The COVID-19 pandemic moved WFH ahead by 25 years
17:27

The COVID-19 pandemic moved WFH ahead by 25 years

Tech Industry
It was almost exactly a year ago when millions of us got sent home from work abruptly, not sure when we'd come back. Now, a year after the pandemic shutdowns began, we're starting to go back, it's suddenly looking clear, but not that clear. Now what? Professor Nick Bloom is gonna have a lot of good answers on this. He's a professor of economics at the Stanford Business School. How much have we grown our work from home portion in this country? And how do you measure it? And where are we going to end up as we start to modulate this a bit. Just to set the scene that's like a before, during and after. So before COVID we know very accurately from our government figures government data that roughly 5% of working days are working from home. Roughly 95% run the business premises. And those 5% of days were driven by about 15% of people during COVID it's completely exploded as you're not be surprised to hear. So it's gone from 5% a day is up to 50, in fact higher during the peak of the lockdowns, has gone up more than tenfold. Then the big question is Where are we going to end up? We're going to drop back down. There's something like 20%. So in some senses, we're down from where we are right now in, March 2021. But for COVID rule, we're doubling the amount of work from home days roughly every 12 years. So to go up fourfold is roughly 25 years of growth is kind of a quarter of a century's worth of working from home. growth has happened in the space of effectively a year. That's what's so amazing is the amount of Of years we have compressed into 12 months and so now we have the ability to take the accordion the other way a little bit and start to let it breathe a little bit and say okay, now how do we go back and how much do we go back? And I guess that's the question that I feel and I'm just on the outside and just one person. I feel like there's a lot of questions are being asked. Like, how much Which roles? How often? With what technology? Are you hearing clarity, or a lack of clarity for the most part. From the outset of the pandemic, I've been running a survey of two and a half 1000 American workers a month. I've also running a separate survey in the Atlanta fed and around 500 firms, and then talking to a lot of CEOs in exact. Right now For graduate employers, which are roughly half the labor force, they're at home full time. So probably most people listen to this, university graduates, you're probably at home full time post pandemic. The typical plan is for something like three days a week in the office two days a week at home, and that is pretty standard. There are some there may be firms that are saying look, one day we go home and some are saying three days a week at home. But I have very few firms that at say either at one extreme full time working from home very few firms want to continue indefinitely. And the other extreme I hate hardly anyone that says you're all gonna have to come back in the office. So it's something like imagine a typical plan. The most standard plan is Monday, Tuesday, Thursday. Everyone comes in the office. The whole team comes in. Your team days groups meetings, client events are there. Wednesday, Friday you go home, it's your quiet time you have one on one meetings, maybe over zoom a lot of expense claims, report writing, etc. And we're going to stick at that, you know, question of when that's going to happen. The other issue that comes up, that's a bit more vague, but a lot of firms are saying we're probably going to wait until Labor Day. Around Labor Day, kind of early fall, we're going to start to dip our toes back into the water and reopen the office. There is a appetite to have us all together during those few days back to the office as opposed to a Come as you are policy saying, whatever you want to do, just clock in two or three days a week at the office, but there seems to be an appetite to get us together. So we are once again a group when we're there. And then we can scatter for those work from home days. Everyone's had the same experience of what's called mixed mode, which is just a horrible disaster. So we've all been in a few of these experiences. There's eight of us on a Zoom call. There are two people Home Sara and john and two different windows and then the other six of them in some other location they're together and you can see whispering going on you know you say something but you're not there and you see people smoking or looking away. You see someone kind of dark out of sight come back again laughing It's like they want to go you know, it doesn't work and so, exact size speak to just loads mixed mode. So because of that, we really wanna be organized and come in on the same days together, there's the simple system and the complicated system, the simple system, if you're a firm of, let's say literally 10 employees, you literally come in Monday, Tuesday, Thursday, you're at home Wednesday, Friday, Wednesday, Friday. I get it. The office is empty as a waste of space, but it's kind of the best you can do. If you're a big foam at say 500 employees. Then maybe you can be a bit more flexible and break into teams. He said an entire team has to be on the same day, the different teams don't need to overlap. And at that point, you know, there's all variants, but basically can make better use of your office space. Do you think productivity in this new model that you're describing is going to be determined more By my job role, or by the nature of me, one is just on productivity, the short run productivity doing the same job over and over again. And that's what I tend to call long run productivity being creative. Now in short run it turns out working from home works. Pretty well, we're actually very efficient maybe even more so than in the office about doing the same thing at home. And the reason is is quieter and I can, I can take you through a lot of research and data but the bottom line is, it's quieter at home. I've heard fantastic anecdotes about noise in the office, my favorite being the person that complained that the person on the desk next to them would clip their toenails under the Come to the desk in the heat, you know this horror story. So basically doing the same old same old is better at home or slightly more efficient. The problem is our home are not as good at creative new tasks cuz it's harder to you know, kick ideas around when you're remote. So that's why this compromises come out of you know, three days in the weekend in