Stanford University: Key insights & data on the future of remote and hybrid jobs (WFH)

Last week I had the opportunity to meet with a Professor of Economics at Stanford University.

He has been researching working from home (WFH) for almost 20 years.

He has been heavily involved with policy, including meeting President Obama, and speaking in the 2014 Working Families Summit.

He gave a 2017 TEDx talk on working from home , has consulted with 100s of CEOs and managers, and has been covered extensively in national and international media.

He is also one of LinkedIn’s Top Voices in Remote Work.

His name is Nick Bloom.

I had the opportunity to ask him about the future for fully remote roles, the remote hybrid work model and what the research tells us.

Let's dig in!

Nick, I'll start with asking one of the most discussed topics regarding remote work - what does research tell us about WFH and productivity?

The best evidence suggests that hybrid WFH likely increases productivity by maybe 3% or 4%. This comes from two sources. First when employees WFH they save about 70 minutes of less commuting and getting ready for work, with about 30 minutes of this spent on more work and the other 40 minutes on personal activities like leisure, child care etc. For an employee who WFH twice a week that is one hour extra work a week.

Second WFH is quieter and that can improve performance in quiet work that requires concentration. For example, in our 2015 paper published in the Quarterly Journal of Economics (QJE) we showed 4 % higher efficiency per minute at home.

One may ask then why do any companies have fully remote positions? The reason is cost.

The best evidence on fully remote is it probably reduces overall productivity. It is harder to mentor and train employees fully remote, it appears harder to innovate, and communication and culture building look harder. One may ask then why do any companies have fully remote positions? The reason is cost, as fully remote roles require no office space and can be hired nationally or globally which keeps down wage costs.

Will WFH disappear if we go into a recession?

No, definitely not. Hybrid WFH has major advantages in terms of reducing hiring and turnover costs and raising productivity. Both of these clearly matter in a recession as they do in a boom. Fully-remote saves costs on office space and on salaries, so again it is clearly here to stay. The forces now promoting WFH for firms is that this lower costs and raises productivity, and this is if anything more important in a recession than during a boom.

If you managed a 100 person firm what WFH would you allow?

I would probably have a group of employees that are in person as their jobs require that. This would be for example any manufacturing, retail, security, transport etc. Typically across the entire economy this is about 60 % of jobs, so a group of employees would likely be in person. For managers and professionals I would have them work hybrid, coming in Tuesday to Thursday and WFH on Friday. For support staff like payroll, IT-support, benefits etc I may have these as fully remote roles, possibly operated overseas.

How has the growth of WFH changed society and cities?

Here's the 5 biggest impacts on society and the economy.

1. Location; Almost 1M people have left city centers (e.g. New York, USA, and San Francisco, USA)
2. Rents and Home Values have surged in the suburbs.
3. Public transit journeys have plummeted → permanently 1/3 down
4. Start-up rates are surging - WFH provides a cheaper way to start a new company (no rent, do this on the side of your main WFH job..)
5. Firms increasing outsourcing/offshoring of IT, HR and finance to access talent, save costs and free up space.

Predictions and where are we heading

What will WFH look like in 10 years?

It will continue to grow driven by market size effects – more folks WFH means more sales for software and hardware companies with great new WFH technologies. This will accelerate the development of WFH products, making it easier and increasing long-run levels of WFH. So in 10 years from now we will clearly have higher levels of WFH. Indeed, pre-pandemic WFH levels were doubling every 15 years driven by better technologies like video calls and cloud file-sharing.

..some fully remote jobs going overseas or replaced by AI.

How do you see fully-remote roles and hybrid roles develop over the next 10-15 years?

My prediction is in 10 years hybrid will have risen from 30% to 40% of employees as new technology makes it a lot easier. Fully remote will remain at 10%, with some fully remote jobs going overseas or replaced by AI, but at the same time new technology making it easier and more appealing, so offsetting trends. Fully in person will drop from 60% to 50% as some of these jobs go hybrid. A good example would be doctors who pre-pandemic were seeing patients in person all the time, and now many family doctors have one day a week for telemedicine visits for patients that want that.

Key takeaways from our conversation

• WFH is here to stay – typically 2 days a week for the average office worker.
• WFH has been an economic and social asteroid strike bringing massive change.
• Fully-remote roles are not going away.
• The hybrid model is becoming by far the most popular form.
• Firms are increasing outsourcing/offshoring of IT, HR and finance to access talent, save costs and free up space.
• Hybrid WFH has major advantages in terms of reducing hiring and turnover costs and raising productivity.
• WFH will continue to grow driven by market size effects – more folks WFH means more sales for software and hardware companies with great new WFH technologies.
• WFH impact will grow in the longer-run driven by improving technology.

Thank you so much Nick Bloom for sharing your research and predictions on the future of work with us ??

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See you next week ??

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