On Thursday, December 3, Nick Bloom joined Markus’ Academy to discuss labor market trends around working from home before, during, and after the COVID-19 pandemic. Bloom is a Professor of Economics at Stanford University.
In March, Work-from-Home (WFH) status of full-time employees surged to 42% of Americans from pre-pandemic levels of 2%. By November, it was still high at 34%. This has left commercial buildings semi-deserted. Swipes of security cards into offices have dropped to 10% of their March numbers.
After COVID, news coverage of WFH went up by 12,000 percent, but we hear little consensus from people about whether WFH is negative or positive and if it will stick. Bloom cites Netflix CEO Reed Hastings who has said he doesn’t see “any positives.” Rite Aid CEO Heyward Donigan says her company has adapted well and she feels positive about the transition.
COVID-19 has increased the share of days U.S. workers WFH, but there is great variation by education level. Bloom and co-authors conducted an online survey that, by comparing responses to pre-pandemic responses from the American Time Use Survey, sheds light on how the pandemic has affected WFH patterns. Before the pandemic, 5% of paid working days were WFH days. By May, that number jumped to over 60%. Share of days WFH increases with education level, hovering around 10.5% for those with less than a high school degree and 53% for those with a graduate degree. Bloom notes that observables of respondents (even unweighted) are pretty representative of the U.S. population.
Interestingly, there were early divisions in WFH patterns between red and blue states. In May, WFH rates were higher in blue states than red states. By November, red states were WFH at equal rates.
The average employee wants to WFH about two days a week, and surveyed firms are planning to give employees who can WFH about two days a week. Bloom’s survey suggests a pre-COVID-19 stigma against WFH has diminished, and that the “forced experimentation” of WFH caused by COVID-19 has reversed the priors of many firms. On average, WFH has turned out better than they thought. Bloom notes that office rents are falling in high-rise buildings (wariness of elevators, etc.), and there is increased interest in office parks in the suburbs.
Investments in WFH add up to about 1.2% of GDP. The average American spent $600 setting up their offices and 13 hours learning Zoom and other necessary tools. Firms have also spent a lot.