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The New Working from Home Economy

The working-from-home economy possesses challenges as well as benefits, bringing societal impacts caused by the massive transition to widespread remote work.

 The New Working from Home Economy
Home-office bouchee/iStock 

Working from home (WFH) is not a new concept. For many of us, working from home has been part of an independent lifestyle for years. Working from home has often been linked to remote workers, location independent people, and digital nomads

However, since March 2020, the ongoing Covid-19 pandemic has forced many companies, employees, and educational institutions around the world to dive into more active virtual coworking and other types of digital collaboration. With the help of digital tools such as virtual working environments, virtual meetings, and virtual video conferences the number of people now working from home has rapidly grown exponentially. 

According to a UK Office for National Statistics' report on coronavirus and home-working in the United Kingdom:  

  • In April 2020, 46.6 percent of people in employment did some work at home

  • Of those who did some work from home, 86 percent did so as a result of the coronavirus (Covid-19) pandemic

  • Of those who did some work from home, around one-third worked fewer hours than usual (34.4 percent), and around one-third worked more hours than usual (30.3 percent)

  • Women were slightly more likely to do some work at home than men, 47.5 percent and 45.7 percent respectively

  • People aged 16 to 24 years were less likely to do some work from home than those in older age groups

  • More than half of people living in London (57.2 percent) did some work at home

  • Occupations requiring higher qualifications and more experience were more likely to provide home-working opportunities than elementary and manual occupations

Indeed, by now, there is enough evidence that comes from researchers, economists, and global leading companies supporting the idea that the current increasing working from home trend is likely to continue way past the coronavirus pandemic that originated it in the first place. 

Major companies actively encourage extended remote work, some switch to a long-term work from home model

Google HQ
 Lobby of Google's new campus and office in Singapore, which is regional HQ. All the employees have left the building. Source: undefinied/iStock

Google is one of the major companies that has decided to remain remote with no immediate plans to return to the physical office. Google employees do not have to return to the San Francisco Bay Area campus until at least June 2021.

Google might extend this even further. In a similar fashion, Uber is following Google's work from home adopted model. The company is even giving a $500 stipend to its employees to set up a proper home office.

International news organization Reuters has told employees that they can continue working from home until January 2021. Many Facebook employees will be able to work from home indefinitely while everyone will keep on remote work throughout 2020.

Working-from-home indefinitely

In the United States, other companies such as Twitter, Square, Zillow, and many others have gone a step further; they have announced that their employees could work from home permanently. 

Outdoor retailer REI has plans to sell the company's new 8-acre campus in Washington while its employees embrace the new long-term business strategy. The move will save the company a considerable amount of money.

At the same time, the active discussion on the new trend includes the fact that the novel working from home economy poses equally new challenges, even hidden threats.

The working-from-home economy

standford campus
Stanford University Quadrangle Hallway. With its Romanesque features, the original sandstone quadrangle is one of the most historic sections of the Stanford University campus. Source: jejim/iStock

According to Stanford economist Nicolas Bloom, the new working-from-home possesses challenges as well as benefits bringing societal impacts caused by the massive transition to widespread remote work.

Nicholas Bloom, who is the William D. Eberle Professor of Economics in Stanford's School of Humanities and Sciences and a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR), focuses on labor economics, management practices, and uncertainty. 

A study that Bloom carried out in 2014 on working from home as well as his ongoing research in collaboration with other colleagues on business firms have been in high demand as policymakers and others scramble to better understand the different shifting dynamics of the workforce as well as its economic implications

In a related SIEPR Policy Brief titled How Working from Home Works Out, Nicholas Bloom offers policymakers and business leaders suggestions for making remote-work a permanent part of the labor landscape.

In The United States alone, Nicholas Bloom has identified that "42 percent of the U.S. labor force now works from home full-time. About another 33 percent are not working --a testament to the savage impact of the lockdown recession. And the remaining 26 percent --mostly essential service workers-- are working on their business premises."

According to Bloom, by sheer numbers, the United States is a working-from-home economy. "Almost twice as many employees are working from home as at work." He noted that this enlarged group of work-from-home employees now account for over two-thirds of the United States economic activity. 

In an interview with May Wong, Communications Manager at Stanford Institute for Economic Policy Research, Nicholas Bloom said that "without this historic switch to working from home, the lockdown could never have lasted. The economy would have collapsed, forcing us to return to work, reigniting infection rates. Working from home is not only economically essential, but it is also a critical weapon in our fight against Covid-19 --and future pandemics."

May Wong asked Nicholas Bloom about his thoughts on why working remotely is morphing into a more permanent reality. A crucial question, indeed. He said that working remotely is now extremely common since the stigma associated with working from home prior to Covid-19 has now disappeared.  

