The Allure of Telecommuting: Economists Assess Its Continued Popularity

The shift to remote work, initially spurred by the Covid-19 pandemic, has now become an important part of the U.S. workplace, according to leading economists. Nick Bunker, director of economic research for North America at Indeed, calls the shift “one of the most significant labor market transformations in decades.”

“Momentum for remote work is still growing and looks set to persist indefinitely,” Bunker noted. This category includes those who work entirely from home and those in “hybrid” roles, where employees split their workweek between home and the office.

Such work arrangements were uncommon before the pandemic, but expanded rapidly during its early stages due to forced lockdowns. While the prevalence of remote work has declined from its peak, it remains substantially higher than before the pandemic, according to economists.

WFH Research data from July shows that the percentage of workdays spent at home has stabilized between 25% and 30% since the start of 2023, more than triple the pre-pandemic rate. Indeed data through June 30 shows that the percentage of job listings advertising remote or hybrid work options has also stabilized, holding around 8%, nearly three times the rate in 2019.

“Remote work is here to stay,” said Nick Bloom, a Stanford University professor specializing in workplace management. Bloom recently shared his insights with CNBC about how long remote work will last.

The reasons for the persistence of remote work

Economists believe that remote work continues to thrive because it offers mutual benefits to both employees and employers. Bloom studies indicate that employees place a high value on hybrid work arrangements, equivalent to an 8% pay increase.

“This is a critical factor for many candidates, making it difficult for companies to eliminate this option,” Bunker explained.

Business Benefits of Remote Work

From a business perspective, remote work is cost-effective. Companies can cut costs by minimizing office space and expanding their recruiting pools. Additionally, remote workers often have lower turnover rates, appreciating the flexibility and thus reducing employers’ costs related to recruiting and training.

However, not all roles are suited to remote work. As of July, about 36% of employees in roles that could be done remotely were still working in the office full time, according to WFH Research.

A 2023 ZipRecruiter survey highlighted some of the perceived disadvantages of remote work among employers, such as difficulty supervising employees and reduced opportunities for peer mentoring, reported by 45% and 42% of employers, respectively.

Bunker speculated that an economic downturn might prompt some companies to reconsider remote work arrangements, potentially reducing workers’ leverage. However, he questioned whether many would take that step, given the financial benefits and potential impacts on employee morale and productivity in a tough economic environment.