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Will Working From Home Stick? – The Economists’ Perspective on WFH future

Thursday July 1, 2021

Will Working From Home Stick? – The Economists’ Perspective on WFH future

Thursday July 1, 2021

Perspective on WFH future

Leaders are looking to understand economic and societal impacts of working from home (WFH) and hybrid work.


Economists Nicholas Bloom (Stanford University), Steven J. Davis (University of Chicago), and Jose Maria Barrero (ITAM – Business School), and published a comprehensive study – Why WFH Will Stick.


Researchers surveyed 30,000+ working-age Americans to forecast the future of WFH and the results give insight into the economists’ perspective on WFH future:


20% of full workdays

will be supplied from home after the pandemic ends


– In 2017 – 2018, workers supplied only 5% of full workdays from home.

– The shift is driven by better-than-expected WFH experiences, new investments in physical and human capital that enable WFH, diminished stigma associated with WFH, lingering concerns about crowds and contagion risks, and a surge in tech innovations that support WFH.

– As an example, the average worker has invested 15 hours and $561 in home equipment to facilitate WFH. The dollar value of these investments amounts to 0.7% of annual GDP.


435 million hours in commute time

will be reduced due to the shift to WFH in post-pandemic economy


– Workers spent an average 54 minutes per day commuting to and from work pre-pandemic.

– Americans devote about 35% of their savings in commuting time to their primary jobs and about 60% to activities of all sorts, including household chores and childcare.


Employees willing to accept 7% pay cuts

for the option to work from home 2-3 days per week after the pandemic


– Desires to WFH part of the week are pervasive across groups defined by age, education, gender, earnings, and family circumstances. 

– Higher earners place greater value on the option to WFH. More residential space for high earners contributes to this positive relationship, but average one-way commute times also rise with earnings except at the very top end. The average one-way commute time is less than 22 minutes for persons earning less than $30K and about 44 minutes for those earning $150K-$250K.


5-10% projected spending reduction

in major city centers relative to pre-pandemic situation


– The shift to WFH will also have highly uneven geographic effects, diminishing the fortunes of cities with high rates of inward commuting. Conversely, the shift to WFH will commercially benefit other communities, as outward commuting drops. 

– As an example, employees who work in Manhattan (San Francisco) spent an average of $288 ($168) per week near their workplaces before COVID. The projected spending reduction is 13% in Manhattan and 5% in San Francisco.


5% projected productivity boost

in the post-pandemic economy due to re-optimized working arrangements


– The main source of this productivity boost is the savings in commuting time afforded by more WFH. This gain is missed by conventional productivity measures. As conventionally measured, only a 1% productivity boost is projected in the post-pandemic economy.


The study highlights that much of the COVID-induced shift to WFH will stick long after the pandemic ends and will become a significant productivity boost for the economy. The economists’ perspective on the WFH future gives us insightful knowledge into future work models. 


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