Remote-first work is taking over the rich world

IN FEBRUARY 2020 Americans on average spent 5% of their working hours at home. By May, as lockdowns spread, the share had soared to 60%—a trend that was mirrored in other countries. Many people, perhaps believing that working from home really meant shirking from home, assumed that office life would soon return to something like its pre-pandemic norm. To say it has not turned out that way would be a huge understatement.

Most office workers remain steadfastly “remote-first”, spending most of their paid time out of the office. Even though a large share of people have little choice but to physically go to work, 40% of all American working hours are still now spent at home. In mid-October American offices were just over a third full, suggest data from Kastle Systems, a security firm. From Turin to Tokyo, commercial areas of cities remain substantially quieter, compared with pre-covid norms, than residential ones. Economists are trying to work out what all this means for productivity.

Perceptions about the future of office work are changing. Last year British government ministers exhorted workers to get back to the office; now they are quieter. Wall Street banks, often the most enthusiastic advocates for in-office work, are toning down the rhetoric. According to a monthly survey by Jose Maria Barrero, Nick Bloom and Steven Davis, three economists, bosses expect that in a post-pandemic world an average of 1.3 days a week will be worked from home—a quarter more than they expected when asked the same question in January. Even that could in time prove to be an underestimate. Workers hope they will spend closer to half their working hours at the kitchen table.

A few factors explain why remote-first work remains dominant. Many people remain scared of contracting covid-19, and thus wish to avoid public spaces. Another possibility is that workers have more bargaining power. In a world of labour shortages, it takes a brave boss to make people take a sweaty commute five days a week (workers view being forced to be in the office full-time as equivalent to a 5% pay cut). There is a more intriguing possibility, however. Work that is largely done remotely may be more efficient compared with an office-first model.

The past year has seen an explosion of research on the economics of working from home. Not all the papers find a positive impact on productivity. A recent paper by Michael Gibbs of the University of Chicago and colleagues studies an Asian IT-services company. When the firm shifted to remote work last year average hours rose but output fell slightly. The authors ascribe part of the decline in productivity to “higher communication and co-ordination costs”. For instance, managers who had once popped their head round someone’s door may have found it harder to convey precisely what they needed when everyone was working remotely.

Most studies, however, find more positive results. Mr Barrero and his colleagues’ surveys cover a large number of firms, rather than just one. Only 15% of home-workers believe they are less…