Is Remote Work Here To Stay?

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Last week, I went into Planet Money's vacant office in midtown Manhattan to pick up some stuff. It felt like visiting the ruins of a bygone age. It reminded me of a time when you could hop in a crowded subway car, stroll into work without a mask, and interact with your colleagues without having to stare at their disembodied heads through a computer screen.

Our building is still mostly abandoned, but our building's manager had already taken precautions for that elusive day when we might all return. There were stand-six-feet-apart circles in the lobby to encourage social distance. Our elevators could only fit four circles, and they didn't even seem like they were actually six feet apart. This being a skyscraper, it had always been a pain in the butt to wait for the elevator. The already-mobbed lines would be insane in a world where elevators could only fit four people at rush hour. Door handles, bathrooms, coffee machines, meeting rooms, and the office kitchen all seem like radioactive sites for the virus. And that doesn't even get into the HVAC system pushing bad air all around.

The experience really hammered home that the grand experiment of remote work will be here for a while. And it really is grand. A new study by Erik Brynjolfsson, at MIT, and five other economists, digs into the numbers on remote work. They conducted two major surveys in April and May, and they find that about half of the entire American workforce is now remote, which is higher than previous estimates. That bears repeating: half of the entire workforce is now working remote.

In a previous newsletter, we gave a bearish case for the future of remote work. We spoke with the Stanford psychologist Jeremy Bailenson, whose research shows how existing technologies like Zoom are a poor substitute for face-to-face interactions. A computer screen can't match the physical office when it comes to opportunities for social bonding, managerial oversight, mentorship and support, and random collisions between colleagues that lead to new ideas.

But there's also the bullish case for remote work. Brynjolfsson, who has spent years studying the intersection of technology and economics, points to its many advantages. Workers don't have to waste time or resources commuting. And they can live where they want. Companies can save money on commercial real estate, which is insanely expensive in places like Manhattan and Silicon Valley (side note: this also shifts the cost of real estate to workers, but that's another discussion). A virtual office offers a virtually unlimited labor pool for companies to recruit from. In econ jargon, there are better "matching" opportunities. "You get to tap into the best people wherever they are," Brynjolfsson says. Moreover, he argues, this shift is pushing companies to focus on performance and output as opposed to just "clocking hours."

A large number of blue-chip companies — including Twitter and Facebook — have said that they are freeing all or many of their employees to become roving nomads forever. Companies, Brynjolfsson believes, are now realizing remote work is less scary than they had imagined and that it's actually making them more efficient and productive. Brynjolfsson says "this portends a much bigger shift in the economy."

Yet, the technology we're all using to do remote work has been with us for decades now. And at the very same time this tech burst on the scene, companies — and especially high-tech companies — doubled down on having offices. Think Google's Googleplex and Apple's "Mothership," which opened only a few years ago. In 2013, the CEO of Yahoo, Marissa Mayer, even banned working from home.

"There's a lot of inertia in the way people work," Brynjolfsson says. "And it's actually quite hard to change the processes, the culture, the training, the types of work and tasks that people are doing. And so unless there's a shock, most people will tend to continue to do things the old way."

When it comes to the utilization of new technologies, Brynjolfsson sees a process he calls "the Productivity J-Curve." The J-curve refers to a pattern he sees in the data, showing that companies are slow to adopt new technologies, and when they do, productivity actually dips at first. They have to invest time and money adopting it, which slows them down. But, like any investment, it ends up paying off.

The core idea of the J-Curve, he says, is "when you have a powerful new technology like electricity or the Internet or the steam engine or artificial intelligence — work does not instantly change to take advantage of it." After electricity was invented, he says, it took over thirty years for factories to be retooled and for society to see big gains from it. "Likewise, with remote work, I don't think people really were forced to think through all the things that we could do and how well it could work," he says.

Brynjolfsson recognizes that the physical office offers some social and economic benefits. "It's probably a good idea for people to come in sometime," he says. But this grand experiment of remote work, he says, is forcing companies to rethink their operations, drop an outdated mindset, and discover more efficient ways of working. He believes many of these changes will stick once the pandemic ends.

After visiting the Planet Money office, I left wondering how long it'd be until we'd come back. And I hopped in my car to go home because there's no way I'm riding the subway these days.

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