- I had some bad exp-
I had my a 5-year-old run in
in the middle of something.
I've had so many times with colleagues with babies and cats.
I had someone I was talking to and the cat run across
and managed to turn the Zoom call off
by pressing some random key.
And the thing just disconnected,
and I was like, "Did I say something?"
My name is Nicholas Bloom,
I'm a Professor of Economics at Stanford University.
I'm going to talk about why working from home will stick
and this is joint work with Jose Barrero from ITAM
and Steve Davis from Chicago.
So firstly, what's our data?
So I've been running since May
a monthly survey of two and a half thousand Americans
that were basically full-time employees last year
and we expect them to be working again this year.
This is a large panel
that effectively represents the US population.
So before COVID working from home full-time
was actually very rare in the US.
Only 15% of Americans ever worked from home,
and of those only 2% work from home five days
or more a week.
Now, things are completely different.
In may of 2020, around 42% of these people
were working from home full-time.
Already that that is just an enormous increase.
If you move over to the right,
that's our most recent data that's from October,
you can see working from home has dropped back a bit,
but it's still an incredibly high number
compared to what we saw before COVID.
So that is a seismic shift up in terms of working from home
under the pandemic due to lockdown.
Here's a different measure.
This is the share of working days,
full-time working days at home.
So I'm aware many people work
in the mornings and evenings maybe at home,
but this is a full day when you do not go into work
and you work completely at home.
Before the pandemic from that original graph,
if you did the maths, you can figure out
that about 5% of working days were working from home.
During the pandemic, it is very peak in May,
just over 60% of working days were working from home.
So I mentioned that 42% of people were working from home.
There were something like 26% on business premises.
That's the entire pool of people working.
So of that pool, roughly 60 something percent of days
were working from home.
So just an incredible number,
an explosion in working from home.
You can see this has dropped down.
It's dropped down to just below 50% now,
but it's still an extremely high figure.
And it tells you how working from home
has been critical in fighting the pandemic.
Only because we've been able to work from home
have we been able
to stop the economy completely collapsing.
If it weren't for working from home,
the shutdown would have probably collapsed the economy
and as a result, we'd have had
to go back to work much faster and end the lockdown sooner.
So working from home has enabled us to maintain
a painful but not impossible lockdown for far long.
Working from home has had a huge impact differentially
across income and particularly education on the right.
So we flip to the right,
you can see people with less than a high school degree -
so people that left school at 16,
they have about a 10% share
of people that are working from home
compared to those with a graduate degree
like an MBA or a master's, which is more than 50%.
So what about the future?
You know, I guess the most interesting question:
you know, looking into our data crystal ball,
what do we see one or two years from now?
So firstly, it's worth knowing
what individual employees want.
So we asked individual employees in 2021 plus after COVID,
how often would you like to have paid work days at home?
And what you can see is
there's just a huge range of opinions.
So there's about 10% of people
that never wanna work from home.
They tend to be young, single, living in small apartments.
And on the other extreme there's about 25% of people
that wanna work from home five days a week.
They tend to be, I know they're more similar to
I guess my demographic, so a bit older.
They're married with kidsm they live in a house.
It's not me personally,
but a lot of these people wanna work from home full-time.
And then there's a group in the middle of
that I would fall into whereby I like going into work,
I enjoy seeing my colleagues,
I find it really stimulating
and it helps for creativity and teaching,
but I probably don't wanna do it
and I don't need to do it every day.
So the typical American actually wants to work from home
something like two to three days a week
and wants to come in the rest of the day to the office.
So what are firms planning to do?
Well, if we look at the data,
we look at the final point,
you can see post-pandemic firms are planning to have
Americans work from home roughly 25% of days
and the other three quarters of days
is gonna been in the office.
Now, how does that work out?
Well, coming back to the earlier graph,
about half of Americans cannot work from home.
There are people who have more manual,
more physical jobs, dealing with customers.
They may be a doctor,
they need to use equipment or an airline pilot.
I mean, they're not entirely lower paid, lower skilled,
there's a mix, but they can't work from home.
The other half of Americans can work from home.
And for them from personally I've spoken to
probably one or 200 managers - so much time discussing this.
And there seems to be almost a strong consensus
that post-pandemic firms are saying,
Look, working from home works well, but it's not perfect.
