“COVID-19 triggered a mass social experiment in working from home (WFH),” said economists Jose Maria Barrero, Nicholas Bloom, and Stephen J. Davis in Why Working from Home Will Stick, a paper published in April of 2021 by the National Bureau of Economics Research (NBER). “Americans, for example, supplied roughly half of paid workhours from home between April and December 2020, as compared to five percent before the pandemic. This seismic shift in working arrangements has attracted no shortage of opinions about whether WFH will stick.”
Working from home (WFH) has been around for decades, modestly growing in the 1990s with the rise of the Internet. The share of WFH three or more days per week was under 1% in 1980, 2.4% in 2010, and 4.0% in 2018. Then came Covid-19, forcing tens of millions around the world to work from home and triggering a mass workplace experiment that broke through the technological and cultural barriers that had prevented its adoption in the past.
To investigate whether WFH will stick, the authors of the NBER paper devised a survey that asked questions about working arrangements and personal experiences with WFH during the pandemic, as well as worker preferences and employer plans after the pandemic ends. The survey was conducted monthly between May 2020 and March 2021, by which time it had collected 28,597 valid responses from 20-64 years old US workers, of which 43.8% were female. The typical respondent was 40 to 50 years old, with one to three years of college, who earned $40 to $50 thousand in 2019.
Let me discuss a few of the survey’s questions and findings.
What is your work status? In May 2020, two thirds of respondents were working and one third didn’t work. Of those that were working, 61% were already doing so from home. The percentages fluctuated over the next several months depending on the pandemic-based restrictions on commercial and social activities. In March 2021, 45% of those working were still doing so from home. Overall, close to 50% of all working days from May 2020 to March 2021 were from home, about 10 times the pre-pandemic share.
After COVID, in 2022 and later, how often is your employer planning for you to work full days at home? After COVID, employers expect 21.3% of full workdays from home. “Business leaders often mention concerns around workplace culture, motivation, and innovation as important reasons to bring workers onsite three or more days per week. Many business people also tell us they see net benefits to WFH one or two days per week … [and] see it as essential to coordinate employee days and times on premises to ensure overlap on the worksite.”
In 2022+ (after COVID) how often would you like to have paid work days at home? About two thirds of respondents are in jobs that enabled them to work from home; nearly 80% of them what to do so at least one day per week; almost 40% prefer 1 to 3 days per week; and about 30% want to work from home all week. Preferences for a hybrid workweek are remarkably consistent across gender, age, educational attainment, and earnings.
Compared to your expectations before COVID (in 2019) how has working from home turned out for you? Overall, productivity when working from home has exceeded expectations. Nearly 60% said that they were more productive, including 20% who said they were ‘Hugely better’; 14% said they were less productive than expected, including 3.7% who said they were ‘Hugely worse’; and 27% said that WFH worked out as expected.
Will workers and employers adjust their future plans in light of what they learn by experimenting with WFH during the pandemic? Yes, according to the survey data. “Among persons who report that WFH turned out ‘Hugely better’ than expected, their employers plan an extra 1.5 days per week of WFH in the post-pandemic economy compared with those who report ‘Hugely worse,’ and an extra 0.8 days per week of WFH compared with those who report ‘About the same.’” And, workers who report WFH turned out ‘Hugely better’ desire 1.6 more WFH days per week after the pandemic than those who report ‘Hugely worse.”
Since the COVID pandemic began, how have perceptions about working from home (WFH) changed among people you know? “Before COVID-19, working from home was often seen as a form of shirking.” But, given that the pandemic compelled tens of millions to work from home for months on end, WFH stigma has fallen sharply. About two thirds of respondents said that perceptions of WFH have improved among people they know, including 22% who that said it has ‘Hugely improved’; fewer than 7% reported an increase in negative perceptions; and 28% said that there was no change.
So, will working from home stick? “Much of the COVID-induced shift to WFH will stick long after the pandemic ends,” concluded the authors of the NBER paper. “[W]e project that American workers will supply about 20 percent of full workdays from home in the post-pandemic economy, four times the pre-COVID level. Desires to work from home part of the week are pervasive across groups defined by age, education, gender, earnings, and family circumstances.”
“We also estimate that higher levels of WFH will boost productivity by about 4.6 percent. Over half of this productivity gain reflects the savings in commuting time afforded by WFH. These true productivity gains will go largely unrecorded in conventional productivity statistics, because they do not encompass the effects of reduced commuting time.”
The above findings are based on survey results through March 2021. But Barrero, Bloom and Davis have continued their monthly surveys, which included some additional questions. In July 2021 they published the findings of their June survey in Let me work from Home, or I will find another job. Let me briefly discuss these new questions and findings.
How would you respond if your employer announced that all employees must return to the worksite 5+ days a week starting on 1 August 2021? 58% said they would comply and return full time to their business premises; 36% said they would comply while looking for a job that allowed hybrid work; and 6% said they would quit rather than return to full-time in-person work.
Suppose you got an offer for a new job with the same pay as your current job. Would you be more or less likely to take the new job if it let you work from home two to three days a week? Overall, 56% of employees said that they would be more likely to consider a new job that include WFH; 33% said it would have no effect; and 11% said they would be less likely to consider.
The proportion that would consider a new job offer is slightly larger among women (57.8%) than men (54.1%), and among those with four-year college degrees (58.3%) compared to other respondents (53.8%). But, not surprisingly, the appeal of a job offering hybrid work is considerably larger among those who have children under 18 at home (64%) than those who don’t (49%).
“Both workers and employers have warmed to the idea of working from home since the onset of the pandemic,” wrote the authors in the more recent article. “Throughout the period since May 2020, workers say they would like to continue working from home more than two days per week, on average, after the pandemic is over. In recent months, they say they would like to work from home almost half-time (2.4 days per week) in the post-pandemic economy. However, “As of June 2021, employers are telling their employees to plan for about 1.2 days per week of working from home in the post-pandemic economy,” about half as much working from home as workers want.
“Our results help in understanding the historically high level of quits and job openings experienced in the US economy in recent months. Labour market tightness, spatial mismatch, and skill mismatch may all contribute, but there’s another driving force as well. In particular, many workers and employers have discovered that working from home works better than anticipated … [which has] led to new-found desires to continue working remotely after the pandemic ends. Some employers are willing and able to accommodate those desires, and some are not. As a result, many workers are re-sorting across employers and into jobs that better suit their preferences over working arrangements. As that process plays out, it will push up quit rates. It will also drive high job opening rates, as employers contend with the need for a higher-than-normal pace of replacement hires.”
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