Mr. Bloom is a professor of economics at Stanford University.
A New York Times Opinion piece – 10/16/23
Working from home is here to stay. I can prove it with data — lots and lots of data showing that returning to the office (RTO) is DOA.
A telling data point is the number tracking how many Americans swiped and tapped electronic cards to gain entry into their offices. This month, occupancy rates were at 50 percent of February 2020 levels. That is shocking — only half as many days are spent in the office compared with prepandemic times.
That number has flatlined not only in office buildings in San Francisco and New York but also in workplaces in Atlanta; Charlotte, N.C.; Dallas; Denver; and Philadelphia. Blue and red, inland and coastal, Northern and Southern workers who might have disagreed on pandemic-related behaviors like mask wearing and vaccine boosters have quietly united behind work-from-home habits throughout 2023.
Work-from-home levels aren’t as high as they were during the pandemic’s first peak in early 2020, when 62 percent of full-day paid work happened at home. People did begin filtering back to the office as the pandemic waned. But they did so only to a point: By December 2022, 29 percent of workdays were happening from home. There was a slight dip after the winter holidays to 27 percent in January 2023. But as of July, we’re back up at 31 percent.
Why have the return-to-office maximalists lost? There seemed to be so much excitement and pent-up demand from people who wanted to leave their kitchen tables for ergonomically better office desks. There was. They just didn’t want to go in all the time.
Hybrid work arrangements have killed the return-to-office hype. Employees equate a mix of working in the office and working from home to an 8 percent raise. They don’t have to deal with the daily hassle and costs of a commute. In fact, the process of getting to work is more despised by employees than the need to actually work.
And, at the end of the day, despite all the noise some business executives made to the contrary, remote work saves firms money. It cuts overhead, boosts productivity and is profitable. And what is profitable in a capitalist economy sticks. Thankfully, remote work also has major benefits for society, including improving the climate by cutting billions of miles of weekly commuting and supporting families by liberating parents’ time. We all should celebrate the resilience of our workers and the benefits of working from home.
What about the news stories that companies like Zoom, whose videoconference product made it a star of remote work in the pandemic, are calling employees back to the office? Surely, if even Zoom is insisting that its workers be present in the office, this must be a significant trend, right?
I visited Zoom’s headquarters in September 2022. Scores of people were present, and the office was busy. Intrigued, I asked about Zoom’s work-from-home policy. I was told that many local employees were on a hybrid schedule, typically coming in a couple of days a week. Recently, Zoom formalized this. Employees living within 50 miles are required to work in the office twice a week. There is no requirement, however, for employees living more than 50 miles away.
The headlines could have read “Zoom confirms work-from-home three days a week for employees within 50 miles and five days for those outside 50 miles.” But sadly, these types of subtleties are harder to get across. Firms like Amazon, Meta, Salesforce and Zoom all discovered that many of their best performers love working from home, and that enforcing a five-day-a-week return to the office would have meant culling their top talent.
What about the future? Perhaps a recession and a change in our historically tight job market is going to give bosses the upper hand and roll back these gains? I doubt it. Indeed, looking 10 years ahead, remote work is likely to increase, driven by two powerful economic forces.
First, U.S. data going back to the 1960s reveals a mere 0.4 percent of full days were worked from home in 1965. That had been doubling roughly every 15 years up until 2019, driven by improving technology. First came personal computers in the 1980s, then laptops in the 1990s. The internet opened up new possibilities in the 2000s, followed by cloud file-sharing and video calls in the 2010s.
As one of four children of two working parents, I saw what working from home was like without a computer or the internet. My parents would sporadically have to work from home when there were child-care emergencies, and it was challenging. In the 1980s, remote work required carrying loads of paperwork to and from the office, and it meant being excluded from meetings and decisions at work. Now, we can Zoom in on laptops, share files via the cloud and easily connect with colleagues. Looking ahead, this rate of technological progress is accelerating, as higher rates of remote working leads firms to develop ever better software and hardware.
Second, we have business cohort effects. In the data, we see that more than 75 percent of start-ups allow employees flexible working locations. Start-up firms have been born in an era when having an office is optional, and meeting customers and clients online is standard. Many of these companies have saved capital by forgoing offices and have saved on expensive urban salaries by hiring remote employees globally.
Today’s new firms have nearly twice as many days worked from home as those founded 20 years ago. As these young firms grow and mature, they will turn into tomorrow’s medium and large firms, bringing their remote-friendly practices with them. Perhaps as importantly, their founding chief executives will grow into tomorrow’s business leaders. In 10 years, expect to see leading chief executives and entrepreneurs actively embracing hybrid work rather than begging employees to return to the office.
Change isn’t easy. Some downtown cities will need to reinvent themselves. But rarely as an economist do I see a change so profoundly positive for the majority of America’s businesses and workers. We should support the working-from-home revolution that has finally yielded a win-win-win. Firms, employees and society all benefit. Typically, reforms involve trade-offs, with some groups winning while other groups lose. Remote work has been good for almost everyone involved. We should support this golden moment and lay the five-day-office-week movement to rest.