According to Stanford economist, the work-from-home trend is here to stay and a five-day return to office is unlikely! Find out why!
Many companies continue to allow remote work for at least part of the workweek, even four years after the work-from-home trend started due to the Covid-19 pandemic. This arrangement is profitable for businesses and highly valued by workers, according to labor economists.
Although some companies have enforced return-to-office mandates, they are exceptions. The traditional five-day, in-office workweek is largely outdated. “Remote work is not going away”, said Nick Bloom, an economics professor at Stanford University who specializes in workplace management practices.
“In fact, if you look five years out, I think it will be higher than it is now”, Bloom added.
Before 2020, less than 10% of paid workdays were remote, according to WFH Research. However, it shifted massively during the Covid-19 lockdowns, reaching over 60%, and then decreased as employees returned to the office in hybrid arrangements, working a few days a week from home. Since early 2023, the share of remote workdays has stabilized at about 25%, more than triple the pre-pandemic rate.
The rise of remote work “is probably going to be one of the most enduring legacies” of the pandemic-era U.S. labor market, according to Nick Bunker, director of North American economic research at job site Indeed. He believes that the days of full-time, in-office work “are gone”.
Why The Work-From-Home Trend Has Stuck
Approximately half of all jobs, such as those in service, accommodation, and retail, cannot be performed from home, according to Bloom. Among jobs that can be done remotely, around 41% are hybrid and 20% are fully remote.
Remote work is “highly profitable” for companies, which is the main reason for its persistence, Bloom said. It reduces employee turnover by about a third because workers value the flexibility and are less likely to quit. Bloom’s research suggests that workers value hybrid work as much as an 8% pay raise, meaning a return-to-office mandate would require a similar pay increase to keep workers interested.
Companies also save on hiring, recruitment, and training costs with lower staff turnover. Additionally, they can reduce office space needs and expand their recruitment pool across the U.S., potentially to areas with a lower cost of living and wages, according to Bunker.
“Firms Care About Profits, Not Productivity”
Hybrid work does not negatively impact productivity, Bloom said. At the end of the day, “firms care about profits, not productivity. What makes money in a capitalist economy tends to stick”, Bloom added.
As of May 2024, about 8% of all U.S. online job postings advertised remote or hybrid roles, according to Indeed data. While this is down from a peak of around 10% in early 2022, it remains significantly higher than the 2% to 2.5% rate before the pandemic. The recent decline is partly due to fewer job ads in struggling sectors like software development, which typically offer remote roles.
When given the option, 87% of workers choose flexible work arrangements, according to a 2022 survey by McKinsey. This high demand for remote work pushes employers to offer it to remain competitive, Bunker said.
Not all companies allow remote work. About 38% of employees who can work from home are required to be in the office full-time, according to WFH Research as of May 2024. These employees are often older or work at older companies.
According to a 2023 ZipRecruiter survey, some companies see drawbacks to remote work, such as difficulty in monitoring employees and reduced peer mentoring, mentioned by 45% and 42% of employers, respectively. However, a University of Pittsburgh study found that large U.S. companies imposing return-to-office mandates often did so to blame remote work for poor performance, rather than because it improved company values.
The study noted “significant declines” in worker job satisfaction without substantial improvements in financial performance or company values. Outside of struggling companies, it is rare for employers to require full-time office attendance. Currently, 90% of U.S. professionals and managers work from home at least one day a week.