. It is great to welcome to the program today, Nicholas Bloom, who is a professor of economics
at Stanford University.
Professor Blum, so great to have you on today.
Yep, lovely to be here.
Thanks.
So you've been studying work from home for some time and work from home is something
that has become more prevalent during the Corona virus.
Social distancing lockdowns, stay at home orders, whatever phrase we want to assign
to them.
And there's a couple of perspectives on this that that are increasingly prevalent.
One is this is really not working for a lot of people in a lot of types of businesses.
And for the most part, we're going to see a return to office work as soon as it's safe.
The other position is a lot of businesses are figuring out that this is really great.
They can save money on office space by decentralizing a lot of their workers.
And and it's an experiment that was maybe forced upon us, but that is an opportune one.
First question is, what was your perspective on work from home prior
to the virus and then how has your view shifted at all if it has during the virus?
Sure.
Prior to the virus is actually very positive from working from home.
I was involved in a large randomized controlled trial in China working with a company called
Sea Trip.
They are like the Chinese equivalent of Expedia.
They're massive.
Ten billion dollar Nasdaq listed firm at about 15000 employees.
And out in Shanghai, we did a big experiment on working from home.
We randomized volunteers to work from home on even on our birthdays.
And we discovered that people that work from home were 13 percent more productive, which
is like a huge impact is basically an extra day a week.
When we looked at why that was basically about a third of it was they said it's just easier
to work from home.
It's quater less distracting.
I remember one you know, there's a whole series of anecdotes we've got of reinterviewed them.
But one of the women, she said, you know, I find it so distracting in the office.
The woman at the desk next door to me, she clips her toenails in her morning breaks,
which
you can imagine.
You know, you don't want to be next to that.
And then the other the other benefit of working right is, of course, that's not the time lost
from commuting problems.
And, you know, that's how the boss didn't turn up or my car broke down, cetera.
So before they are Kovac shut down, you know, this is five, six years ago in China.
I did a big experiment.
And since then, I've done a lot of media and research on this.
And it was always before now very positive from working from home.
Employees seem to love it.
Quit rates halved after they wrote this out in China and that performance improves.
Okay.
So before we get to now, what if you're and how your opinion has changed?
Were you able when you do a study like that, if working from home represents a change for
an employee, presumably some of the productivity increase may be initial, but it may not stay
right as that.
Did you account for that, that maybe the news surrounding initially increases productivity,
but then maybe there's some other longer term effect where you return to the mean, so to
speak?
Very interesting question.
So this is where choice matters enormously.
So the saying from working from home is the three great enemies of working from home at
the fridge, the bed and the television.
You know, often some of us discover that we got overcome by one of those, at least at
home.
And so what we found in sea trip was we got we had actually a thousand people in one division.
We awesome.
Who wants to work from home?
Only 500 them volunteers.
You can imagine already there's a number of people that don't want to work from home and
then see Trip.
I should say, the average person was commuting 40 minutes each way in and back from work.
So, you know, they told us they needed isolating, depressing, only half of who wanted it at
the end of the nine month experiment.
We let them read
shoes and about half of them chose to come back into the office, and about a third of
those initially chose not to come to change their mind.
And then so in the longer run, the impact of working from home is almost twice as big.
So this was like 25 percent.
Why was that announced?
Announces a lot of people think a day really while working from home, they go home and
then they just can't handle it.
They end up watching TV, they sleep in July, etc.
So it's not so much that people get worse over time.
That you discover that it either works or doesn't work for you.
So I'm not so much pro or against working from home.
I'm very pro-choice on it and allowing people to experiment.
Okay.
So now we get into you've continued your study through this experiment, this additional phase
of experimentation forced upon a lot more people than than the thousand people in your
study globaly.
What, if anything, has modified your view that you've seen so far right now?
You know, very negative on walking the under-covered.
Why?
There are four reasons that there's a big problem that's completely different from our
study.
Firstly is children.
So a lot of us had kids.
And I have a.
