Remote work % in industry not correlated with excess productivity growth
frbsf.org
frbsf.org
> Analyzing the relationship between GDP per hour growth and the ability to telework across industries shows that industries that are more adaptable to remote work did not experience a bigger decline or boost in productivity growth since 2020 than less adaptable industries. Thus, teleworking most likely has neither substantially held back nor boosted productivity growth.
I think the companies that are trying to force RTO will start changing tune pretty quickly when studies like this show there’s really no downside in terms of productivity.
but doing this means they can force you out, and replace you with someone in Alabama, or India, who will do the job for less. Often much less.
An awful lot of tech bro Big4 consulting CEO types are also betting a lot on AI -- cut bodies and let Copilot or GPT do the work. If that doesn't work they can always scrounge up another body or two from Tata or Cap Gemini.
A lot of the feet-dragging concerns can be summed up as: We ruined suburban areas because everyone had to commute centrally (e.g. closure of community spaces, shops, restaurants) and it will take a while to adjust.
I do find it interesting that when individuals take risks and lose, there is near zero sympathy from society but when big commercial real-estate firms do so, suddenly we have to adjust our way of life around them.
A lot of the smaller downtown businesses will be absolutely fine, they'll just move suburban where the workers now are.
I do worry whether they hold the economy hostage. Do they have the ability to ruin that? Do they have the choice of ruining it or not, or have they gotten shit so tangled up that it would be ruined even if they didn't want it to be? And does anyone really believe that, given the choice between themselves being ruined but the economy surviving just fine, and them being ruined while the economy is ruined as well... that they'd choose the former?
And I don't care. They can rot. Really.
But if they drag everyone else down with them... god help us all. Can they? Could they, for instance, destablize the stock market, or cause a cascade of bank runs? Is it a matter of choice on their part, or will they also be helpless to stop this supposing they even want to stop it?
I too laugh at my enemies as I see them sink down into the quicksand, but first I check if they've grabbed onto my ankle.
For anyone reading this, I'm not being rhetorical. I do not understand the economics of this well enough to know if they're going to blow up the world on the rest of us. Are they?
The CMBS market is about $1T in total asset value. It's comparable to Bitcoin. It's significantly less than the $9T in residential MBS that caused the 2008 crash. So if CMBS crash is likely to have financial effects similar to a crypto crash (of which we've had several) or the drop in value of FANGs (total CMBS market size is about the same size as Meta's market cap).
The problem is that commercial real estate's woes are caused as much by the interest rate hikes as they are by WFH - notice that CRE (outside of certain locations like SF) did fine in 2020-2021, but now has really big problems. And the interest rate hikes absolutely do affect corporate bonds and the stock market, and yet have not really been priced in. Corporate bonds exhibited a "taper tantrum" when interest rates went up to 2.25% in 2018; rates are now more than double that. Most of this is long-term debt coming due 2025-2027, but if rates do not drop before then, we could see corporate bankruptcies and unemployment that make 2008 look like nothing.
Big businesses have a lot of employees. Even if just a small percentage of those employees contact their representatives and get on the news, it's still a much larger and more focused message then individuals doing it about individual problems. A big business failing becomes a very loud squeaky wheel.
It's the most obvious no brainer thing to do, that a majority agrees on across the board, in a time where they agree on nothing else. Yet, it isn't happening because powerful alcohol, tobacco, and pharmaceutical lobbies are against it.
People can unite and call representatives all they want. Unless you can primary a representative in a local election they won't give a crap, and will gladly please their donors.
For example, nobody would think that the current agro-transportation-healthcare system where we make everybody fat with subsidized high-fructose corn syrup, ensure they don't get enough exercise, and then spend massive quantities of money fixing all the obesity-related illnesses is efficient. Nobody thinks the housing stranglehold where home prices get bid up, investors and people who bought them early buy more of them on leverage, and other people go homeless is efficient. Nobody thinks modern enterprise software is efficient.
But these systems are held in place because there's essentially no lever to topple them. The economically rational response to a housing shortage is to build more housing, but if you pick up a hammer and do it yourself, you will get shut down so quickly by the local planning commission and building inspector. Corn subsidies and local zoning are held in place by the government; various people have tried to change them, but democratic government by design moves slowly. It would be a big (and expensive) lifestyle change to cook all your meals at home from fresh ingredients and walk everywhere - people that actually do it tend to be significantly healthier than those who don't, but it requires an economic & free time surplus. Building enterprise software with a good UI is an expensive and pointless waste of time, because the decision maker who decides whether to buy your software usually cares about price, how easy it is for IT to manage, and whether they can blame another company when things go wrong. Hence why we get dumpster fires like Concur.
