It may turn out to be one of the lasting legacies of the COVID-19 pandemic.
When the country shut down nearly four years ago and millions stayed home rather than head into the office, remote work set off a chain reaction that not only changed how Americans do their jobs but also upended the real estate industry and population patterns.
Today, remote work has declined from its levels of the pandemic but is still – depending on how broadly one measures it – three to four times as prevalent as it was in 2019. And the percentage of workers who still say they want the option of working from home to some degree is close to half.
“What the pandemic demonstrated is that we can all work from home,” says Kory Kantenga, senior economist at LinkedIn. “It was a proof of concept.”
Well, maybe not all. Studies have shown that remote work tends to be clustered in certain industries, those that hire skilled workers who can do tasks that do not require in-person contact. Unsurprisingly, the tech industry, with one of two job postings, leads industries with the highest percentage of remote workers, but financial and professional services and utilities are also large employers of the remote or hybrid workforce.
And remote work tends to be dominated by higher-educated employees, with nearly 40% of those holding advanced degrees hybrid or fully remote.
At the other end of the spectrum are workers in manufacturing or service sector jobs where an onsite presence is needed.
“You can’t make carpet from your basement,” says Sandra Moran, chief marketing officer at Workforce Software, a global firm that assists companies with technology to manage large workforces.
In early January, LinkedIn’s Global State of Remote and Hybrid Work study found that at its peak, in April of 2022, the share of job postings that offered remote work reached 20.3%. That was more than double the share in January 2021 and many times more than the 3% to 5% estimate used by many for the pre-pandemic period.
The Bureau of Labor Statistics found last August that about 1 in 5 workers teleworked. That compared to a range of 17.9% to 20% from October 2022 to August 2023.
“The rise of remote work has made business roles more flexible and, therefore, substantially more attractive to workers than ever before, attracting large numbers of applications per role,” ZipRecruiter Chief Economist Julia Pollak wrote in listing the top three workplace trends to watch in 2024. “Remote work has also given companies access to a wide talent pool across the country and beyond its borders.”
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The number of people working remotely has shrunk as people return to the office, sometimes voluntarily and for many large companies now as a requirement. LinkedIn and others say it is closer to 9% or 10% now, but in some cases remote work is being replaced by hybrid schedules that run the gamut from a few days in the office or on-site to as little as a visit every quarter.
“The big shift is within the broad category of what we call remote,” says Nick Bunker, director of North American research at Indeed. “We’re shifting into a new equilibrium with more people working remotely a few days a week. The more enduring feature of remote work is now hybrid.”
There are also substantial differences within industry and among countries. While the percentage of jobs that are fully remote is around 10%, applications for remote positions accounted for 45% of those received in December, according to the LinkedIn study. In the U.S., hybrid positions account for about 13% of LinkedIn postings. In the U.K., it is 45% and in Israel, 44%.
“Companies overall are leaning more to hybrid,” agrees Layla O’Kane of Lightcast, who adds, “People actually hate commuting to work.”
A new research paper published Thursday by Oxford University Press in the Review of Economic Studies sought to assess the current state of remote work. Authors Morris Davis of Rutgers University, Andra Ghent of the University of Utah and Jesse Gregory at the University of Wisconsin found that “the pandemic induced a substantial increase in the relative productivity of those working from home. This change has increased housing prices, reduced office rent costs, and will permanently increase income inequality and change where people live within a metro area.”
The study complements other work that found broad shifts in economic behavior from the increase in people working from home, whether that be those whose work is fully remote or the various arrangements that allow greater flexibility in how much time employees spend working onsite.
“This shift to working from home is likely the key driver of the large gap between goods and services consumption that has persisted even as virus fears have diminished,” Goldman Sachs economists wrote in a 2024 outlook piece published in late December. “Real goods consumption was already growing more quickly in the pre-pandemic years and is now about 7% above trend, while real services consumption is still about 1% below trend. Metro-level credit card data show that remote workers spend less on office-adjacent services such as transportation and more on home office and recreation goods. This suggests that much of the shift in consumption patterns is likely to last.”