the office to be more creative two days a week to be more efficient. Then ask about function, it turns out that it varies a lot on your role. So if you look across the whole of the US labor force, roughly half the people there, primarily graduates, have jobs you can do at home. We're right to ask, does it work well for everyone? The answer is, not entirely. There's a joke about the three great enemies of working from home, and the Fridge to television and the bed. And you know, some people fall victim to one or many of them. I think it's a lot easier, frankly to cope when you're only at home two days a week. So if you're only having two days a week, let's say Wednesday, Friday, you kind of have the discipline of going into work to keep you, you know, to keep you on the straight and narrow. It seems like a little bit of what you're describing in my mind, I'm visualising it as sort of a. Sort of a tension or a battle between concentration which I think a lot of us can do better at home versus ideation, which a lot of us feel works better when we get together at the office is that kind of an essential, essential stress going on here are tension between those two goals.>> I'd rephrase it slightly. It's kind of efficiency on current jobs versus creativity on new jobs. And they are in fighting against each other. And the reason this kinda three two package works reasonably well is if you think for most of us what we currently do, or used to do before the pandemic is, even in the office or in the office five days a week, you wouldn't spend every minute of, you know every hour actually meetings other people there's a lot of time in the office, you're actually quietly reading in your, desk or doing something else. So. Post pandemic. You're just going to reshuffle your tasks throughout the week. So those three days in the office are going to be exhaustingly social, like every meeting and event and presentation will happen in those three days. At the end of those three days, you will never want to see anyone ever, ever again. I'm so tired of talking to people. But then in those other two days you reshuffle the quad task. Basically as they're typically not completely time sensitive, so you couldn't have a month in the office in 11 months at home because most of those activities couldn't wait. You can't have three days in the office two days are home in the week. Have you spaced them out because most of that quiet stuff you can probably put off for a day, I should say in our day Do we see employees tell us They see it as a major Park worth equivalent about 8% of salary to work from home two days a week. So it's a definite perk for employees. And it seems firms are more productive. So there's any upside in the pandemic, it's hard to find it but this would have to be one of the big ones that .>> Would you bring up there about the value that we perceive in this It almost sounds like once we go back to some form of a three into like, you're describing I would think that those days at home, are gonna be even more of a treat or more of a reward because they're not such commodity at that point. The other point to note is if you're a firm and you're a manager, if you're gonna force people into the office for five days a week, given the average employee value this same as about 8% increase, you're gonna have to compensate people. So, I'm not claiming as some Pull on the heartstrings. The firm should be nice this is in their interest because if you think there's a perk that basically improves your productivity and employees like you might as well hand that out and that's working from home today. To wake and if you don't have to, I get that some firms don't like working from home, you're probably going to have to pay your employees more to stop them quitting when the economy properly recovers. So in 2022 on 23, we're going to be back to close to full employment. If you want. They're not offering working from home, you basically need to offer your employees 510 percent more money to stop quitting. But let's talk about a certain class of employees which would be either young employees who are new in their career and or people that are new to the company. It seems like they need to spend at least the three days Or more do you think in their initial, I don't know, year or six months to really get into the company culture? You're absolutely right,? In fact, it's fascinating, we'll rewind the clock back to some of the statements that were made early on, for example, Mark Zuckerberg Back in May of last year said a, working from home will be us forever, which is correct. He didn't say fulltime, he just said forever, which is completely consistent with two days a week. But b, he said the biggest issue is around new hires. And by now we all now have multiple students who have been in jobs now for almost a year and have never physically met their colleagues. So Going forwards once you return to normal new hires are clearly going to come in the office at least three days a week, I can quite easily see for new cohorts. You may say you guys are going to come in for an extra fourth day, when it's really only the new hires will have some kind of company, you know, training or company integration sessions or something like that to get you guys up to speed. There's about two hours a day or so sometimes a little less of Saves time getting cleaned up and commuting. Those kind of go away when I'm not going to the office that to me is kind of an uncolonized no man's land who gets that is mine or is that going to naturally gravitate toward work in kind of a perversion of work life balance? I think it's fantastic that Procter and Gamble said you know, the sales of deodorant have plummeted under. Working from home under the pandemic but in terms of commute time, the average American spends an hour a day commuting roughly 30 minutes each way. In the surveys people tell us about 45% almost half of that time goes to their current employer. That's one of the reasons why as a manager, you should like folks working from home because about half of that committing time they're working on their job. The other half gets, 55% gets taken by the employee. If you look at that's roughly split equally between What we call kind of productive inverted commas activity so childcare some working on another job actually some repair and the other half is more or leisure watching TV and exercise and yeah. I don't have to exercise even watching TV is unproductive but it's roughly half off basically the firm keeps half you work harder for half of it and the other half the employee gets to keep it. Which is why it works well. It's a kind of a nice split both parties game. What questions are still out there for you to figure out this year in your line of work and your scope?