Sat, Feb 04, 2023 page9

• Advantages of remote work can be maximized

  If broadly implemented and accompanied by the right policies, harnessing remote working could benefit the overall economy

  • By Pinelopi Koujianou Goldberg
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  There is no shortage of hyperbole in the debate about whether companies should demand a full return to office work. Citadel chief executive officer Kenneth Griffin said the hedge fund owes its record-breaking US$16 billion haul last year to its staff’s full-time presence in the office.

  However, such sound bites ignore all the benefits that remote work offers to employers, employees and the economy more broadly.

  Naysayers dismiss employees’ preference for remote work as a manifestation of entitlement or “quiet quitting” — doing the bare minimum to remain employed.

  However, that snap judgment is far too crude. A recent study by Harvard University economist Raj Chetty’s Opportunity Insights lab estimates that there are about 2.6 million people in the US who should be working, but are not.

  At a time when many employers cannot fill vacancies, offering greater flexibility would increase the applicant pool and contribute to higher retention rates, easing the pressure on hiring.

  Happier employees also tend to be more productive. Survey data on attitudes toward remote work from multiple countries show that many employees were surprised by their own productivity during the COVID-19 pandemic. Remote work saved them hours of exhausting commutes, and they were able to tailor their days to do their work when they felt most productive. Women and parents of young children especially came to appreciate — and make the most use of — this newfound flexibility.

  More broadly, remote work offers greater opportunities for labor-market participation to talented individuals who had been previously disadvantaged by time or mobility constraints — including not just women and parents, but also people with disabilities.

  Research by Harvard labor economist Claudia Goldin shows that the need to work long hours outside the home at prescribed times is one of the most important challenges that women, especially those with a college education, face in the labor market.

  Remote work could help eliminate some of the tension between career and family.

  However, as the pandemic has taught, leveraging remote work requires complementary policies, especially adequate childcare. Otherwise, remote work would not spare women from the double duty of full-time employment as well as household and childcare responsibilities.

  If broadly implemented and accompanied by the right policies, remote work would deliver far-reaching benefits for the overall economy. It would reduce labor costs and inflationary pressures, as employees could move to cheaper locations. These relocations could in turn lower congestion costs, making commutes easier and cheaper for those who still need to be physically present in the workplace.

  In real-estate markets, rents and house prices would be more evenly distributed. Although this might raise prices in some previously low-cost locations, it would eliminate the extraordinarily high rents and house prices found in highly congested areas such as the New York City metropolitan area or the San Francisco Bay Area.

  There are also some disadvantages to consider. In some sectors, employers worry that a lack of structure, office “culture” or the ability to monitor employees’ progress would drive down lower productivity. Since remote work is not an option in many industries — from restaurants to health care — its uptake might add another dimension to labor-market inequality.

  Still, even those workers who need to show up every day would benefit indirectly from remote work, through the reduction in commuting costs, rents and house prices.

  Moreover, if markets are functioning properly, there should be a compensating differential for workplace labor. Employees already seem to recognize this trade-off. Estimates suggest that, on average, employees would be willing to give up 5 percent of their pay to work from home two to three days per week.

  Critics of remote work also often argue that personal interaction — at the proverbial water cooler — fosters creativity and innovation, as if to suggest that new ideas never emerge from a Zoom screen.

  Of course, many employers and employees cherish a good office culture.

  However, most of these needs can be met through hybrid models, whereby employees are physically present on a few pre-determined days of each week or month.

  Finally, the widespread adoption of remote or hybrid work would have serious implications for city centers, particularly those that are deemed less appealing or competitive. Many local jobs, especially in services and entertainment, would be lost, contributing to a vicious cycle of urban decline.

  However, the advantages of remote, and especially hybrid, work outweigh the disadvantages, especially if such work is supplemented by complementary policies to provide childcare and support urban development.

  The COVID-19 pandemic was horrible for everyone, but as in every crisis, it taught some valuable lessons and accelerated innovation. Remote and hybrid work is a silver lining of a prolonged tragedy. We should cling to it.

  Pinelopi Koujianou Goldberg, a former World Bank Group chief economist and editor-in-chief of the American Economic Review, is professor of economics at Yale University.

  Copyright: Project Syndicate
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