Four year old that runs into the room, she calls me.
Do, do and relax, shout.
Doo time to play.
And my older kid plays the bagpipes.
I don't know which is quite worse, but you know, kids kids is hugely distracting.
That's quite an instrument to have happening in the next room over.
Yeah.
Well, you know, I think the only thing worse than playing the bagpipes is practicing the
back.
Since it's like the same song over and over again.
But with each mistake, you know, it's painful.
And I live on the West Coast in California or in a wooden framed house that has very
little soundproofing.
So one is kids, you know, we see it wouldn't have allowed people.
No if no family would allow people to work from home.
Kids normally around.
Secondly, as you need your own room, that's not your bedroom.
I mean, even in my I don't know if I move out the way, you know, there's a bed behind
me in this room.
It's like I'm lucky I have my room to work in.
But a lot of people are sharing apartment rooms.
I had a colleague of mine that when I asked, I could see, you know, her toothbrush in the
background.
She was taking a call from the bathroom.
The third factor is choice.
As I mentioned on the covered, we don't choose.
And if there's an interesting study of Chicago that looks carefully across all jobs in America
and estimates only around one third of jobs can be done effectively at home.
So the other two thirds are either hard to
do or impossible.
I mean, being a waiter or a dentist or a pilot and then finally was full time.
So right now we're working from home five days a week and see trip.
We only had four days a week because that fifth day is critical to come into the office
to have, you know, both to be motivated and inspired and also to be creative.
So just to give you a figure, if you look at surveys from the U.S. Census before covered
28 percent of graduates work from home at least one day a week.
So it's quite common amongst, you know, slightly more senior employees, managers, et cetera.
But only 2 percent did full time five days a week.
So five days a week is really extremists like fanatical working from home.
It is extremely rare beforehand.
And the reason is you need some face to
face time in the office right now.
Right.
That was going to be my other question about the social interactions, which is the mental
health effects of people maybe dramatically reducing their social interactions over the
course of a week.
Maybe this also leads to people not taking as good care of themselves.
I just don't know.
Do we have any data about that?
Yes, a mental health, a you know, two two data points, one is just in secret.
When he asked at the end of the study, half the people voted to come back into the office.
We asked them why and interview them in detail.
And they said depression, loneliness, isolation.
If you look now that two kind of indicators that are coming out, that what I think of
as a kind of tsunami of mental health problems are caused to suicide help lines have risen
several hundred percent.
And then, you know, anecdotal in China, the stories of, you know, a surge of divorces.
So that data is only starting to come out.
But I mean, I feel very worried that people forced to isolate, in fact, is even worse
than full time work in time because you can't go out in the evening so that we can either.
So I think we're stirring up a mental health time bomb.
And as you point out, mental
health is also very strongly associated with physical health.
In fact, another good indicator of this is on retirement.
In countries where you have statutory retirement, like in Germany, you have to retire at 55.
You see a very large deterioration in health and a big spike in death rates when people
retire.
So actually, it turns out, you know, believe it or not, work is actually good for us in
terms of health.
And so being forced at home, I think is very problematic for health.
One of the things that I've read about here in the U.S. in terms of the economic effects
of those who are on unemployment versus those who are able to work from home is, of course,
what we would colloquially call a white collar versus blue collar divide, which is that there
are probably some pretty notable economic disparities in who even has the opportunity
to have a conversation about working from home versus who either is going in or you
don't really have a job right now.
So if work from home were to become more prevalent, is there some way in which it might increase
economic inequality in the country?
Maybe.
I mean, it certainly is now.
I think now is far more problematic because there is no office equivalent.
So you're right that jobs that work remotely are obviously non fisrt mostly the nonphysical.
There's very few physical jobs you can do at home.
I mean, maybe if you're making high end handbags, you can make them a home, but pretty much
physical jobs in the office.
The other issue is you have to be a job that's based on you're evaluated but measured on
output rather than inputs.
So for example, if you're doing something, I just you know, I'm an academic so people
can evaluate my research and teach her to see me sitting at my desk.
