Nicholas Bloom Discusses the Ups and Downs of Remote Work

In an opinion piece shared with CNBC, Stanford economist Nicholas Bloom shares his expertise about the ups and downs of working from home. Professor Bloom is widely known for his research on remote work and best management practices.

Below are a few excerpts from “Stanford professor on the new remote work economy: A ‘productivity disaster’ and ‘ticking time bomb for inequality’.”

As an economics professor at Stanford University, I’ve talked to dozens of CEOs, senior managers and policymakers about the future of work. This has been built on my own years of research, including a two-year study of a major Chinese travel company called Ctrip, which found that working from home made employees 13% more productive and 50% less likely to quit.

But what’s happening today is very different from Ctrip’s success due to four factors: Children, space, privacy and choice.

A Slump in Productivity and Innovation

A collapse in office-time will also lead to a slump in innovation. In-person collaboration is necessary for creativity, and my research has shown that face-to-face meetings are essential for developing new ideas and keeping staff motivated and focused.

The inventions we’re losing today could show up as fewer new products in 2021 and beyond, lowering long-run growth.

Not Everyone Can Work Remotely

In a recent study that I conducted with the Atlanta Federal Reserve and the University of Chicago, only 65% of Americans reported having fast enough internet capacity to support workable video calls.

The others have such poor internet at home, or none at all, that it prevents effective telecommuting.

Taken together, this is generating a time bomb for inequality. Our results show that more educated, higher-earning employees are far more likely to work from home — so they are continuing to get paid, develop their skills and advance their careers.

At the same time, those unable to work from home (either because of the nature of their jobs, or because they lack suitable space or internet connections) are being left behind. They face bleak prospects if their skills and work experience erode during an extended shutdown and beyond.

The Bright Side of a Work-from-Home Economy

Despite the drawbacks, there are a few silver linings. For starters, the stigma of remote work has evaporated. Before Covid-19, I’d frequently hear comments like “working from home is shirking from home,” or “working remotely is remotely working.”

Another upside is a boom for suburbs and rural areas. Given the need for social distancing, most of the firms I’ve talked to are thinking about halving the density of offices.

Finally, investments in telecommuting technology have paid off significantly. By now, we’ve had plenty of experience working from home. We’ve become adept at video conferencing. We’ve fine-tuned our home offices and rescheduled our days.

In short, we’ve paid the startup costs for learning how to work from home, making it far easier to continue.

Read the full article: “Stanford professor on the new remote work economy: A ‘productivity disaster’ and ‘ticking time bomb for inequality’.”

Read more from Professor Nick Bloom on remote work:
 

• “Nicholas Bloom Addresses Working from Home Challenges During COVID-19” (TAP, March 31, 2020)
• “Innovation Is Slowing Down” by Nicholas Bloom (TAP, July 3, 2019)
• “Does Working From Home Work?” by Nicholas Bloom (TAP, June 9, 2016)
• “Does Working from Home Work? Evidence from a Chinese Experiment” by Nicholas Bloom, James Liang, John Roberts, Zhichun Jenny Ying (Quarterly Journal of Economics (2015), 165–218, March 2015)
• TAP’s article summary of “Does Working from Home Work? Evidence from a Chinese Experiment”

Nicholas Bloom is the William Eberle Professor of Economics at Stanford University, a Senior Fellow of SIEPR, and the Co-Director of the Productivity, Innovation and Entrepreneurship program at the National Bureau of Economic Research. His research focuses on management practices and uncertainty.