Telecommuting will likely continue long after the pandemic

The COVID-19 pandemic is, among other things, a massive experiment in telecommuting. Up to half of American workers are currently working from home, more than double the fraction who worked from home (at least occasionally) in 2017-18.

Of course, some jobs simply can’t be done at home. But the outbreak is accelerating the trend toward telecommuting, possibly for the long term. Until now, telecommuting has been slower to take hold than many predicted when remote work technology first emerged. This inertia probably reflects sticky work cultures as well as a lack of interest from employers in investing in the technology and management practices necessary to operate a tele-workforce.

But the pandemic is forcing these investments in industries where telework is possible, with more people learning how to use remote technology. As a result, we may see a more permanent shift toward telecommuting. As the economist Susan Athey recently told the Washington Post, “People will change their habits, and some of these habits will stick. There’s a lot of things where people are just slowly shifting, and this will accelerate that.”

There are pros and cons to more telecommuting. On the plus side, workers tend to prefer working from home, it reduces emissions and office costs, and it helps people (especially women) balance work and family roles. It may even make us more productive. The downsides: managing a telecommuting staff can be difficult, professional isolation can have negative effects on well-being and career development, and the effects on productivity over the long run and in a scaled-up system are uncertain.

Telework is usually rare, now a necessity

Just under one-third of all workers over the age of 15 say they can work from home, according to Bureau of Labor Statistics estimates from the 2017-18 American Time Use Survey. Many of those who worked from home did not have an official work-from-home arrangement but were instead taking work home with them (such as at night or over the weekend). Only 20% said they were occasionally paid to work from home, and just 12% worked from home at least one full day per month.

Those who can telecommute tend to be higher-paid professionals. Just under half of working Americans in the top 25% of the earnings distribution did any paid work from home in 2017 and 2018, compared to 4% in the bottom quartile. About a third of people in the top quartile worked from home at least once a month; the equivalent number for the bottom quartile was too small a sample to meet BLS’s reporting standards.

Telecommuting has skyrocketed this month as many workers across the country have been compelled to stay home, though disparities remain. The following chart, reproduced from a report by our colleagues Richard Reeves and Jonathan Rothwell, shows that higher-income workers are much more likely to be working from home during the pandemic and much less likely to be unable to work at all than lower-income workers.

Overall, these numbers suggest that about half of employed adults are currently working from home, though a recent paper estimates that only a third of jobs can be done entirely from home. Either way, this is a massive shift. Between 2005 and 2015, the fraction of workers who regularly worked from home increased by only about 2 to 3 percentage points, according to Mas and Pallais (2020). Even at that growth rate, telecommuting has been the fastest-growing method of commuting over the last several years. If our new telecommuting culture sticks, the pandemic will have accelerated this trend dramatically. Already, nearly one in five chief financial officers surveyed last week said they planned to keep at least 20% of their workforce working remotely to cut costs.

Thanks to a few recent experimental studies, we now have good evidence that job applicants place high value on the option to work from home. Mas and Pallais (2017) gave jobseekers at a U.S. call center the choice of either a standard on-site job or a randomly selected alternative, such as flexible scheduling or the ability to work from home. Among all possible employee-friendly alternatives, working from home was the most valued: the average applicant was willing to take an 8% hourly wage cut in order to work from home. Similarly, He et al. (2019) found that jobseekers in China were more likely to apply for, and willing to accept lower pay, for positions that offered remote work.

Telework in a disaster

This isn’t the first time a crisis has required a shift toward telecommuting, though it is at an unprecedented scale. In the U.S., interest in telework spiked following the events of 9/11 and the anthrax attacks that soon followed, which forced several key government offices to close. In a 2004 committee hearing on The Heightened Need for Telework Opportunities in the Post-9/11 World, Congressman Tom Davis stated, “[W]e now realize that telework needs to be an essential component of any continuity of operations plan. Something we once considered advantageous and beneficial has evolved into a cornerstone of emergency preparedness.” The federal government became a leader in telework under the Obama administration with the Telework Enhancement Act of 2010, which required federal agencies to develop a telework plan and encourage employees to use it; however, many federal agencies have rolled back their remote work policies in the last few years.

Many workplaces in Christchurch, New Zealand transitioned to telework after worksites closed during a series of earthquakes between 2010 and 2012. In a case study of a government agency that transitioned entirely to home-based telework, staff saw many benefits from telework, such as greater motivation to return to work and better work-family balance. As in the COVID-19 outbreak, access to childcare and schools was limited during the disaster, leaving many doing double duty as parents and workers.

