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Is Remote Work Really the Future?

City Journal,  Allison Schrager, July 3 2023

Workers may be heading back to the office for five days a week sooner than they think.

Economic change often happens gradually, and then some big shock comes along—a war, a natural disaster, or a global pandemic—and slow-moving changes already in the works suddenly accelerate. For a while, it seemed like this was the case with working from home. Once households had access to strong Internet connections, many knowledge and service jobs could be done remotely. Yet, until recently, most people still worked in the office five days a week. This was the cultural norm for as long as anyone could remember. It’s just what we all did.

Then office workers were sent home in March 2020, as the pandemic struck, and they did their work there. Many employees loved not having to put on presentable clothes, get in a car or on a train, and deal with coworkers all day. And without their co-workers distracting them, they not only got their work done but also felt more productive. In one survey, 77 percent of workers said that they were more productive out of the office. Early research in 2020 indicates that working at home resulted in productivity gains of about 13 percent. Many never want to go back to the office—in another survey, 65 percent of people said that they would like to work remotely all the time. Now some workers are even counting on it, having moved out of commuting distance from their jobs.

It won’t last. Even if we have the technology to work from home, we don’t have the culture for it, and many jobs still have tasks and functions that can’t be done remotely. In theory, hybrid work—coming into the office two or three days a week—offers the best of both worlds, but in practice it often brings the worst of both. Eventually, most of us will be back in the office most days of the week. If you crave flexibility, you will pay for it or opt for less traditional work.

Working from home was indeed somewhat unusual before Covid-19. According to the U.S. Census in 2019, just 5.7 percent of Americans worked from home (9 million); in 2021, that number had jumped to 17.9 percent (27.6 million). Before Covid, only about5 percent of paid workdays took place at home; that figure was over 60 percent in the spring of 2020 and remained elevated in 2021, at 50 percent. According to a survey from McKinsey, in 2022, 87 percent of workers were remote at least one day a week.

The preference to work from home is understandable. Before the modern era, for most of human history, people worked closer to home; farmers or small-scale artisans engaged in home-based production. Industrialization changed that. Jobs were now in factories, where workers had to be located for a preset number of hours daily, working with others with whom they had no previous social connection, and doing whatever their bosses (also likely with no prior relationship to them) told them to do. The experience can be terrible now, and it felt even worse in the nineteenth century, when individuals were more accustomed to personal autonomy. According to economic historian Joel Mokyr, it took decades and lots of social conditioning for us to adjust to this new way of working. Initially, factories hired lots of women and children because they were more compliant than men, who found the whole situation demeaning. One reason factory owners were early champions of universal education was because it conditioned people to go somewhere every day and be told what to do.

The factory model of work was necessary for the industrial economy to function. From the Bronze Age to the Agricultural Revolution, the nature of work has evolved as new technologies changed the economy. Few of these evolutions, however, were as transformative as industrialization.

Eventually, as technology mutated further, jobs shifted from factories into offices. Like factory work, office jobs required people to come together and work for a boss; they had to be in the office to collaborate in teams or see clients, and the tools of the trade were in the office, too.

More recently, as technology associated with the Internet emerged, work has changed yet again. Computers, once large, expensive, and only to be found in offices, are now compact enough for everyone to carry to and from work, as long as both locations have a good Internet connection. It would have been hard to imagine everyone working from home even 15 years ago, but today better software and applications like Zoom and Microsoft Teams mean that meetings can happen online, from your living room. This makes it possible to shift production back to the home, as in pre-industrial times—albeit now in a service-industry economy.

Possible, but not likely—not yet anyway. Perhaps someday that full-scale move will happen, but technology has not altered work or human nature enough to make working from home the norm.

Much of the productivity bump due to remote work during the pandemic came from time saved in commuting and making ourselves presentable to the public. And many tasks we do in a given day—finishing deliverables on firm deadlines—can be done on a computer or over the phone at home. But for many employees, work isn’t just daily deliverables like logging into a meeting or speaking with a client; intangible expectations are not only important to company culture but also serve a vital role in the larger economy.

Innovation and problem-solving often rely on collaboration. Sometimes this happens spontaneously—for example, over coffee while chatting with a colleague about the pointless meeting you just sat through. In-person workers also provide valuable services like mentoring, training, and advocating for younger colleagues. This is why Stanford professor Nicholas Bloom—who estimated the 13 percent productivity gain from remote work mentioned above—worries that working remotely every day will reduce productivity and innovation over the long term.

