What the WFH Revolution Means for the Economy
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What is the main topic discussed in this episode?
Here's your Money Briefing for Wednesday, December 13th. I'm J.R. Whelan for The Wall Street Journal. After some push and pull, companies and workers have settled into a hybrid work schedule. And the economic impacts of working from home a few days a week are just beginning to take hold.
Work from home is going to likely increase long-run labor supply, which will push up growth, help keep down interest rates, be very positive for the entire economy. Millions of people more working is a huge benefit for everyone in terms of less taxes and lower prices.
How did hybrid work levels change from the pandemic peak to the new normal?
We'll talk to Stanford University economics professor Nicholas Bloom after the break.
Hybrid work schedules becoming the new normal for millions of Americans has had a ripple effect across companies, cities, and workers' lives. Stanford University economics professor Nicholas Bloom tallied up the winners and losers from the work-from-home revolution, and he joins me. So, Nicholas, it's been almost four years since the spread of the pandemic forced companies to send most of their office employees to work from home. How have those work-from-home trends evolved to today?
What we've seen is an explosion in work from home levels at the beginning of the pandemic. So about 60% of working days were spent at home in March, April, May 2020. They've been dropping back down as the pandemic's ended, people have returned. But amazingly, throughout 2023, it stabilized. So that drop ended really at the end of 2022, and it's been flat at about 30% of days for the last year now. And it looks like this is really the new normal.
Now let's talk about how that has affected people's careers and lifestyles. Is hybrid work something that people want to do?
Yeah.
Yes, hybrid work is definitely extremely popular. We've surveyed hundreds of thousands by now of Americans, people around the world. They report working from home two to three days a week is about the same as an 8% pancreas.
Why do most workers and companies prefer two to three days of remote work per week?
They really like it. Perhaps that seems a lot of money, but there's lots of evidence that people really dislike commuting. They hate commuting. And if you work from home two to three days a week, you save on average about three hours of commute. And of course, you can live a bit further away, maybe have a bigger backyard, maybe have a home office.
Hybrid work has meant a shorter commute for a lot of workers, but an issue that many face is the need for childcare. What are the long-term effects likely to be on people's finances?
One effect on childcare that's pretty striking is in the American Time Use Survey, we see that folks that work from home are spending about 40 minutes more a week with their kids. They're saving a lot of commute time. They're spending some of it on leisure and exercise, watching TV. In fact, sleeping's a big bucket, but more time with children is one of the major uses. And that's incredibly positive for trying to combat some of the damage from lockdown on kids.
How does hybrid work affect commuting, childcare, and daily time use?
The other bigger long run effect is it's going to be easier for a bunch of folks to work. So imagine if you have some kind of disability or maybe looking after young children or like the case of my parents, you know, at the end of their career, they didn't want to work five days a week, but might have been happy to do three. And as a result, work from home is going to likely increase long-run labor supply, which will push up growth, help keep down interest rates, be very positive for the entire economy.
And what will this mean for labor force participation rates?
Thank you very much. What would that mean for everyone listening? A, there are more working Americans. They're paying more taxes. It means more money for spending and less taxes that everyone else has to pay. And B, it helps to provide more goods and services, keeping down price pressures so that inflation isn't as high and so the Fed doesn't have to push up interest rates. So millions of people more working is a huge benefit for everyone in terms of less taxes and lower prices.
We've seen companies and employees engaged in several rounds of battles over return to office policies.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:03–0:36
2
How did hybrid work levels change from the pandemic peak to the new normal?
0:36–2:23
3
Why do most workers and companies prefer two to three days of remote work per week?
2:23–3:22
4
How does hybrid work affect commuting, childcare, and daily time use?
3:22–5:03
5
In what ways will increased remote work change long‑run labor supply and the economy?
5:03–6:29
6
How do hybrid schedules impact companies’ recruitment, retention, and productivity?
6:29–7:27
7
What new technologies are emerging to support remote and hybrid work?
7:27–7:35
Speakers
2 identifiedMore from WSJ Your Money Briefing
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