2 October 2020

Coronavirus or not, remote work is here to stay

By Matt Clancy

In 2019, just 5% of workers in the UK worked primarily from home. In 2020, the number is 50%. If there is an effective vaccine for the coronavirus available in 2021, the share of people working from home in 2022 is likely to be significantly down from 50%. But it’s not going back to 5%. Coronavirus or not, remote work will be much more common in the future than the past, as I argue in The Case for Remote Work, a new report for The Entrepreneurs Network.

For decades, technology has steadily eroded the advantages of working in an office. A variety of studies, conducted in the years before Covid-19, consistently found remote work to be more effective than expected. For example, a 2015 study randomly assigned 250 employees in a Chinese travel booking company to work from home or in the office for nine months; those working at home were actually 13% more productive than their counterparts in the office. Another looked at the US patent office; again, workers who were (randomly) given the option to work full time from home were 4% more productive than those who had to come into the office once a week (who were, in turn, more productive than those who came into the office every day). And a 2019 internal study at Google found no difference at all in the performance of workers who had to collaborate with geographically distant coworkers and those who exclusively worked with people in the same office.

Studies that look at large samples of businesses also find modern remote work isn’t the productivity drag it’s so often believed to be. A 2019 study looked at 400 firms in Portugal that enabled (or disabled) the option to work remotely between 2011 and 2016. For mid-sized or large firms, enabling remote work wasn’t associated with any decline in worker productivity, and for firms that conduct R&D, workers at remote-capable firms were 9% more productive.

Before Covid-19, businesses were slowly learning just how good remote work has become. In the 15 years before 2010, the share of UK employees working remotely stagnated a bit below 3%; but in the subsequent nine years, the share rose to 4.7% – a more than 50% increase, with no signs of slowing. And with Covid-19, the forced global experiment with remote work has revealed to many just how well remote work functions. In a 2020 survey of 1,500 US hiring managers, 30% said remote work was going somewhat better than expected and 25% that it was going much better than expected. Across surveys of US small businesses and hiring managers, a substantial proportion plan to increase their use of remote workers going forward.

What we’ve learned over the last decade, and especially the last year, is that many jobs can be done remotely with no loss of productivity. But some still fear remote work may be good for individual workers, but bad for businesses. One oft-cited concern is the importance of local learning – the improved access to ideas and knowledge that comes from physical closeness to other people (and who and what they know). But this concern is probably overblown.

One way to see how important it is to be close to other people’s knowledge is to look at the teams of scientists and inventors on patents and academic papers. Remote collaboration among these knowledge workers is becoming normal. For example, among US patents with teams of two inventors, the share of these patents where the inventors reside more than 500 kilometres from each other rose from 22% to 34% between 1975 and 2015. And the share of academic papers in the US with coauthors at different institutions rose from 55% to 76% between 1996 and 2018. Patents and academics are also increasingly less likely to cite local patents or papers, again suggesting it’s no longer so hard to learn about relevant work from far away. Other studies suggest a simple explanation; as it gets easier to access distant ideas through cheaper travel and the internet, long-distance collaboration becomes more common.

Moreover, in another way, remote work is good for businesses, as well as workers. Remote capable firms are able to hire from anywhere, meaning they can find employees with a better set of skills and experiences than would be locally available. While this has always been true, it has become increasingly easy to realise this potential. As more people use the internet to find work and as online labour markets improve their design and algorithms, it has become much easier to match geographically distant workers and firms. And as more of our social lives move online, our social networks may well be more geographically dispersed too, also helping us find out about distant job candidates and positions.

Taken together, the outlook for remote work is much stronger than it was in the previous hype cycles. While it may not work for everyone or every position, in the decades to come we’re going to see that it works for a lot more than 5%.

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Dr Matt Clancy is a lecturer at Iowa State University affiliated with the Agricultural Entrepreneurship Initiative and the Department of Economics.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.