In simple descriptions of the labor market, people work for pay. It’s not wrong, but it’s incomplete. A job also involves a wide range of other costs and understandings. For example, getting to work is a cost, and in many jobs, so is dressing for work. Jobs can have more or less flexibility as to when they start in the day, whether you can extend a lunch break if needed, or when you’re done. Some workplaces may have a subsidized lunch room or only the occasional free donut. For a given employer, co-workers can be pleasant or alienating, and customers can be professional or rambunctious. Some jobs can expose workers to additional health risks. Managers can encourage contributions and offer whatever flexibility they can, or they can be mini bullies.
In short, a job is not just paid hours, but also a set of substantive characteristics and rules. In a happy workplace, workers and employers will go beyond the minimum necessary courtesies and try to help each other; conversely, an unhappy workplace is a kind of cold war of animosities and provocations.
In nearly every job, the COVID pandemic has altered a substantial number of non-salary characteristics. Working from home, for example, is shorthand for changes in travel costs, flexibility, level of management supervision, co-workers, benefits of what was available close to the on-site location, etc Those unable to work from home have found, as a result of the pandemic, that the health risks and daily habits of working in person have changed. Unemployment rates have come back down over the past two years, but the wide range of unpaid and disrupted work-related arrangements continue to make their way to new agreements and arrangements.
Cevat Giray Aksoy, Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Mathias Dolls, Pablo Zarate examine some aspects of this transition in “Working from home around the world”. written for the most recent Brookings Papers on Economic Activity (Fall 2022, article, commentary and video available online). Much of their article examines surveys of the prevalence of working from home in a number of countries, as well as hopes and expectations for what future models of working from home will look like. From the summary:
The pandemic has triggered a significant and lasting shift to working from home (WFH). To study this
shift, we survey full-time workers who completed primary school in 27 countries in mid-2021 and early 2022. Our cross-country comparisons take into account age, gender, education and industry and treat the US average as the benchmark. We find, first, that teleworking averages 1.5 days per week in our sample, varying considerably across countries. Second, employers are planning on average 0.7 telework days per week after the pandemic, but workers want 1.7 days. Third, employees value the option of WFH 2-3 days a week at 5% of salary, on average, with higher ratings for women, people with children, and those on longer commutes. Fourth, most employees have been positively surprised by their productivity working from home during the pandemic. Fifth, looking at individuals, employers’ plans for post-pandemic telecommuting levels rise sharply with telecommuting productivity surprises during the pandemic. Sixth, looking across countries, predicted WFH levels increase with the cumulative stringency of government-mandated lockdowns during the pandemic.
These results suggest to me that a collision of expectations regarding working from home is underway. Workers would like a bit more working from home than they have experienced during the pandemic; employers would like much less. One can imagine a future where some companies offer more work from home and attract workers who place a high value on this aspect of work, and others do not. Workers would then have to be redistributed among these firms, and the market would then determine how they compete. Some employers have had a good experience with surprisingly high productivity from working from home during the pandemic; some did not. Some organizations and workers have made substantial investments to facilitate working from home; some don’t.
The authors also highlight, without taking a firm position, some of the broader issues raised by the shift to working from home. For example, it’s one thing for an experienced worker with a well-defined job to work from home, but for young adults just entering the workforce who are looking for on-the-job training and support. , it may look quite different. There is a well-established belief that physical interactions in the workplace are often important for innovation and the dissemination of knowledge. Interactions in the virtual workplace have become much easier, but in terms of supporting innovation, can they substitute for a drop in in-person interactions?
For cities, perhaps the biggest short-term effect of an increase in working from home is less urban activity and a lower tax base from commercial real estate and sales taxes.
As a previous example, the waves of suburbanization after World War II imposed high costs on cities and on those unable, for whatever reason, to relocate to the suburbs. But economic forces can also cut in an unexpected direction. As the authors write, “If older, wealthier workers move to suburbs, suburbs, and amenity-rich consumer cities, the resulting decline in urban land rents will allow younger workers to live more easily and benefit from the networking opportunities offered by large cities. .” With this kind of change, cities and those who run them should rethink the sources of their economic vitality and attractiveness, as well as the mix of taxes and services they currently provide.