Offices across the country are being used less and less as companies embrace work from home arrangements.
Kritchanon Srisawai/Dreamstime
About the author: Nicholas Bloom is the William Eberle professor of economics at Stanford University, and co-founder of www.WFHresearch.com.
Conversations with hundreds of managers and two national surveys have unearthed clear trends about the future of working from home. Working from home is here to stay, with hybrid arrangements fast becoming the dominant strain. By 2022, the typical firm will have everyone in the office three days a week, typically Tuesday to Thursday, and working from home Monday and Friday.
I have been researching working from home for almost 20 years. Both my parents worked from home when I was growing up, and I sensed this was a huge opportunity for society. But before the pandemic few people took this seriously. It was common to hear comments like “working from home, shirking from home” and “working remotely, remotely working.” March 2020 changed all that. The pandemic hit like an asteroid for teleworking. In one instant everything changed. The workplace of 2019 isn’t coming back.
Firms are now rapidly moving to a three-tier workforce. About 50% of all employees will work fully in-person. These are folks in front-line jobs in retail, manufacturing, healthcare and services. Their positions in many cases are lower-paid and don’t require college degrees. These employees have entirely missed the working-from-home affair, and are often angry and upset about this. After spending a pandemic working in unpleasant conditions and risking their health, they are missing the postpandemic work-from-home bonus. Managers around the country have told me they have been raising salaries for front-line employees to compensate, and are trying to increase the flexibility of their working hours. Their employees may, for example, shift to longer days, but in four-day weeks.
A second group of employees, about 40% in total and probably including most readers of this publication, are going to work hybrid. Typically this is three days in the office and two days at home each week. Hybrid workers are usually university-educated professionals and executives, who need face-to-face contact to be productive and manage their teams, but value a few days each week at home for quiet time and saved commute time.
Finally, the remaining 10% of employees will remain fully remote. Mostly these are folks in skilled service roles like IT support, finance, payroll, or editing. They have been working entirely remotely throughout the pandemic often at higher levels of efficiency. Since their roles do not require managing large teams or ongoing creativity they can operate entirely remotely.
This division of the workforce has major implications for real estate prices and the shape of cities. Hybrid workers do not need to live in city centers, but do need to live in the suburbs for their commutes two days each week. This is leading to a doughnut effect, where the centers of large cities like New York and San Francisco are emptying out as employees decamp to the suburbs. Overall about 15% of residents have left the centers of major U.S. cities to live out in the suburbs. If you only need to be at the workplace two days a week you can put up with a longer commute, and by moving out to the suburbs you get more space and a home office.
Fully remote workers can relocate even more radically, far out into rural areas, to other states, or even abroad. These footloose employees bring money and jobs with them as they buy and shop locally. The pandemic, by sending millions of workers permanently out of city centers, may end up being the economic savior of rural America. Indeed, some of the fastest-growing areas are the more scenic rural parts of the country where fully remote workers are permanently relocating. This effect could even help to reduce polarization, by more evenly mixing red and blue voters, urban and rural residents, graduate and nongraduates.
While residents are leaving city centers, offices will remain. Large firms want hybrid to involve a few days of intensely social, connected, and interactive work each week. The typical three-two plan involves Mondays and Fridays at home for quieter activities like reading and writing, and office time Tuesday, Wednesday, and Thursday for flowing meetings and events. And if you want your employees to come together for three vibrant social days each week, you need your offices in city centers that are easy to access and attractive with entertainment and retail options. Firms are making these more appealing by scrapping isolating Mad Men-style individual offices in favor of meeting rooms, open-plan lounge seating, and soundproofed zoom-cubicles.
The pandemic has also given a shot in the arm to innovation to support remote working. Working from home will increase from 5% of full-paid-days prepandemic to about 25% postpandemic. This is generating a gold-rush of tech firms to generate the next killer app, product, or software to support working from home. We have seen some major innovations over the last 10 years, notably video-call applications like Zoom and Microsoft Teams, file-sharing software like Dropbox, and communications platforms like Slack. These products have revolutionized our pandemic experience of working from home—having worked from home since 1996, I know how challenging using conference calls and dial-up modems can be.
The next decade will see even more rapid change as firms pour billions of dollars into developing WFH friendly products. Whether this is virtual reality, AI guided cameras, or holographic projections, the experience of working from home will radically improve for those of us lucky enough to enjoy it.
The pandemic is just the start of the working-from-home revolution.
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