The need for speed: more broadband

Technological limitations could be a barrier to the development of an American tele-workforce. Although Pew estimates that three-quarters of American adults now have high-speed broadband internet service at home, up dramatically from just 1% in 2000, many rural areas have been left out of the broadband revolution, and around 14% of households in urban areas are still digitally disconnected. If there is one piece of critical infrastructure that will provide jobs to those in left-behind places, it is high-speed broadband.

More telework: the pros…

What can we expect from a more permanent shift to telecommuting? For one thing, it would save money on office space and reduce the time employees spend commuting. Cutting commuting is good both for environmental reasons and because it is one of the least enjoyable activities that many adults engage in on a daily basis.

We may also be more productive working from home. An experiment at a large Chinese travel agency found that call center employees who were randomly assigned to work from home for nine months saw a 13% performance improvement, partly because they took more calls per minute, but mostly because they took fewer breaks and days off. The agency also saved on office costs. Similarly, when a sample of workers at a large Italian multi-utility company were randomly assigned to set their own place and time of work one day per week for nine months, they were more productive and took fewer leave days than their office-bound coworkers.

These benefits may not scale up outside of a trial, or at least not in all workplaces. Successful telework experiments have generally taken place in workplaces that have had time to prepare for a switch to remote work and where performance is based on clear, measurable outputs, such as calls per minute. This requires a different management approach from what many companies are used to. Managers can’t measure teleworkers’ performance by how much time they spend in the office—though this is not a great performance metric for other employees, either.

Another concern is that employees differ greatly in how well they adapt to working from home, so this will not be the best option for all employees. Providing a mix of home- and office-based work options could lead to better outcomes. After the telework experiment at the Chinese travel agency, the company allowed employees to sort themselves into either home or office work. The measured performance gains for the work-from-home group nearly doubled under self-sorting. This was primarily because employees who had not worked well at home self-sorted back into the office, while the most productive teleworkers stayed home.

Some research has also found that switching to remote work improves retention, consistent with other evidence that people who work from home have higher job satisfaction on average. This is good from both an employer and an employee perspective, since greater retention saves on hiring and training costs. For employees, working from home can reduce work-family conflict, especially for women. An analysis of the German Socio-Economic Panel found that working from home reduces the gender gap in working hours and monthly earnings because teleworking mothers are able to increase their work hours.

…and the cons

Productivity boosts aren’t guaranteed, especially if employee performance is difficult to monitor. Using the staggered rollout of the U.S. Patent Office’s telework program as a natural experiment, one study found a spike in procrastination among patent examiners who were assigned to telework, resulting in more rushed reviews that required greater revisions later on. A few high-profile companies, such as Yahoo and Reddit, have publicly moved away from remote work.

Many of the downsides of remote work apply to extensive rather than occasional telecommuting. Professional isolation from telecommuting can have a negative impact on well-being. After the earthquakes in Christchurch, many employees reported that they combatted isolation by occasionally teleworking in the same location as co-workers. Co-working from home is obviously at odds with the current need for social distancing to slow the spread of the coronavirus, but under more normal circumstances, telework appears to be most successful when alternated with face-to-face contact. For instance, face-to-face groups perform better than virtual groups in creative teamwork tasks, but working away from the office can improve focus on individualized tasks.

It can be a problem when some members of an organization or a team can telework and others cannot.  Having more coworkers who telework can result in lower performance, higher absenteeism, and higher turnover among those who do not telework, particularly if team members have very limited face-to-face time. This suggests that telework may create some additional work for onsite workers (for instance, if they have to serve as liaisons for their teleworking colleagues), or that social interaction at work is important for morale. (We should note that the experiment at the Chinese travel agency did not find evidence of such spillover effects.)

Finally, telecommuting may have a negative impact on employees’ career development. In the experiment at the Chinese travel agency, teleworkers were less likely to be promoted than equally productive employees who worked in the office. This is probably because managers have better perceptions of employees who are present in the office. In the Christchurch case study, team leaders tended to think that employees were less productive under telework, in contrast to employees’ self-reports that telework enhanced their concentration, motivation, and productivity.

A new study of employees at a U.S. technology services company found that extensive telecommuting is associated with fewer promotions and lower salary growth, but that telecommuters who have face-to-face time with managers or who perform supplemental work outside of normal hours have better outcomes. Supplemental work signals dedication to the job but also blurs the boundary between work and home life, contributing to pressure to be “always on.”

COVID-19 may permanently change the way many of us work. At present, shifting as many people as possible to home-based telework is a necessary response to a terrible crisis. In the post-pandemic world, it may stay with us as a popular practice that, if done well, can improve job satisfaction, raise productivity, reduce emissions, and spread work to more remote regions.