And we really need people to come back into the office
to encourage creativity, to be innovative,
to encourage them, to motivate them,
to keep in connection with the company culture.
And in fact, also to avoid the kind of depression
that is becoming a bit of an issue
across the US with people cooped up at home.
So most firms I speak to are saying
for our working from home employees,
we see them working from home post-pandemic
for about two days a week
and being in the office for about three days a week.
So the typical kind of story I'm hearing is,
Monday, Tuesday, Thursday, you come into the office.
Everybody comes in, we have all our team events,
our training, our lunches are leaving dues,
our customer and client meetings.
Wednesday, Friday, the home days,
the CEO downwards is going to work from home.
We wanna encourage you to go home.
Of course, if you really don't want to,
you can come into the office,
but be aware managerial staff are not there.
So you're not gonna kind of get ahead.
And here I put up a quote,
you're always going to have a quote from Apple.
Here's Tim Cook of Apple, basically saying this,
having spoken to you and being in Silicon Valley,
having spoken to so many tech firms,
it works reasonably well,
but we do wanna come back to the office.
We just don't need to be in the office all the time.
is very standard.
And Apple's one of the many companies talking about this.
So why will working from home stick?
So just remember before the pandemic,
there was only 5% of working days were working from home.
And that was from 2% of people that did it full-time
and the other 3% was more people doing it part-time.
Why has it gone from that to a much more broad scale,
kind of five-fold, long-run increase in working from home.
So let's look at why it stuck.
The first is stigma.
This slide was from an a TEDx talk
I gave in 2017 actually at Stanford
on working from home.
I've been working on working from home
for more than a decade.
And I just punched in working from home into image search,
and you can see where these images came up
and they are mostly incredibly negative.
I mean, it's just a bunch of
basically naked people, cartoons, people, babies.
The reason I use Bing for this reason
I use Bing is at the time,
it provided other similar search terms.
And if you look at them, they're working from home funny,
working from home comics and working from home underwear.
It basically, it had a terrible reputation
and who is searching working for home underwear?
Apparently millions and millions of people.
So it just tells you how badly perceived working from home
was before the COVID pandemic.
Since there's just been a sea change
in people being much more positive on working from home
for 90% of people in perceptions,
either the same or improved.
in fact for about 70% they've improved.
And for some, a lot of people
they say dramatically improved.
So working from is seen as much more positive,
much more normal. We're all doing it.
There's nothing wrong with it.
It works well.
Secondly, forced experimentation has exceeded expectations.
So we asked people compared to before COVID,
how has working from home turned up?
And you can see that most people,
about 60% of them, slightly more than 60%
of reported it's turned out better.
And very few, a bit over 10%
reported this turned out worse.
So there's been a very positive experience
with working from home.
Thirdly, there's been massive investments
mostly sunk in working from home.
So in our survey, we asked people how many hours a week,
or how many, sorry, how many hours
and how much money they spent
on getting working from home set up.
And the average person said about 13 hours and $580.
We have spent in terms of time and money,
about 1%, one and a quarter percent of GDP
on getting working from home up and running.
And that's just on the household side.
If you look at, phone numbers,
we see similar numbers as well.
So we have spent maybe two, 3% of GDP
on investing in working from home
and that money isn't going anywhere,
that money is equipped us to do this in the long run.
And then fourth, there is what I would call residual fear
of proximity to other people.
So we ask people about after vaccine arrives,
assuming it arrives in 2021 plus
how much you or when would you return
to pre-COVID activities?
And you see that only 28% of people said
they completely return.
The majority are nervous about various things.
Most people say they would avoid the subway
and crowded elevators, and some go further
that avoid eating out on taxis.
And some are just gonna claim at least
to continue social distancing.
Who knows how accurate this is, but it's worth pointing out.
It's pretty clear whatever happens
is gonna be a substantial group of us still
will feel nervous about social distance
and about getting too close to people post-pandemic.
And I might be in that group.
I don't know how I feel,
but I've probably like everyone listening.
I've watched a lot of sneeze videos
and those other horrifying videos or particles flying out.
You breathing around to be much more conscious
of the fact that the vaccine doesn't work
or there's another pandemic
or someone's sick with the flu or the cold,
being so close to BB, you're more likely to get infected.
