Nicholas Bloom Discusses the Future of Work in a Post-Pandemic World

Regarding hybrid work, that is, working from home 2-3 days per week:

This is hugely experimental. We’re in a weird world: during the pandemic, we wanted people to social distance, stay at home, when they came into work they didn’t overlap. Before the pandemic, no one was really running large-scale hybrid. We’re about to, post-pandemic, go into a brave new world.
– Nicholas Bloom, Stanford economist

Stanford economics professor Nicholas Bloom shared his learnings from two decades of researching remote work on the Recalibrate Reality podcast. On the "Future of Work with Nick Bloom" episode, Professor Bloom discusses data from his research surveying working arrangements and attitudes since the start of the COVID-19 pandemic. He emphasized: “The reality of 2022 onwards is that hybrid is here to stay. It’s definitely not fully remote for most companies, but it’s also not fully in person.”

Professor Bloom goes on to say:

About a quarter of people – we’ve surveyed about 50,000 Americans by now, it’s very robust. About a quarter of people never want to work from home again. They want to come in 5 days a week, they’re lonely and isolated, they loath it. There’s then another quarter at the other extreme that love working from home and never want to go into the office ever again. And then the remaining half are spread roughly equally between coming in one, two, three, or four days a week.

Below is an overview of the podcast conversation.

Recalibrate Reality: "Future of Work with Nick Bloom” with Scott Rechler. Recorded March 17, 2022.

Summary
Work from home (WFH) can benefit both employers and employees. Cities may need to adjust expenditures to compensate for lower tax revenues.

Main Points

• Post-pandemic, about half of workers in the United States cannot WFH because of the nature of their jobs; most of the rest work from home two or three days a week, and a few workers are fully remote.
• On average, workers prefer a hybrid arrangement, working from home two or three days per week; this preference does not vary widely by age, race, industry, or gender.
  • Women and parents of young children have a slightly stronger preference for more WFH.
  • Highly educated workers are much more able to WFH than other workers.
• Firms must consider whether to allow workers to choose what days they will WFH, or whether to coordinate WFH schedules; coordination is the strongest trend, as people mostly want to be at work to see their colleagues.
• WFH means that tax revenues for large cities are reduced at least 10 percent, and cities may need to reduce services to the city center to reduce expenditures.
• WFH reduces ridership of public transportation, but the cost of providing transportation service is fixed and cannot easily be reduced; to avoid bankrupting public transit systems or abandoning marginal routes, forcing commuters back onto crowded highways, cities may need to subsidize rail service as they subsidize roads.
• Many firms require remote workers to stay in the same state to avoid entanglement with multiple states’ tax systems; when this administrative problem is solved, firms may permit remote workers to leave the state and move to more remote areas.
• Workers view the freedom to work from home as the equivalent to an eight percent pay increase; employers enjoy productivity gains from WFH, as workers focus on some tasks better in a quiet home, and workers devote about half of the time saved by not commuting to working.

Conclusion
Following the pandemic, about half of U.S. workers are free to work from home two or three days per week. Firms must choose whether to allow workers to choose which days they work from home, or to coordinate work-from-home schedules; coordination may be preferable, as workers want to see their colleagues when they go to the office. The shift to hybrid work from home will challenge cities, as tax revenues from activities in the city center will fall. Cities may need to subsidize public transportation to avoid cutting service. Ultimately, firms will allow more remote workers to live out of state, increasing labor mobility nationwide.

Recalibrate Reality: "Future of Work with Nick Bloom” with Scott Rechler. Recorded March 17, 2022.

Nicholas Bloom is the William Eberle Professor of Economics at Stanford University. His research focuses on working from home, management practices and uncertainty. He previously worked at the UK Treasury and McKinsey & Company. Professor Bloom is a Fellow of the American Academy of Arts and Sciences, and the recipient of the Guggenheim and Sloan Fellowships, the Bernacer Prize, the Frisch Medal and a National Science Foundation Career Award. He has a BA from Cambridge, an MPhil from Oxford, and a PhD from University College London.

Read More of Professor Bloom’s Research on Work from Home:

• “Nicholas Bloom Shares WFH Research and the Business Impact of Hybrid Work” (TAP, September 16, 2022)
• “Nicholas Bloom Explains the “Donut Effect” and Policy Concerns for Cities” (TAP, December 3, 2021)
• “Hybrid Is the Future of Work” by Nicholas Bloom (Stanford Institute for Economic Policy Research (SIEPR), June 2021)
• “Nicholas Bloom Discusses the Ups and Downs of Remote Work” (TAP, October 26, 2020)
• “Covid-19 and the Workplace Revolution” by Nicholas Bloom (TAP, August 4, 2020)
• “Does Working From Home Work?” by Nicholas Bloom (TAP, June 9, 2016)