The switch of workers plying their trade at home has had a significant effect on the real estate industry, driving apartment rents and house prices higher in some locales while at the same time pushing down rents and office occupancy rates in the major urban centers. Ghent, finance professor at the University of Utah, where she holds the Ivory-Boyer Chair in Real Estate, said the new study found an approximately 8% decline in central business district office rents, while residential rents increased, especially in outer suburbs of major cities. This led to a rise in housing costs of 14% near downtown locations and 25% in the outer suburbs.
To some degree, the changes reflect trends underway before the pandemic but they may have accelerated them. When COVID-19 struck, many people chose to leave congested, urban areas in favor of places where they could have more space, perhaps a home office and an expansive outside living area.
Over time, the jobs and the companies that provide them have moved to where the workers are – a sea change from the days when people trudged into the big cities in search of their paychecks.
The decline in fully remote job postings over the past year has not been uniform. As large tech employers like Google, Amazon and Meta push return to office policies that require employees to be present a minimum of two to three days a week, Santa Ana, California, saw a 45.1% decline in the number of employees working remotely, according to a report from LLC.org. New York saw a 28% decline, while Huntsville, Alabama, home to a large NASA workforce, saw a 34.7% drop. Male workers in Huntsville returned to work twice as much as women employees.
In contrast, areas that have developed as suburban enclaves of larger cities have experienced an increase. Glendale, Arizona, a suburb of Phoenix, saw a 37.5% increase while Arlington, Texas, a suburb of Dallas, saw an 18.6% gain.
“There are a couple of things going on in terms of demand for housing, whether it’s full-time work from home or hybrid,” says Brad Case, chief economist for Middleburg Communities, a developer of single-family and multi-family rental homes in the Mid-Atlantic and Southeast. “That’s going to have more of an effect in suburban areas than central areas. “If you are working full-time from home, you don’t want to be in downtown San Francisco or New York. “The real kicker is this encourages the jobs themselves to move.”
It is hard to say what is the chicken and what is the egg. A Zillow survey of the nation’s top housing spots for 2024 found that people across the country are increasingly relocating to places where housing costs are more affordable. And those are also places where jobs are growing the fastest. These include Charlotte and Raleigh, North Carolina; Orlando and Jacksonville, Florida; and Houston and San Antonio, Texas. These are all places that are attractive to remote workers.
Lightcast’s 2023 Talent Attraction Scorecard, a rating of the top 10 states for attracting and retaining workers, found Florida and Texas taking the two top spots. But Vermont, a state that in 2018 launched a program to pay people to move to the Green Mountain State, rose to No. 3 on the list from a position of 30th a year ago. Vermont is no longer running the program, although state officials have branded it a success.
Among the largest counties on the list, six were in Texas and three in Florida. Both states benefited from open policies during the pandemic and were among the hottest housing markets during the past three years. Many people fled places like New York and California, where COVID-19 lockdowns were the most pronounced, in search of homes in warmer climates where they could still be outside if they had to wear masks.
“One of the big changes is that all of a sudden, people wanted a whole lot more space,” says Ghent of the University of Utah. “You’re moving to where the housing is cheaper.”
Not that it is all rosy when it comes to remote work. Many large companies are trying to get their employees to return to work, with mixed success, and experts say that remote work is not as effective when it comes to mentoring workers and engaging in the kinds of collaboration that can lead to new products and more efficient teamwork.
“How do you build culture when people are never together,” asks Workforce Software’s Moran. But, she adds, “the idea we could all be in offices at one time is impractical at this time.”
And, as Ghent and her colleagues note, while improvements in work-from-home technology have increased productivity, this “will lead to a further widening of income inequality because WFH technology is more widely available to high-skill workers.”
Still, it does not look like the shift to remote work is likely to reverse anytime soon.
“Importantly, the data shows remote work is stable over the last year and, if anything, has increased slightly,” according to an October analysis from the Economic Innovation Group. “There is no sign that return-to-office is gaining steam on a national scale.”
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