‘The new normal’: What we do and don’t know about the effects of remote work
When workplaces are remade by a tectonic shift — women flooding into the workforce, the rise of computing — it typically takes some time for economists, psychologists, sociologists and other scholars to gather data on its effects.
So when employers moved suddenly to adopt remote work during the pandemic, with the share of employed Americans working exclusively from home rising to 54% in 2020 from 4% in 2019, researchers leaped to examine the effects of remote work on employees and the economy at large. Now the early results are emerging. They reveal a mixed economic picture, in which many workers and businesses have made real gains under remote work arrangements, and many have also had to bear costs.
Broadly, the portrait that emerges is this: Brick-and-mortar businesses suffered in urban downtowns, as many people stopped commuting. Still, some kinds of businesses, such as grocery stores, have been able to gain a foothold in the suburbs. At the same time, rents rose in affordable markets as remote and hybrid workers left expensive urban housing.
Working mothers have generally benefited from the flexibility of being able to work remotely — more of them were able to stay in the workforce. But remote work also seems to bring some steep penalties when it comes to career advancement for women.
Studies of productivity in workfrom-home arrangements are all over the map. Some papers have linked remote work with productivity declines of between 8% and 19%, while others find drops of 4% for individual workers; still other research has found productivity gains of 13% or even 24%.
Nick Bloom, an economist at Stanford University and a prolific scholar on remote work, said the new set of studies shows that productivity differs between remote workplaces depending on an employer’s approach — how welltrained managers are to support remote employees and whether those employees have opportunities for occasional meet-ups.
Researchers tend to agree that many workplaces have settled into a new hybrid phase, where offices are at about half their pre-pandemic occupancy levels and about one-quarter of American workdays are done from home. That suggests some of the effects of remote work may stick.
As Bloom put it: “This is the new normal.”
Urban downtowns
Photos of urban downtowns in their COVID lockdowns are eerie, with silent streets, wilted office plants and dusty cubicles.
When some 50 million Americans started working from home in the early days of the pandemic, brick-and-mortar retailers clustered in urban downtowns were hurting. The number of downtown clothing stores fell 8% from late 2019 to late 2021, according to a study using transaction data from 70 million Chase Bank customers. General goods stores in downtowns — including anything from department stores to florists to book sellers — fell 7%, and grocery stores declined 2%.
Some of those businesses followed remote workers to the suburbs. During that period, there was a roughly 3% increase in the number of suburban grocery stores, slightly outpacing the urban decline, particularly in suburbs where remote work levels were high.
In the coming years, the movement of retailers from downtowns to suburbs is likely to prove difficult for low-income workers who cannot afford to live in these areas, some of them affluent, where retailers may be hiring. This problem is already visible in the Bay Area. Take the case of Maria Cerros-Mercado, who used to work at a salad shop in San Francisco, a 20-minute walk from her home. Now she commutes by Uber from the city to the shop’s new location in Mill Valley, a wealthy suburb in Marin County.
But some economists argue that many Americans stand to gain from the effects of remote work because rents in rural and suburban areas are likely to begin dropping. One recent study used data from postal service address changes, rent changes on Zillow and the construction industry to project the potential rent effects of remote and hybrid work. The pandemic saw a temporary rent spike in previously affordable areas — think Dallas; Manchester, New Hampshire; and upstate New York — because many remote workers left the priciest housing markets once they gave up daily commutes. As construction catches up with that new demand, economists say, rents will fall back down.
Working women
For decades, a working mother’s schedule has felt like an equation that won’t balance. Many women are expected to still be at their desks at 5 p.m., and simultaneously at school pickup. They’re supposed to be in an office, and also available at home when their children are coughing and turned away from day care. (Ample data shows that this bind tends to constrict mothers more than fathers.)
Remote work slightly eases that conundrum, according to research using pre-pandemic data from economists at the University of Virginia and the University of Southern California. In fields such as computer science, marketing and communications, which welcomed remote work from 2009 to 2019, working mothers’ employment rates increased. There was an almost one-to-one correlation: When remote work rose 2%, there was a 2% rise in mothers’ employment. Even so, the employment rates for working mothers still lagged those of women without children, though remote work diminished that gap.
Claudia Goldin, who last month was awarded a Nobel Prize in economics, has shown that women tend to seek jobs with more flexibility so they can take care of household responsibilities. That has contributed to the gender pay gap.
While some working women, particularly mothers, might gain from being remote, women tend to see greater penalties when they do so. In a study of engineers at a Fortune 500 company, remote work had a negative effect on the amount of feedback junior employees got on their work — with the penalties more pronounced for women.
“Proximity has a bigger impact on women’s comfort with asking follow-up questions,” said Emma Harrington, an economist at the University of Virginia, who conducted both the study on remote work’s effect on feedback, as well as the one on mothers’ workforce participation.
Men appeared more comfortable asking clarifying questions even if they weren’t physically near colleagues.
Women may also face more undeserved questions about their productivity, wherever they work. In a series of studies with more than 2,000 participants, researchers in Wisconsin and Canada found that both men and women were more likely to suspect women than men of shirking work. Some of these employees worked from home and some did not.
Remote productivity
Whether work-from-anywhere setups hurt productivity or help it has been a burning question for executives.
Early evidence came in a 2013 paper from Bloom and others about a call center in China that allowed some employees to be mostly remote for nine months, and found that productivity rose 13%. Just less than 10% of this boost was attributed to people taking fewer breaks, and 4% to them doing more calls per minute because their working environments were quieter.
But during the pandemic when millions of workers suddenly shifted to being remote, the effects were more complex. The arrangements hadn’t been figured out in advance. The move to remote work wasn’t voluntary. So the results were more scattered.
A study of an Asian information technology company’s remote employees during the pandemic showed a decline in productivity of 8% to 19%. Another, looking at an American call center, found that when workers went remote, they made 12% fewer calls. On the other hand, a study of the productivity of economic researchers in the United States during the pandemic found a roughly 24% increase in their output.
These disparate findings leave some questions unanswered. “How on earth can you get a more than 30 point spread between them?” Bloom asked. “It all comes down to how workers are managed. If you set up fully remote with good management and incentives, and people are meeting in person, it can work. What doesn’t seem to work is sending people home with no face-time at all.”