Canada

Work From Home Will Stick, and It’ll Be Great For Employees and The Economy: NBER

The pandemic is almost over, but things aren’t going back to the way they were. A new working paper called Why Working From Home Will Stick was recently published by the US-based National Bureau of Economic Research (NBER). They found more employers are planning on adopting WFH as a regular part of operations, and it has huge benefits to employees, employers, and the economy. Almost all of these benefits are related to the elimination of commute times. Who knew it was such a drag? 

Work From Home Is Here To Stay, With A Lot More Companies Planning To Make It Permanent

Interviewing tens of thousands of Americans, many will continue to WFH post-pandemic. The researchers found 20 percent of full workdays will permanently be WFH. This is up from 5% before the pandemic, so the telework force will increase four-fold in terms of days. The reason this is in days is due to a number of companies adopting hybrid models — where some days are in office. The last point being largely due to companies being locked into long-term leases, but that’s a different discussion for another day. 

The researchers found the WFH trend is likely to stick for five reasons:

  • Better-than-expected experiences, with many people pessimistic about WFH finding they actually like it;
  • New investments into physical and human capital to accomplish work from home. That infrastructure wasn’t cheap, and companies are going to use it;
  • The diminished stigma of being an “at home worker,” which was perceived by many to be a low-income job prior;
  • Lingering concerns about crowds and contagion risks;
  • and a pandemic-driven surge in tech innovation to support remote work. You now have an army of companies with salesforces, developing ways to get your boss to approve sending you to work from home.

They find this will lead to three huge changes that will boost the quality of life and economy. 

Most Employees Will See Big Benefits Working From Home

Most employees will see huge benefits from working remotely. The main reason is due to the elimination of the worst part of people’s days — the commute. They found highly educated and well-paid employees see this as the largest benefit. Their research shows they tend to have the longest commutes. While that may not have been the case in Canada prior to the pandemic, it might be now

Higher paid workers are more likely to feel the benefits of not having to commute often, or ever. They explain this is due to the opportunity cost per minute. The more you make, the more likely you are to perceive commuting as a waste of time. Do you want to commute 3 hours to do a one-hour meeting, or do you want to not commute and get 4 one-hour meetings done? Exactly.

Cities That Have Large Commuter Inflow Will Lose Up To 10% of Spending To Other Regions

Cities that benefit from large amounts of inward commuting are going to take a hit. Fewer days working in an office, means less time around the office. This means lower expenditures on meals, entertainment, personal services, and shopping in city centers.

They estimate this will lead to a 5 to 10 percent drop in pre-pandemic spending in city cores. Fortunes of cities like San Francisco, which have a large inward flow of commuters will be “diminished.” How many times have you gone for a beer after work that you didn’t plan on doing before work? That kind of spending is gone.

On the flip side, just like we’re seeing during the pandemic — it will bring new life to regions further out. Small cities and towns have seen a huge boost in activity since the pandemic, as people relocated. Those big-city incomes are going to benefit local economies. Especially in regions where housing didn’t just adjust to consume any saved funds. 

Work From Home Will Boost Productivity By 4.6%

WFH arrangements will lead to a huge boost in productivity. They estimate re-optimized work plans will lead to 4.6 percent growth. One of the primary contributors here is, once again, commute times. Just by dropping commutes, years of productivity gains are being realized in a short period of time.

The researchers say this has been largely underestimated by traditional models. Using conventional models, productivity only increased by 1 percent. Almost 80 percent of the gains were not being captured.

There’s plenty of research to back this assertion as well, with the paper using a number of examples. One Chinese study found a 13% increase, with people needing fewer fatigue breaks at home. Another US study found call center workers had an 8% increase in productivity. The US Patent Office also found a boost of 4% when they started to adopt WFH as well. There is little evidence that WFH produced lower productivity, despite the many times your boss has probably repeated the claim. 