It's very likely that remote work will end up in a similar situation. The decision-maker for whether your job is remote isn't the employee; it's the employer, sometimes your manager and sometimes someone higher up in the org like a VP or HR. They optimize for their own incentives, which usually includes how easy it is to manage people. For the economically-rational result to happen, remote workers need to be able to start independent firms that are remote-first, so they can do an end-run around their managers. But for that to happen, remote work needs to be more efficient in the competitive, early stages of a new technology market, so that those remote-first companies win the market when it is still winnable. I'm not convinced that's possible; I think in-person work is still significantly more efficient in a highly-ambiguous environment where people don't have well-defined tasks to do, and that's exactly the environment where most companies get founded.
I cannot think of a more contrived metric than "GDP per hour growth" this reeks of someone who already had an opinion and wanted to prove it and the best they could come up with is to prove it doesn't for sure help productivity.
It differs from the colloquial sense of the word.
There's a huge benefit to the personal life of the employee. When you take a break you can run laundry, run to the bank, vacuum, etc. The 30-90 minutes you don't spend sitting in traffic each day becomes productive time.
With no negative impact to the employer, and only benefits to the employee, WFH represents a Pareto optimization: there's no reason not to do it.
To the company you work for. In terms of societal impact, I can't imagine it's anything other than hugely impactful. I used to spend close to 2 hours a day driving around. That's time I now spend exercising, with family, volunteering, and not wasting gas.
Not to mention the number of meetings I need to take from my uncomfortable car seat on office days because there aren't enough meeting rooms and phone booths in the office.
What you’re missing is the economists’ definition of productivity which is amount of goods/services produced over the inputs used to produce them. It is unrelated concept to personal “feeling” of being productive.
Does it have to?
Remote work is great because it reduces carbon emissions, reduces noise pollution, reduces traffic, increases residential rent revenues, increases work satisfaction, increases hobby engagement, improves child rearing, and generally gives people their time back.
If we can get all that and maintain the same productivity, working from home feels very worth it.
All reasons corporations will crush it. They don't want happy workers, they want fearful ones.
One challenge is that many execs see WFH as a privilege of being an exec. The modern corner office is a detached home office overlooking the pool.
You have to remember that we’re the first generation since pre-industrial times that even can work from home en masse.
I've been a WFH advocate for 22 years, having spend 20 of those working in my own home. I still refuse to go downtown, but I don't mind going to a place like this. I still work about 70% from my house, and 30% from the office. I work from the office when it suits me.
Perhaps if they weren't trying to shove us into a singular zip code from a radius 50 miles away, distract and annoy us, force us to deal with traffic, not to mention the personal and monetary expense of it all -- I'd be willing to entertain the idea that an office is "better."
I'm now also willing to accept less money for remote only than before and i also thinking of taking my current money and doing an exit faster if the industry doesn't like that and i will just accept a 'lost' of luxury but i do want to look at nature when i have to work (like your lake side office).
Increases in productivity have not necessarily led society to greater prosperity, so I think we've been looking at the wrong indicator all this time.
To be fair they acknowledge in conclusion that it has other positive effects, but their analysis was focused on productivity.
But I agree, title of this analysis is weird, as it assumes that it should impact productivity positively and comes as negative since it doesn't.
I am glad they conclude its neutral though. If we were starting to see analysis showing it reduces productivity, you'd bet we'd be back in office in no time
reduces carbon emissions/reduces noise pollution/reduces traffic - These are related. There is absolutely no evidence for this. In the U.S. traffic in 2021 was higher than in 2019 despite significant remote work and has only been going higher since. Electricity consumption has been higher as well (which is obvious…heating or cooling an office space with tens or hundreds of people is almost certainly more efficient than heating tens or hundreds of different spaces with 1-2 people in them).
increases residential rent revenues - I’m not sure what you mean but if you mean higher rent, I think most would agree that high rent is a massive problem in the U.S. and high rents aren’t a good thing.
increases work satisfaction - Yes, the evidence shows that this appears to be the case for a decent majority of people. But the satisfaction numbers may drop with distance with COVID so we need to see if this holds up.
increases hobby engagement - I’m not sure there’s any evidence for this.
improves child - there is a correlation here but it’s not clear how much of it is a result of the large percentage of women who’ve dropped out of the workforce to care for children since COVID.
and generally gives people their time back - The evidence points in the opposite direction. Since the massive increase in WFH people are very clearly stating that work has taken over all hours in their life. Once again, this may be due to the lack of establishment of norms due to the limited time, so it may improve, but the evidence isn’t clear in either direction.
Another point is that most of these benefits are a result of avoiding (although it isn’t clear that this is even the case) bad commutes. Which is largely driven by bad infrastructure design which may not be the case in places which don’t have the bad infrastructure design, which would contain a lot of major population centers outside USA/Canada.
>Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.
https://www.jfklibrary.org/learn/about-jfk/the-kennedy-famil...
Knowing whether the companies within software that allow remote work add more or less value than the companies within software that don't would be far more informative.
Could it be that it’s not about productivity or even “culture”, but actually all about control and/or trying to justify the org’s sunk costs in office space purchases/leases?
For the record, I would prefer a hybrid arrangement if I could have one that didn’t require a long commute (more than 15-20 minutes). But what works for me might not work for everyone else in the org.
It's 100% about this. I know several people who were forced back to work after being able to do their entire job at full productivity remotely for years, and they were happier and saving money. They were just as able to "brainstorm" with people. It's all about control and justifying office space cost.
I think the Netherlands doesn’t stipulates a disability. And honestly, there are reasons other than disabilities and neurodivergence; some people are caregivers, or have young kids, or have a nice home office setup (which a lot of the same companies “flexing” as you put it will never match in the office), or they just don’t want to waste money and time commuting.
I believe if the job can be done remotely, it should be a worker’s right. No hassle, no questions asked, and no retaliation or discrimination.
However, I’m not sure where you’re located, but I’m not holding my breath for meaningful workers’ rights legislation in the US any time soon.
Yes, there are many such reasons one would prefer to be at home that have nothing to do with the individual's physiology/neurology. But as you guess, I'm located in the US. Disability is a rapier with which to sharply defend oneself against predation, not something our work-worshiping society actually cares about. Having responsibilities outside of work which aren't due to legally protected disability is widely considered unimportant, a distraction, or a liability.
One of the reasons I decided to return to entrepreneurship is to be able to have a flexible schedule, maybe not work at all on days when I just don’t feel like it, and generally avoid work-worshiping (great terminology!)
To your larger point, I learned recently that the Family Medical Leave Act does not apply to grandchildren under your care, even if the parents are dead or for whaterver reason cannot be caregivers. Like, how awful is that?
It could be for those reasons, or it could be for a variety of other reasons. One thing that we know that humans are really good at rationalizing irrational choices.
Anecdotally, my experience seems to show that there are many relatively low-productivity people who are fooled into thinking they are being productive by scheduling meetings, having face time, overanalyzing problems without necessarily addressing them, etc. Those people also seem to be the ones who favor RTO policies. My suspicion is that RTO helps them enable those meetings, which makes them "feel" productive.
Once established that WFH meaning having a closed room, well equipped, well connected etc, such issues disappear; once people understand how to relate with others from remote another issue is gone.
So to say: so far they have not observed nor boost nor degradation in productivity BECAUSE there are some issues about WFH organization and habits, resolving them will likely boost productivity as well.
Beside that: the push against WFH have two reasons:
- at small sale remote workers are easy to fire, but ALSO have from a whole country to the whole world of potential job market, not just the market in a close proximity of facing relocations costs. So to say, remote workers are LESS EASIER exploited beyond their signed contracts than in person workers;
- al large scale working from remote en mass means a population that start to spread, this means many modern services going down. We have no reasons to Uber when we live in a spread place where parking is never an issue and all have their own cars. We have no reasons to JustEat if we have few restaurants nearby and we normally eat at our home. We have no room for drone delivery of small packages since there are no long-range drones. We have no room for keep visiting shopping malls buying small things that sum up to a significant amount of money for the shop since we live in a large and calm place. Essentially at large scale remote work help small and medium enterprises cutting market slice to the modern giants, avoiding the "sharing economy" and the "not owning anything, use services instead" scenarios.
I remember some fellow working class folk asking me in the early 00's about WFH "oh right, you must be wanking off to porn all day" or some such, like it was some paid opportunity to get that done and everyone who wasn't remote was earning their corn honestly. Well no, I want to work for a living, pay my own way and just like the idea of working from home and hopefully it can be proven that it doesn't harm productivity.
After a while it just seemed absurd that people would commute for hours, pollute the atmosphere, waste their time etc to perform the same job. Then again some people just enjoy the company.
It has a very specific meaning.
So even without an increase in productivity the ratio of cost per employee to productivity per employee may improve.
Go on TikTok and look at the sheer apathy for corporations. "Think of the share holders" memes as an example.
It's clear for 99% of workers there is going to be zero reward for producing more, so they simply aren't going to produce more, remote or in person.
Exception is startups, which is part of the reason I work for startups.
So in aggregate, we're not more productive as a society when we work from home more.
But I suspect that this is a result of the increased (virtual) office productivity offsetting less economic activity related to commuting and maintaining the vehicles needed for commuting; we're still slightly below 2019 vehicle miles.