In the preindustrial world, apprenticeship systems flourished, and people grew up working alongside family and neighbors. These experiences imparted skills, a sense of community, and socialization. But nothing exists today to replace our current system of training, mentorship, and socialization. Workers say that they’re happier working from home, yes—but they also report higher levels of loneliness and isolation.

Early pandemic measures of remote-work productivity don’t capture the long-term effects of working from home because they can’t capture the impacts of lower levels of supervision, in-person collaboration, and loneliness. But a new paper estimates the value of “proximity” by studying a Fortune 500 firm that utilized two office buildings several blocks apart. Pre-pandemic, they estimated that engineers who worked in the same building as their colleagues got 23 percent more feedback than the engineers who worked in a different building than their co-workers. However, when pandemic restrictions sent everyone home, this difference shrank to 17 percent. The fall in feedback was even more striking for junior and female engineers. Junior and female staffers were also more likely to quit when they worked remotely. (To be sure, senior engineers tend to be less productive when they have to give feedback to less experienced colleagues, suggesting a trade-off between short-term productivity and the benefits of training.) The economists who studied the firm also noticed that having just one remote colleague reduced the amount of feedback for the whole team.

Some researchers claim that we don’t need an office for these interactions, which can be simulated with digital meetups or offsite events. But even with new technology, humans are still humans. How we connect, form relationships, and collaborate has not changed that much; these interactions come from sustained and regular contact, often in informal settings. The proximity research illustrates why working together, in person, on a regular schedule is so important, no matter how far technology advances.

This explains why bosses have been desperate to get employees back into the office. Earlier this year, JP Morgan CEO Jamie Dimon said of remote work, “It doesn’t work for young kids or spontaneity or management.” Other bank CEOs have also pushed to return to five-day in-office work weeks. The federal government is finally forcing its workers back to the office.

But employees aren’t listening. Even if it makes us lonely and isolated in the long run, people want to work from home. More than 41 percent of workers said that they would look for another job if their current one demanded them to be in the office every day. Some workers say they would take a nearly 20 percent pay cut to avoid the office routine. When Dimon posted a memo on the importance of working in-person, after many employees had already ignored previous orders to return, he was called tone-deafand divisive.

For now, the uneasy truce between in-office and remote work is hybrid work. According to Bloom, from a productivity perspective, this might be ideal. A few days for mentoring and collaboration, and a few days where you save time by not commuting or having to kibbitz with your coworkers.

In other ways, though, hybrid work hits a sour spot. One of the benefits of the hybrid model is supposed to be flexibility, but the whole purpose of coming into the office is to have the whole team in one place at the same time. If employees come in only when their schedule allows it, or when the mood strikes them, leading to a scattered workforce, then everyone might as well stay home. And if the team coordinates which days they come in, on the other hand, then they no longer have flexibility.

Hybrid schedules also fail to save the firm money on office space, because having the whole team simultaneously present, even for a couple of days, takes the same amount of space as a five-days-a-week schedule. Nor is it clear that hybrid work is a stable situation that will survive a weakened labor market. Hybrid risks becoming the new “you don’t have to answer your emails on the weekend” rule—observed in theory, but not in practice. If you want to demonstrate dedication to your job, you show up to the office daily. Workers who do that will never miss impromptu meetings. They will be there for the post-meeting water-cooler talk, where decisions are often hashed out, and they will be at the top of their manager’s mind for new projects and promotions, because the boss sees them every day.

This may be why those who want flexible work because of family or other commitments tend to end up penalized. They’re the ones not around and risk being the first ones let go. Work from home can be a trap that widens disparities in the work force.

Longer term, while technology may enable remote work, it also makes jobs less secure. As artificial intelligence infiltrates the workplace and remote screen work improves technologically, it will be easier to hire jobseekers from other countries, who are typically much cheaper. A workers’ value under these conditions will likely be based in being able to do something that AI, or someone thousands of miles away, cannot—offer a real human interaction. This will require being in the office.

We will not go back completely to pre-pandemic work habits. Working from home when it is necessary—say, to care for a sick child or to manage one’s own illness—will probably be more common. Work-from-home also offers more and better possibilities for contract workers and those working part-time as part of their transition into retirement—more options, more flexible work. But if you seek success in your company or institution, you’ll be in the office most days of the week.

Allison Schrager is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and host of the Risk Talking podcast.