Some companies have resisted the WFH arrangements, and insist on everyone coming back to the office. Which is kind of funny, considering that means they’ll be competing with more productive companies, no?  

Post-pandemic life is about to see more than quadruple the amount of WFH compared to less than two years ago. This is going to lead to some big changes, and most of them are great. Just don’t expect things to roll back to normal. Many people and companies got a taste of an improved quality of life and productivity, and they aren’t going back. 

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16 Comments

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  • Ed Higgins 3 months ago

    The only people at my work that really want to go back to the office are the ones that never did any work at the office. The “sidlers” that pop up at your desk to talk, and you start to wonder why the f don’t you have any work?

    • Mici 3 months ago

      Great article. There is also one more huge reason the companies are wholeheartedly looking toward the WFH model. Cost of realestate. Knowing that never again will they be at full capacity, they can reduce the number of work stations, keep only the ones that will be shared and thus eliminate floors and floors of the overhead cost. Brilliant.

  • Travis Hunter 3 months ago

    Oh god. Started working from home in 2015, and it was the best decision of my life. I can’t ever imagine having to go back into an office.

    • Matt 3 months ago

      People with kids can’t just work from home. It’s impossible to work from home while a kid is running around screaming. The office needs to go back, or half the population won’t be able to get anything done.

      • Mortgage Guy 3 months ago

        Whatever you’re doing with your kids while you’re at the office. Do that while they’re at home. They aren’t just running around in an empty house when you’re at work.

      • Marco Von Marcovich 3 months ago

        I’ve been working from home since 2009 and have kids. You make sure you have a completely separate office without distraction. In our case we bought a 4 bedroom with the large master on its own floor over the garage and completely separated.

      • Calvin 3 months ago

        Wouldn’t the solution to this be to have kids go back to school, not send workers back to the office though?

      • Luigi Vampa 3 months ago

        Ummmm most peoples kids will hopefully return to school… I know mine are.

  • Trader Jim 3 months ago

    One hour each way is 10 hours per week. It’s like you reclaim a whole work day, but it’s for your own life. If you’re don’t appreciate work from home, you probably aren’t very happy with your home life.

  • D 3 months ago

    Working from home leads to less productiveness. I don’t see how this sham of an economy will do any better if pencil pushers work at home. They’ll be inclined to do the bare minimum and a bad job of it too.

    • Omar 3 months ago

      You actually can’t hide a lack of work from home, because you have to actually submit items to deadlines. My last office job had a whack of people that would just chat all day, and it was unclear if they ever actually did work. Performance was based on things that don’t matter, like attendance and visibility.

      At my startup, I don’t care what you do while at home. You have x number of hours and the deadline is on a specific date. don’t

      • Average Man 3 months ago

        This is it. WFH, either you’re hitting your deadlines or your not, and nothing else matters. “Presenteeism,” putting in long but not particularly productive hours, was endemic in a lot of jobs I’ve been in.

        • D 3 months ago

          Nonsense, all of the big tech, finance, banking, insurance etc.. companies want their employees back in the office. If what you and the other poster say is true then why would companies continue paying rent for office space when their employees are supposedly more productive at home than at the workplace? Nope the truth is that employees slack at home. The economy gets fudged with poor productive employees working at home.

      • D 3 months ago

        If that were the case then every office job would have been moved to employee homes before CV.

  • Kolf 3 months ago

    Would you pay for expensive downtown office space if you don’t have to? Btw if high wage earners can WFH. Many would not buy in Toronto, hence prices will drop.

  • Chris 3 months ago

    I’m getting more used to WFH, but would rather work in an office. So much of my productivity depends on being able to bounce ideas off people and solve problems. But now a coffee chat is a formally booked Teams meeting. Agree that I’ll be looking forward to having the kids back on school, which will make things easier. Also thankful that without the pandemic I likely would have the job I have, as my office is in a different province and remote work pre-pandemic wasn’t an option.

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