Remote Working: The New Standard

Remote working has long been a fantasy of 21st-century professionals. The shift towards working from home (WFH), however, may be occurring sooner than expected. As a result of COVID-19, many workers have gotten a taste of the WFH lifestyle; suffice to say, many workers want to keep that lifestyle. In an April Gallup survey, 59% of U.S. adults claimed they would like to work remotely as much as possible, whereas 41% claimed they would like to continue their prior office routines (1). In a May IBM survey, 75% of workers claimed they would like to continue to work remotely occasionally, and 54% claimed they want to primarily work remotely (2). It seems employers are also warming up to the digital workplace, as, according to a separate Gallup survey, 52% of surveyed managers claimed they will allow their employees to work remotely more often as a result of the pandemic experience (3). For these reasons and others, including potentially lower overhead costs, analysts believe WFH opportunities will increase after quarantine subsides (4). Considering this is a substantial change to our working lives, it is worth analyzing how this shift will affect businesses, markets, and U.S. sustainability.

Employees and Businesses

The alternative to WFH, of course, is commuting. The average one-way commute for American workers in 2018 was 27.1 minutes (5), which translates to 9-10 days a year spent commuting. These long commutes are not ideal; when controlling for personal and workplace characteristics, it was found that increasing travel time and/or decreasing travel predictability increases perceived stress levels (6). Further, commuting costs (public transportation tickets, car and gas expenses, and sometimes child-care services) often increase with commuting distance, so workers are often restricted to those jobs closely available – limiting an individual’s employment opportunities (7). Despite this, few people want zero commuting (7). Similarly, employee engagement is highest among firms with remote work options rather than those with no remote options or those that are already entirely remote (4), suggesting there is a balance between the two extremes.

Specifically, Gallup found that employee engagement is at its highest when employees spend between 60-80% of their time working off-site (8), which is important given that highly engaged workplaces demonstrate 40% lower absenteeism, 40% fewer quality defects, and 21% higher profitability (8). These findings are supported by further research that found that Chinese call center employees randomly assigned to WFH increased their employee performance by 13% (9). When these call center employees were later given the opportunity to choose between WFH and working in-person, employee performance increased by 22% (9). These findings suggest choice is important, as workers value WFH differently. A survey-based report by Buffer indicates having a flexible schedule, working from any location, and spending more time with family are the biggest pros of WFH whereas difficulty unplugging after work, loneliness, and collaborating/communicating are the biggest cons of WFH (10). Thus, WFH may be best as an option rather than a directive.

Real Estate Markets

This shift towards remote working may also have sizable impacts on real estate markets, as expensive housing markets often justify their prices with better local employment opportunities. In fact, living near employment hubs like the Bay Area can be so expensive that some companies, such as Zapier, have actually financially assisted employees in moving to less expensive places and working remotely for a better standard of living (11). WFH allows people to live in low-cost areas and make high-cost wages – taking advantage of a “wage arbitrage” of sorts (12). Further, moving away from employment hubs like NYC can also help employees avoid costly city and state taxes (13). Through investments in wider and faster internet access, improved remote-working infrastructures can enable workers to work from anywhere. In theory, an employee can live in rural Ohio and make a NYC-based salary. Consequently, we may witness residential property values decrease in employment hubs while property values elsewhere rise. We may further witness some firms change their salary structures so that remote work and in-office work are rewarded equitably when factoring in employees’ costs of living.

Moreover, the demand for types of properties within the real estate market is changing. The trend towards WFH has increased the demand for residential properties with office space as well as co-living residential spaces (13). From a business perspective, the increasing ability to WFH decreases the need for traditional commercial properties. In turn, this has led towards increased demand for coworking spaces with shorter-term leases (14). Real estate market trends will largely depend on how many/quickly workers decide to leave employment hubs, as there are also plenty of non-employment benefits to living in major cities. 

Social and Environmental Sustainability

The ability to work remotely, however, varies among populations. As of 2018, only 29% of workers could feasibly work from home (15). More specifically, roughly 20% of Black or African American and 16% of Hispanic or Latino workers are able to work from home (15). In contrast, 30% of White and 37% of Asian workers are able to work from home (15). Similarly, the ability to work from home increases with higher earnings and education (15), and it also varies by industry. The industries in which the largest percentage of workers could work remotely include the information, financial activities, and professional and business services industries (15). A trend towards WFH within these three industries alone can heavily impact businesses that rely on foot traffic and commuter spending. Such businesses include, for example, the stalls and coffee/food shops at which commuters stop during their commute or lunch breaks. Given that WFH can benefit people’s qualities of life, these inequalities can worsen the current gap in standards of living.

The pandemic may have also altered the public’s view on public transportation. In fact, 20% of IBM survey respondents claimed they would no longer use public transportation while 28% claimed they would use public transportation less often after the pandemic subsides (2). Additionally, more than half of respondents claimed they will either use ridesharing app services less or even not at all, though only 24% of respondents claimed the same for more traditional car services (2). Uber, has already acknowledged these immediate and long-term changes – cutting its workforce by 14% (16).

This increased fear of public transportation and ride-sharing may increase the demand to WFH among workers who are able to do so; thus, people may commute less for work – lowering transportation sector energy consumption in general. At 28%, the transportation sector was the largest contributor to US greenhouse gas emissions in 2018 (17). More than half of these emissions are coming from passenger cars and light-duty trucks (17), so assuming all workers that were capable of working remotely in 2018 worked entirely remotely, the US could have reduced its overall greenhouse emissions by roughly 4%. Considering WFH capabilities are increasing with cloud, communication, and network technologies, encouraging a shift towards WFH may be largely beneficial for the environment.

