Remote work is here to stay, say economists
The phenomenon of widespread remote work has become a permanent part of the U.S. labor market, according to economists, as the share of workers being called back to the office has flatlined.
Nick Bloom, an economics professor at Stanford University, stated, “Return to the office is dead,” indicating that the trend of working from home is here to stay. The shift can be seen in the data, with the share of paid work-from-home days remaining around 28% in 2023, down from 61.5% at the beginning of the Covid-19 pandemic in 2020, a decrease of about half. This new percentage, however, still remains four times greater than the pre-pandemic level of 7%. Similarly, office occupancy has remained around 50% in the 10 largest U.S. metro areas, according to Kastle data.
The initial surge of remote work was driven by Covid-19 lockdowns, but the trend has been reinforced by a strong job market in the U.S. Workers are leveraging their positions, using the opportunity to look for better work arrangements. Research has shown that the typical worker equates the value of working from home to an 8% pay raise. Meanwhile, remote work has also been profitable for companies, as it results in reduced costs and better worker retention without sacrificing productivity.
Most remote work is now done in a “hybrid” arrangement, with some days at home and the rest in the office. The new normal is characterized by incredible diversity, with different companies implementing varied remote work policies.
Looking ahead to the future, economists believe that the share of employees working from home is likely to increase beyond 2025. Improving technology, enthusiasm from younger firms and CEOs about hybrid work arrangements, and cost savings for companies point to the continued growth of remote work. Overall, this indicates that remote work has gained significant traction and is likely to remain a long-term fixture in the U.S. labor market.
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