(WSJ) Early on, remote work looked like a win-win: Employees got to work where and when they pleased, and employers got more productivity.
It turns out only the first part of that bargain came true. Employees still love remote work, but recent studies find no boost to productivity and a decline in fully remote work.
And yet most employers have given up on prodding staff to return to the office full time. According to the Society for Human Resource Management (SHRM), 62% of employers offer the option to work remotely for at least some time. The Census Bureau finds that 39% of workers are teleworking from home, half of them five days a week.
It is symptomatic of a broader shift in attitudes toward work since the onset of the pandemic. Despite a historically tight labor market, pay until recently wasn’t growing much faster than inflation. One reason is workers aren’t just bargaining over money. They are also demanding more nonmonetary compensation, such as paid leave and flexible hours. As a result, they often put in fewer hours or accomplish less in the hours they do put in.
This seems to have made for a happier workforce. The Conference Board in May reported that worker satisfaction rose sharply in 2022 from 2021 and reached its highest since the survey began in 1987. This isn’t because workers find their jobs more fulfilling, but because their jobs are consuming less of their life. Among the 18 components of the survey, “interest in work” made the smallest contribution to this year’s increased satisfaction; work-life balance made the largest. (Wages were somewhere near the middle.)
Memes such as “work your wage,” “quit quitting” and “lazy-girl jobs” attest to the lesser priority many people today place on a career. They are on a collision course with the chief executive who typically worked ungodly hours, sacrificing leisure and family time, for the sake of the company and assuming others should, too. The result: Executives who try to force employees back into the office often have a revolt on their hands.
The conventional wisdom is that happier workers are more productive. That isn’t necessarily because happiness increases productivity, but because an employer, to keep its most productive employees, must keep them happy—even if that means taking steps that make them less productive.
There is nothing unusual about workers favoring something other than money. “Over the last century, the average job has become more pleasant and less onerous,” Valerie Ramey, an economist at the University of California, San Diego, said in an email. One reason is government regulations, “but part is…workers’ real income has risen over time and they have decided to ‘spend’ (by accepting lower wages) part of that income on better job amenities.”
In a 2009 study, Ramey and Neville Francis reported that the average number of hours men aged 25 to 54 worked per week fell from 49.8 in 1920 to 41.4 in 1940. That reflected a shift from the six- to five-day week—as famously implemented by Henry Ford and later enshrined in the 1938 Fair Labor Standards Act, which mandated overtime pay for more than 40 hours of work a week.
Hours continued to decline, though more slowly, until 1980. Separate data suggest they have been largely stable for the past few decades in the U.S. while trending lower in Europe.
There are signs that in the wake of the pandemic, Americans, like Europeans, are putting more priority on the “life” part of the work-life balance, and employers are responding.
According to SHRM, the share of employers offering paid time off has risen from 63% in 2019 to 70% now, and the share offering paid parental leave has risen from 28% to 39%. Leave averages seven weeks for fathers and nine weeks for mothers, according to human-resources consultants WTW.
Employees are also taking more vacations. Since 2021 some have enjoyed the first new federal holiday in four decades, Juneteenth.
The upshot is that even as employment grows rapidly, employees work fewer hours now than in 2019, according to monthly Labor Department data. Its annual American Time Use Survey, meanwhile, found the share of employed people actually working on a given day fell from 67.8% in 2019 to 66.1% in 2022, the lowest since at least 2003.
Meanwhile, the hours workers do put in are less productive. Output per hour in the business sector shot up early in the pandemic then trended lower through the first quarter of this year, though it likely recovered a bit in the second quarter (the Labor Department reports the latest data on Thursday).
These are notoriously volatile figures. But it is plausible some of this reflects a change in how we do our jobs. Employees love working from home because it saves on commuting and other aggravations, and lets them pursue personal matters during the day such as going for a run or picking up the kids from daycare. They can catch up on missed work at night or during the weekend.
Employees think they’re 7.4% more productive working from home, according to surveys conducted by Nicholas Bloom of Stanford University and two co-authors. Their managers think the opposite, estimating workers are 3.5% less productive at home. The reason, according to the economists’ review of recent research, is that communicating with an employee at home is more cumbersome and time-consuming, while reduced social interaction and feedback diminish creativity and learning.
Many workers find distractions, from the fridge to the television, at home. The authors note international chess players perform worse remotely, despite the motivation of prize money and rankings, proof that “overcoming potential self-control issues may not be easy.”
Employers might be less willing to let employees work from home if the economy eventually slides into a recession and unemployment rises. “We’re probably not in a steady state at this point, and some reversal of the movement toward remote work seems likely to me,” said Katharine Abraham, a labor economist at the University of Maryland.
Bloom is less sure. He and his co-authors concluded the loss of productivity was confined to those working remotely full-time rather than just a few days a week. And even if productivity suffers, that might be more than made up for by cost savings. Remote employees might need less office space, live in cheaper places, and accept lower pay: The authors found employees value working from home two or three days a week as equivalent to an 8% pay increase. It will take more than the threat of unemployment to undo this shift in values.