It can be frightening for businesses to test whether allowing workers to WFH fits their individual needs. In an unexpected turn of events, COVID-19 did not give businesses a choice. While we very well may see an increase in WFH opportunities as a result of the pandemic, we should understand this shift can have wide repercussions: changing businesses, real estate market valuations, standard of living gaps, and energy consumption behaviors.

Works Cited

1. Brenan, M. (2020, Apr 3). U.S. Workers Discovering Affinity for Remote Work. Gallup.com. Retrieved 6 May 2020, from https://news.gallup.com/poll/306695/workers-discovering-affinity-remote-work.aspx

2. IBM. (2020, May 1). COVID-19 Is Significantly Altering U.S. Consumer Behavior and Plans Post-Crisis. IBM News Room. Retrieved 6 May 2020, from https://newsroom.ibm.com/2020-05-01-IBM-Study-COVID-19-Is-Significantly-Altering-U-S-Consumer-Behavior-and-Plans-Post-Crisis

3. Harter, J. (2020, May 1). How Coronavirus Will Change the 'Next Normal' Workplace. Gallup.com. Retrieved 6 May 2020, from https://www.gallup.com/workplace/309620/coronavirus-change-next-normal-workplace.aspx

4. Buscaglia, M. (2020, Apr 21). Staying home: Job analysts expect remote work opportunities to increase after coronavirus subsides. chicagotribune.com. Retrieved 6 May 2020, from https://www.chicagotribune.com/coronavirus/sns-job-analysts-expect-remote-work-opportunities-to-increase-20200421-qyebodb3ibft5fh4yn5c4azbt4-story.html

5. Ingraham, C. (2019, Oct 7). Nine days on the road. Average commute time reached a new record last year. The Washington Post. Retrieved 9 May 2020, from https://www.washingtonpost.com/business/2019/10/07/nine-days-road-average-commute-time-reached-new-record-last-year/

6. Gottholmseder, G., Nowotny, K., Pruckner, G. J., & Theurl, E. (2009). Stress perception and commuting. Health economics, 18(5), 559-576.

7. Emre, O., & Elci, M. (2015). Commuting related problems in the workplace. Journal of Business Studies Quarterly, 6(4), 1.

8. Hickman, A. & Robison, J. (2020, Jan 24). Is Working Remotely Effective? Gallup Research Says Yes. Gallup.com. Retrieved 6 May 2020, from https://www.gallup.com/workplace/283985/working-remotely-effective-gallup-research-says-yes.aspx

9. Bloom, N., Liang, J., Roberts, J., & Ying, Z. J. (2015). Does working from home work? Evidence from a Chinese experiment. The Quarterly Journal of Economics, 130(1), 165-218.

10. Buffer. (2019). State of Remote Work 2019. Buffer.com. Retrieved 6 May 2020, from https://buffer.com/state-of-remote-work-2019#

11. Green, A. (2020, Mar 20). Why This Local Tech Company is Paying Employees $10k to Leave the Bay Area. Bizjournals.com. Retrieved 6 May 2020, from https://www.bizjournals.com/sanfrancisco/news/2017/03/20/paying-employees-leave-tech-san-francisco-zapier.html?ana=e_ae_set1&s=article_du&ed=2017-03-20&u=9XpjVbVf1woUtuA8dTLKTg0c8b9e5d&t=1490102407&j=77700361

12. Zimmerman, E. (2020, Sep 22). Future of Work: Telecommuting from Oregon While Earning Like Brooklyn. Forbes. Retrieved 6 May 2020, from https://www.forbes.com/sites/edwardzimmerman/2016/09/22/future-of-work-telecommuting-from-oregon-while-earning-like-brooklyn/#6cecee581808

13. Prevost, L. (2019, Sep 20). Seven Ways Telecommuting Has Changed Real Estate. Nytimes.com. Retrieved 6 May 2020, from https://www.nytimes.com/2019/09/20/realestate/how-telecommuting-has-changed-real-estate.html

14. CBRE. (2019). The State of Flexible Office Space Report. United States Commercial Real Estate Services. Retrieved 6 May 2020, from https://www.cbre.com/agile-real-estate/Lets-Talk-About-Flex-US-Flexible-Office-Market-2019?article=%7BC46C92DB-0326-4DF8-95CB-96983FA2B3A3%7D

15. U.S. Bureau of Labor Statistics. (2019, Sep 24). Table 1. Workers who could work at home, did work at home, and were paid for work at home, by selected characteristics, averages for the period 2017-2018. United States Department of Labor. Retrieved 6 May 2020, from https://www.bls.gov/news.release/flex2.t01.htm

16. Chapman, L. (2020, May 6). Uber Is Reducing Workforce by 14% and Signals More Cuts to Come. Bloomberg.com. Retrieved 6 May 2020, from https://www.bloomberg.com/news/articles/2020-05-06/uber-is-reducing-workforce-by-14-and-signals-more-cuts-to-come

17.  EPA. (2018). Sources of Greenhouse Gas Emissions. US Environmental Protection Agency. Retrieved 6 May 2020, from https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions