4 reasons remote work will survive a recession, according to Stanford economist Nick Bloom

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Nick Bloom.
  • If the economy takes a downturn, some have speculated companies will bring workers back to the office.
  • Stanford economist and a leading remote work expert Nick Bloom says remote work is here to stay.
  • But even if a recession comes, Bloom says employers will still see the value of remote work.

The pandemic-induced recession in 2020 introduced millions of Americans to remote work. If another recession is in fact on the horizon, the work-from-home trend isn't going anywhere. 

That's according to Stanford economist Nick Bloom, a leading remote work expert and co-founder of WFH Research, where he and his team publish findings on all things work from home. 

Even as pandemic restrictions have eased across the country, many companies have continued to embrace fully remote or hybrid work arrangements. Per a June WFH Research survey of over 21,000 Americans, 15% of full-time employees are fully remote, 30% are hybrid, and the remaining 55% are on-site full-time. While these figures are well below their early-pandemic highs, they've remained largely flat over the last six months.  

With job openings near record-highs over the last year, workers have taken advantage of their new-found leverage, quitting their jobs and joining the 'Great Resignation.' Many have used this power to push for flexible working arrangements, and in order to attract and retain talent, companies have often complied — whether they've wanted to or not.

But if inflation remains red-hot, and the Federal Reserve's rate hikes don't achieve the desired 'soft-landing,' the labor market dynamic could change. If layoffs become more widespread and the power shifts back to employers, companies might feel more comfortable demanding a return to office — parting ways with anyone who doesn't comply.

Nick Bloom, however, who has consulted with hundreds of CEOs and managers, and whose research on working from home spans nearly 20 years, believes that remote work — hybrid models in particular — won't fade away if the economic cycle takes a turn for the worse. 

"It keeps employees happy" and could save companies money on salaries

Bloom's research — which includes monthly surveys of 5,000 US working age adults and 1,000 US firms — has found US workers value a hybrid working arrangement roughly the same as a 5% pay raise, suggesting they'd be willing to take a 5% pay cut to work from home two or three days per week. 

The reasons for this vary. In a February survey of nearly 3,000 Americans, 60% of respondents selected "no commute" as a top-three benefit of working from home, followed by "flexible work schedule" — 49% — and "less time getting ready for work" — 47%. 

A different survey of over 32,000 people conducted in January found the absence of a commute saves Americans an average of 70 minutes per day that they put towards things like television, exercise, chores, and childcare. Roughly 30 of the 70 minutes are spent working more. 

Bloom adds that quit rates are "clearly down" for companies offering remote and hybrid arrangements, alluding to one study that found a hybrid arrangement reduced quit rates by 35%.

Even if a recession leads to some layoffs, the need to attract and retain talent isn't going away. If workers want a flexible work environment, Bloom expects many employers to accommodate this. 

It increases productivity 

Bloom's research has found that a hybrid work environment increases worker productivity. "Productivity seems to be up a little bit," he says. "It's not massive, but it's 3% to 5%.

While there is other research to support this claim, some studies have claimed the opposite — that remote work reduces productivity. Skeptics tend to focus on the ways it can be challenging to onboard and train younger employees remotely, as well as how remote work might stifle the face-to-face and inter-team interaction that can foster creativity and boost productivity. 

Bloom, however, believes these concerns should be directed more towards fully remote arrangements. He acknowledges that for certain roles and individuals, being fully remote might not be best for an employee's productivity and well-being. A hybrid approach on the other hand, be believes, doesn't elicit the same concerns. 

"Hybrid, if it's well-organized, I think it's a win-win."

It supports diversity

"If you look in the data," Bloom says, "people that are diverse within their workplace by race or gender or age are more likely to want to work from home."

A November 2021 WFH Research 2021 survey of over 10,000 workers from five countries including the US found 86% of Hispanic / Latinx respondents preferred a hybrid or fully remote arrangement. 81% of Asian / Asian Americans, and black respondents said the same, as well as 75% of white respondents. 

To Bloom, this data signals an especially strong desire for remote work among minority communities — the reasons for this desire surely vary. He thinks embracing flexible working arrangements can help companies build the diverse workforces many of them say they aspire for. 

Zooming Forward

Bloom believes the four aforementioned factors will sustain remote work, even in a recession. 

"Keeping employees happy, improving productivity, focusing on diversity, cutting costs, they're all pretty acyclical," he says. "They're not things that in a recession you're like, "Sod it, we don't care about keeping employees happy or cutting costs. Some companies actually, you care more."

While he concedes that a downturn could produce "a bit of a pushback" against remote work, he says he hasn't seen any signs of it in the data yet. In the years to come, Bloom expects the technology supporting remote work to continue advancing, something he thinks will only make remote work more appealing for workers and their employers. 

"Even Zoom since March 2020 is way better now than it was," he says, adding that patents mentioning 'work from home' have risen in recent years. 

"The market for work from home hardware and software technologies is probably about five times bigger," Bloom continues. "All tech firms, startups, hardware companies are making products to support it."

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