This is not me only, this is survey data.
You can see that this is a broad feeling.
And in fact, you can see that,
for example, an airline flights after 911.
It took three years for them to return to the same level.
And they never really quite got back
on the same trend for another few years after that.
And then finally, there's one I'm gonna call it direct
to technical change.
Here is another paper I've been working
along with (indistinct).
And what you can see is their share of patents
connected to working from home is doubled already
by July, 2020 and it was on a massive upper trade.
So this tells you there's lots of companies
are undertaking innovation and research
to make working from home better.
Just as a simple example Teams, Microsoft Teams,
when we went into the pandemic in March
could only fit four windows,
by April it expanded to nine
and then by September is up to 49.
So finally, to wrap up, what are the implications?
So one is this has a very uneven effect.
Here's a figure, on the X axis is annual earnings in 2019.
So how much is people earned last year?
It gives you a pretty good sense
of basically how wealthy they are,
how much they're gonna earn in the future.
And on the Y axis in black circles
is how much the employee,
the person would like to work from home post-pandemic
in terms of share of days, essential days.
And you can see most people want about 40% of days.
So that's two out of five days a week.
If you look in red,
this is what their employers have told them.
So we ask them what their employees have told them
and they're allowed to fill in don't know
which about a quarter of people do,
but the remaining three quarters, they give us a number,
and this is this number in red triangles.
And you can see that for the very wealthiest
or for those earning $200,000 a year or more,
we basically will get what we want.
We'll get roughly two days a week working from home.
If you go down to the left end for those owning 20,000,
there's a huge gap.
The people I need $20,000 a year,
they still want to work from home two days a week,
but it doesn't again we get anywhere near that.
Looks much more like they're gonna get
to maybe on average as a group work from home
kind of once every other week.
So this raises while it's great,
it raises an issue about inequality,
the benefits of working from home this pack,
then in our survey, people tell us
is worth something like 10% of salary salaries,
a very valuable park.
You reduce your commute time,
you reduce your commute costs.
You can potentially live much further out from the city
is going to go disproportionate to higher on us.
Secondly, there's a big impact on cities
because people are working from home in city centers.
I'll get to the kind of punchline.
We basically estimate,
for example, in Manhattan to take one city,
there's about a 10% permanent reduction retail expenditure
on the Island, in San Francisco
to come up as similar numbers.
It's definitely the end of cities.
Cities are gonna continue to be wealthy thriving places
but it's basically a bit of a knock.
Thirdly productivity as I mentioned earlier,
people are very positive on working from home
as increasing productivity.
So what happens post-pandemic we estimate working from home
is gonna increase productivity in the US by about 2%.
That's the bottom red number.
So that's not a lot, but it's a nice, one of the few upsides
from the pandemic is we're gonna
have a work from home system that post-pandemic
is both very popular with employees
and also increasing productivity for firms.
So this is really as a win-win situation.
Finally, you know, to end on a positive note,
Americans right now are saving around 60 million hours a day
from not having to commute.
So if you just figure out how many Americans
are currently working from home
and realize the average American, which is about 60 million.
The average American commutes for about an hour a day,
that's a lot of time.
What do we do with this time?
Hey, we show you about 40% of it.
You want more for your current employer.
So your current employer gets to keep almost a half of that.
The remaining time, the 60%
you roughly equally split
between what I call home production.
So either working on another the job, childcare,
or kind of improving your house
and the remaining is just indoor outdoor leisure.
It's kind of personal leisure time.
So to end, working from home
is going to permanently increase post COVID.
It's gonna particularly increase,
not so much for all of us going full-time working from home,
but just a lot of us are going to be working from home.
But unlike under COVID,
we're gonna be doing it for two days a week.
So I really think it's a win-win.
We are gonna get from work from home.
It is not gonna be isolating and depressing
with our kids running around the way it is now.
It's gonna be a couple of days a week
in a much more organized, predictable manner,
and we're gonna see our colleagues
the other three days a week.
And I see this is going to stick.
I've been through it
and I think it has some pretty major implications
actually for inequality.
The slowing down of the growth of cities
that will help to address the affordability crisis,
which is good.
It will improve productivity which is good.
And I think it's freeing an enormous amount
of commute time for Americans workers.