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During periods of significant change in the workplace, such as the influx of women into the workforce or the rise of computing, it often takes time for researchers to gather data on the effects of these shifts. However, the sudden adoption of remote work during the pandemic has prompted researchers to quickly examine its impact on employees and the wider economy. The early findings reveal a complex economic landscape, where some workers and businesses have benefited from remote work arrangements while others have faced challenges.
One notable trend is the struggle faced by brick-and-mortar businesses in urban downtown areas as commuting decreased. On the other hand, businesses like grocery stores have found success in suburban locations. Additionally, the shift to remote work has led to increased rents in affordable markets as workers leave expensive urban housing.
Working mothers have generally seen positive outcomes from the flexibility of remote work, as more of them have been able to remain in the workforce. However, remote work has also presented hurdles for women's career advancement.
Studies on productivity in remote work settings have produced varied results. Some papers indicate productivity declines ranging from 8 to 19 percent, while others report individual workers experiencing drops of around 4 percent. Conversely, some research has shown productivity gains of 13 or even 24 percent. Notably, the productivity levels in remote workplaces seem to depend on factors such as managerial support and opportunities for face-to-face interactions.
Experts tend to agree that many workplaces have now entered a hybrid phase, with offices operating at around half their pre-pandemic capacity and approximately a quarter of workdays being conducted remotely. This suggests that some of the effects of remote work will persist.
In summary, the current situation points towards remote and hybrid work becoming the "new normal," with both positive and negative implications for workers and the economy at large.
The images of urban downtowns during the Covid lockdowns are haunting, with empty streets, abandoned office spaces, and neglected workstations. When around 50 million Americans transitioned to remote work at the beginning of the pandemic, it had a profound impact on brick-and-mortar retailers located in city centers. According to a study that analyzed transaction data from 70 million Chase Bank customers, the number of clothing stores in downtown areas declined by 8 percent between late 2019 and late 2021. Similarly, general goods stores, ranging from department stores to florists and bookshops, experienced a 7 percent drop, while grocery stores saw a 2 percent decline.
The impact of remote work on businesses has led to a significant shift in retail locations. As remote workers moved to suburbs, there was a slight increase of around 3 percent in the number of suburban grocery stores, surpassing the decline observed in urban areas. This trend, however, poses challenges for low-income workers who cannot afford to live in these affluent suburban areas where retailers are hiring. This issue is already evident in the Bay Area, as exemplified by Maria Cerros-Mercado, who now commutes from San Francisco to a salad shop located in Mill Valley, a wealthy suburb in Marin County.
Nevertheless, economists argue that remote work can benefit many Americans by potentially lowering rents in rural and suburban regions. A recent study analyzed postal service address changes, rent fluctuations on Zillow, and construction industry data to project the impact of remote and hybrid work on rent. Initially, the increased influx of remote workers caused a temporary rent surge in previously affordable areas like Dallas, Manchester, NH, and upstate New York as individuals abandoned expensive housing markets in search of remote work opportunities. However, as construction catches up with this new demand, economists predict that rents will start to decrease.
One unexpected advantage of remote work is a decrease in burglaries. A study conducted in Britain found that areas with a high rate of remote work experienced a nearly 30 percent decline in burglaries, attributed to the increased presence of people working from home and acting as extra surveillance in those neighborhoods.
When it comes to working women, remote work offers some relief to the challenges faced by working mothers. Research-based on pre-pandemic data indicates that in fields like computer science, marketing, and communications, which had already embraced remote work from 2009 to 2019, the employment rates of working mothers increased. In fact, there was a direct correlation between a 2 percent rise in remote work and a 2 percent increase in mothers' employment. While remote work narrowed the employment gap between working mothers and women without children, there is still room for improvement.
According to Nobel Prize-winning economist Claudia Goldin, women often seek jobs with more flexibility to balance household responsibilities, which contributes to the gender pay gap. However, remote work can have negative consequences for women. In a study on engineers at a Fortune 500 company, remote work had a detrimental effect on the feedback received by junior employees, particularly impacting women. Proximity was found to play a significant role in women's comfort with asking follow-up questions, unlike men who exhibited more comfort even when not physically near their colleagues. Women may also face unjust scrutiny regarding their productivity, regardless of their work location. Studies involving over 2,000 participants revealed that both men and women were more likely to suspect women of slacking off at work, with this perception more prevalent when women were seen not being at their desks through video footage. This bias could be influenced by societal expectations regarding women's greater household responsibilities.
In summary, remote work has had a varied impact on businesses, employees, and gender dynamics. While it has led to a shift in retail locations and the potential for reduced rents in certain areas, it has also presented challenges for low-income workers. For working mothers, remote work provides some advantages in terms of employment rates, but there are still obstacles to overcome. Additionally, women may face specific hurdles related to feedback, productivity perceptions, and societal expectations regardless of their work location.
The question of whether work-from-anywhere arrangements have a positive or negative impact on productivity has been a topic of intense interest among executives. Early evidence from a 2013 study conducted by Mr. Bloom and his colleagues, which focused on a call center in China, suggested that allowing employees to work remotely resulted in a 13 percent increase in productivity. This boost was attributed to factors such as reduced breaks and a quieter working environment, which allowed for more efficient call handling.
However, the sudden and involuntary shift to remote work during the pandemic presented a more complex picture. Companies had not been prepared for this transition, and the results were varied. A study of remote employees at an Asian information technology company revealed a decline in productivity ranging from 8 to 19 percent. Similarly, an examination of an American call center found a 12 percent decrease in the number of calls made after the switch to remote work. On the other hand, a study focusing on the productivity of economic researchers in the United States during the pandemic showed a significant increase in output, approximately 24 percent.
These divergent findings raise important questions. "How can we account for such a substantial difference of more than 30 percentage points?" Mr. Bloom asks. The key factor appears to be how workers are managed. When remote work is supported by effective management practices, incentives, and opportunities for in-person interactions, it can yield positive results. Conversely, simply sending employees home without any face-to-face contact seems to be less effective.
In summary, the impact of remote work on productivity depends on various factors, including management practices and the level of face-to-face interaction. By implementing remote work strategies that prioritize effective management and allow for occasional in-person meetings, companies can maximize the benefits of remote work arrangements.