoption in the coming decades."