The work from home phenomenon - will it stick?

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Across much of the developed world, COVID-19 has led to hundreds of millions of people working “remotely” — mainly from home — due to the imposition of public health restrictions and an unusually high incidence of business closures. This extraordinary situation virtually emptied many office buildings and caused employers in multiple sectors to retool the organization of work — sometimes in previously unimagined ways.

Work from home spread rapidly as COVID-19 arrived in March 2020. In the U.S., close to half of all paid work hours from April to December 2020 were supplied by employees working remotely, compared to 5% of paid hours pre-pandemic. In Canada, Statistics Canada surveys indicate that roughly 33% of employed Canadians were spending a majority of their work time at home as of early 2021, up from about 4% who were doing so back in 2016.

In this edition of Policy Perspectives, Jock Finlayson examines emerging workplace trends, how remote work has evolved over the course of the pandemic, who has been impacted, and what we might expect going forward.

Report Highlights

  • Across the developed world, the COVID-19 pandemic has led to an unprecedented experiment as hundreds of millions of people have been working “remotely” — mostly from home — amid public health restrictions and widespread office closures.
  • In advanced economies like Canada and the U.S., estimates suggest that 37-48% of all paid jobs can be done remotely all or most of the time. Mainly, these jobs typically are performed in office settings and require little or no direct, in-person interaction with customers, suppliers, supervisors and co-workers.
  • There is wide variation across both occupations and industries in the proportions of paid work that can be done remotely. In many occupations and industries, relatively few jobs are conducive to “work from home” (WFH).
  • Work from home spread rapidly as COVID-19 arrived in March 2020. In the U.S., close to half of all paid work hours from April to December 2020 were supplied by employees working remotely, compared to 5% of paid hours pre-pandemic. Statistics Canada surveys indicate that roughly one-third of employed Canadians were spending a majority of their work time at home as of early 2021, up from about 4% who were doing so back in 2016.
  • Employee surveys find that most workers who have gained experience with WFH would like the option to perform a significant share of their work duties from home once the pandemic has ended. This view is not universal among workers, however.
  • On the whole, employers are less keen on continuing with WFH, with many signaling a strong preference to have most employees return to traditional workplace settings once it is safe to do so. In a few knowledge-intensive industries, large employers are planning to allow and encourage WFH in the post-pandemic context.
  • Based on survey results and published academic studies, we expect an approximate quadrupling in the proportion of paid work in British Columbia that will be done remotely once the pandemic is over. This is equivalent to 18-20% of all jobs (leaving aside the self-employed), compared to 4-5% of jobs before 2020. Put differently, we believe that 400,000–450,000 jobs in B.C. may be done largely on a WFH basis going forward.

The ongoing pandemic provides important insights into what a transition to a different model of work may look like - the future of work in the post-pandemic world will be mixed across industries and occupations, depending in part on the feasibility of working from home. If a new equilibrium develops in which a substantially higher fraction of overall work in the economy is performed remotely, this will have important knock-on consequences — including for the owners of office space, for the vibrancy of central business districts, and for the housing choices of employees who no longer need to commute to work every day. There is also the question of whether and how government labour, employment, and health and safety regulations may need to be modified to account for the fact that a larger proportion of paid work will be done remotely.

At this point, we can’t say with confidence how the WFH phenomenon will affect the levels and future growth of labour productivity. There is some evidence that the COVID-19 crisis led to a productivity boost in certain industries, but whether this proves to be a one-time bump or instead points to faster productivity growth over time remains uncertain. To the extent that the pandemic induces faster deployment of advanced process technologies and the speedier adoption of other innovations across the broad economy, it is reasonable to expect a positive effect on labour productivity growth over the rest of the decade.