I just look at what I do.
But a number of lower skilled jobs tend to be based on inputs and you're actually going
to physically observe the person.
So
in the long run, yes, it will be easier for higher skilled graduate jobs to be at home.
That's probably less of an issue than you can still go into work if your, you know,
lower skilled.
The problem is much more right now that you've literally been forced to lose your job and
of course, you losing skills as well.
So I think the bigger issue is now, you know, the one positive I take on a lot of this is
I think Welcome Home is going to slightly empty out the center cities, which is going
to address to some extent, affordability crisis.
So the other big, you know, issue is San Francisco, New York.
Many large cities become so expensive, we can't live in them anymore.
You know, the upside of working from home is people move out of there.
Prices will drop in center of cities.
But at least those workers that need to be in work every day can more easily afford to
live there.
Yeah.
So that was actually one of the things that was going to ask ask you about.
Here's another one since you mentioned it.
And I have no idea whether this is something you've looked at.
It's a bit out further outside of the scope of what we've been talking about so far, which
is there was this initial panic among some that if work from home, if companies figure
out we don't really need these offices, that there would be a crash in commercial real
estate and it would be absolutely terrible economically.
But then there was a counter argument that I read, which was interesting, which was,
well, a lot of those companies, if they did pull back from full time office space, would
likely find new places that would be available for meetings, co-working spaces on an as needed
sort of basis, and that it would not
be as objectively decimating to the commercial leasing industry.
Is this something you've considered or looked out at all or have any opinion of?
You know, I am somewhat pessimistic on commercial office space.
You also put post post, you know, there are tons.
So in the short run, I mean, the Shoura makeover could honestly be one to two years.
He knows when to find a vaccine.
But if you talk post vaccine, post the current pandemic, you could easily see a big surge
in people working from home two days a week.
So it's a good example.
London in 2012 shut down the center of the city for three weeks because the Olympics,
they didn't on the congestion of the Olympics.
And after that there was almost a doubling of working from home of firms affected.
They just found it worked quite well.
I went back to that on a part time basis.
So Marjorie wrote this out and everyone goes from working from home, basically no days
a week to two days a week.
You can see that's roughly a 40 percent drop in demand for desks.
You are right.
You
still need meeting rooms.
And in fact, the way the work, the future, I think is like to be arranged as you do all
your meetings, your lunches, your coffees, your group activities on, say, Monday when.
Friday when you're in the office.
Tuesday, Thursday, the whole team goes home and that's when you have your quiet time and
maybe a one to once you know, you have a one on one discussion about work.
You can actually do it pretty effectively on a video call.
Increasingly so.
Really?
Yeah, I think so.
And the norm.
You know, for me, I used to take regular phone calls every morning with various, you know,
call things around the U.S. and internationally.
It was all by phone.
Now I oh, do I do it by video conference?
Because you you need that sense of interpersonal relationship.
I think the center cities will become cheaper.
The other more out their impact.
I think I worry about political polarization.
So there's a view that in the 50s we all watch the same TV.
We basically lived in similar areas and we went to work with other people in that moderated
our views.
By now, we consume different media.
You know, the left and the right go to different television stations.
Americans in particular are increasingly polarized on where they live.
You can opt from charter schools into different schools.
The one moderating factor
as being real at least have to go to the same workplace and work with people.
Serve you a hard right or hard left.
You have to talk with others over lunch.
If suddenly we are working from home, you know there's nothing to stop the extremes
just moving out to the fringes.
So, you know, that's another impact.
Oddly enough, work was the single biggest motivating factor, it appears from data now
on our political opinions, actually.
That's interesting.
That is that is certainly less one that is less discussed in in everything that I've
been reading and certainly one not to be dismissed because it is a major problem, as you point
out, currently in the United States.
We've been speaking with Nicholas Bloom, professor of economics at Stanford University.
I so appreciate your time today, guys.
David, thanks very much.
The David Pakman Show David Pakman dadgum.