>> It's very interesting. I mean, one question people asking a lot is how much city centers are gonna rebound? So just to be clear in this state in fact, I've also been looking at Zillow transaction state and micro transaction data. With a sum of good Arjun Romani is a Stanford undergrad. And you see the donut effect going on, which is the center of big cities like central San Francisco, central New York, Chicago rental, and property prices have gone well down, but the suburbs are going up. But this idea of digital nomads whereby remote indefinitely and forever, we can move to Alaska or Mississippi or Hawaii, or Greece, wherever. just aren't that many people in that group I understand. There's plenty of anecdotes but in terms of presented labor force, they're pretty small. So what we're seeing is people moving out of big cities into the suburbs. The open question is, whether will they come back? So yeah, quite concretely San Francisco. The rents in central San Francisco are down 30% are back to the levels they were in 2010 How much is that going to snap back? It's not clear and it depends on whether people ever return to city centers. The other big question, I think, for me is how much firms will offer choice. So this is very sensitive, but let me just explain. If you look in the data, the average employee wants to work from home two days a week, but there's a big spread. So there are some people that tend to be you know, young and single. I live in the center of cities that like I never wanna work from I've ever again I'm like fed up with my apartment and they wanna come back full time post pandemic, others wanna stay at home indefinitely. You know, they tend to be older married with kids. The question is do firms after the pandemic let people choose? Now on the one hand, you think, yes, it seems natural to let your employees choose On the other hand, the problem is if you let them choose, A, you have these issues, the mixed mode I talked about before. B, more sensitively, when we look in the data, we see the people that wanna work from home tend to be more likely to be female, to have young kids. They're slightly more likely to have disabilities. I also know from other work that if you are working from home and your colleagues are working in the office, your promotion rates fall we see it pretty sharply actually. So if you let people choose and say women with young kids choose to work from home, you could find down the road three five years, you have yet diversity issue. And in fact, threats of lawsuits so I'm personally kind of nervous about that. That's another big issue, we're gonna follow though in the data how much firms let people choose. So that brings up the idea that if you don't engineer this properly as an employer, you will not get Get a nice, clean, representative horizontal slice of all your employees, you'll end up with kind of a bar chart with some peaky areas and some other areas that aren't. In terms of those who are really present, really on the floor And Let's face it, that's going to mean in front of key managers and leaders more just to put numbers on. I did a big randomized control trial in China and a company called trip.com is very large NASDAQ, quote a travel agent 10 years ago, and we found in teams where people work from home for our five days a week that promotion rate was almost half Those who are in the office five days. So to your point, if you find young, single men coming in the office all the time, and let's say women and small kids don't, you can predict what's gonna happen. Promotion rates of young, single men are gonna rocket, ten years down the line, the firm's gonna be managed by groups of slightly older men. And so I personally, I don't come to that, I don't think most people would be but it's an unintended consequence. And as you say, when I talk to CEOs and senior managers, these are the kinds of issues that come up. These are complicated things and so most people because of that are saying, look in the short run, We're gonna go back slowly. And when we do go back, we're gonna try and have common days in the office and common days at home. And it's gonna opening Pandora's box. If you let people choose, you could find a year from now, things about totally out of control. And as an ex, CEO is hard to pull it back in again, say no you can no longer choose. So I would be cautious about allowing too much choice for multiple reasons. It's interesting this almost threatens to take away one more of the very few things that we have as a common experience in our society. The the advertising community often says, look, people have scattered to the winds. There's a, there's 100 channels of television, not just three networks. There's all these different places you go to find your own experience. And now they can only reach all of America basically at the grocery store and during the Superbowl, One of the other ones what that we had as a shared experience was we all got up, got ready commuted to work where their nine to five and commute home. Most of us knew that experience but now even that seems like it might be less of a common thing that we all share. There's a big political science literature on Extremism and polarization and we know in the US it's a big issue right now. And people argue one of the moderating influences is coming into work and having to have lunch with other people that maybe have different views. So, for those reasons as well, and when I talked to execs they normally mentioned number one is creativity while they want people in. We've mentioned cultures number two The third thing I talk a little bit about is employee mental health. They don't want people getting too isolated but from a broader society, probably you maybe want reduction of extreme views. All of those things push me towards saying, we wanna probably have employees in the office three days a week post pandemic. I love working from home. We're gonna end up a year and a half after the pandemic four times higher than we were before. That's 25 years worth of growth. I just don't think we need to go all the way to five days a week like we have now feels to me and most people I talk to five days weeks like too much. Nick Blum is professor of economics at the Stanford School of Business. Thanks very much for having me.

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