"A number of corporations are developing plans for more work-from-home options beyond the pandemic," Bloom said. He mentioned a recent survey of firms from the Survey of Business Uncertainty --Firms Expect Working from Home to Triple-- which he runs with the Atlanta Federal Reserve and the University of Chicago. The survey indicated that "the share of working days spent at home is expected to increase fourfold from pre-Covid levels, from five percent to 20 percent." Bloom added that "the typical plan is that employees will work from home one to three days a week, and come into the office the rest of the time."

Not everyone can work from home

 The New Working from Home Economy
 Only 65 percent of Americans reported having fast enough Internet capacity to support workable video calls. Source: simarik/iStock 

According to Nicholas Bloom, mostly managers, professionals, and financial workers who can carry out their jobs on computers have reported that they are able to work from home at an efficiency rate of at least 80 percent. But those who work in retail, logistics, transport, and business services who need to see customers or work with products or equipment cannot work remotely. 

The lack of facilities or sufficient Internet capacity to work effectively from home plays a role as well. "More than half of those surveyed who are now working from home are doing so either in shared rooms or their bedrooms. And only 65 percent of Americans reported having fast enough Internet capacity to support workable video calls. The remaining 35 percent have such poor Internet at home --or no Internet-- that it prevents effective telecommuting," said Nicholas Bloom. 

Bloom says that according to the reports, more educated, higher earning employees are far more likely to work from home, they continue to get paid, develop their skills, and advance their career. In contrast, those unable to work from home --either because of the nature of their jobs, or because they lack suitable space or Internet connections-- are being left behind. "They face bleak prospects if their skills and work experience erode during an extended shutdown and beyond," he says. 

The hidden thread of the home office: The paradox  

Perhaps it may seem a bit contradictory at first glance, but increased flexibility in people's workday may have given some of them less flexibility in the work itself.

According to the Norwegian University of Science and Technology researchers, on one hand, some people become more efficient in their new work setting of home-office because they have fewer distractions and work becomes easier to prioritize. On the other hand, others become less efficient due to lower motivation and lack of daily structure. 

Some individuals think it is beneficial to have more peace and flexibility in their daily life, while others may feel lonelier and less motivated due to the lack of social and physical contact with fellow co-workers and other colleagues.

Research literature on Covid-19 speculate on the long-term consequences of the coronavirus pandemic. Some of these consequences could include the way we think about the methods we employ in our working life, especially with regard to home-offices and digital collaboration.

It has been pointed out that people cannot work exclusively in physically separate environments. Some need the opportunities to meet with colleagues and experience the social cohesion and replenishment this provides. This, however, could be easily be solved by periodic company or team gatherings in a kind of workshop or professional retreat, an opportunity that could be seen as educative, perhaps offering courses to upgrade, update, or develop new skills. 

The paradox that working from home brings. Is it so?

Norwegian university of science and technology
Norwegian University of Science and Technology. Source: charlathan/iStock

Despite all the positive elements of working from a home office, one finding stands out as a paradox. Let's take a distributed team, for example, remote work can provide increased flexibility for the work situation, and yet provide less flexibility in carrying out the work in terms of meeting colleagues, collaborating, and teaching, as a study from the Norwegian University of Science and Technology (NTNU) and published by the Journal of Praxis in Higher Education has found.

Then again, everything is relative and each team, educational institution, or company is a different world; thus, every case and every team should be considered individually.  

"This flexibility issue, or paradox, is largely related to a much greater need for structure, planning, and clear communication in the digital modality. Meetings and teaching need to be planned in much more detail, and the digital form makes it difficult to deviate from the plan," say the researchers. 

They argue that some team members may lose the ability to pick up cues from the room, the kind of thing that some people tend to do when they are in a physical space together. "Several communication-related aspects of working digitally also make it difficult to achieve a good flow, as well as to make spontaneous and necessary changes." 

However, a good coordinated team using updated teamwork applications can make as many necessary changes as they require in real-time within their virtual realm. 

The researchers at NTUN also found that "the threshold for making small and necessary clarifications with collaborators is significantly higher in the digital realm." They conclude that the flexibility to complete a task is therefore reduced and can affect the quality of what people do.

In order to illustrate their point, they say that "people risk working alone with a task for too long, assuming rather than clarifying along the way. We don't want to disturb people, and we don't know what they are doing right now." The researchers found this to be the case both for students who worked synchronously, and for academics who mostly worked asynchronously within their study sample.

Yet, the question remains: Are these findings product of the after Covid-19 reality, or a mere detailed observation of how each individual's personality and personal way of working and interacting in teams manifests when moving from the physical space to the digital space?

Working from home: The Learning curve

learning curve
For many, working from home is still a relatively new concept with a learning curve they just started to incorporate into their life. Source: ozgurdonmaz/iStock 

Home offices may offer benefits for many, but it is hardly advantageous for everyone. The simple reason for this is that before being a collective, people are individuals with different ways of being efficient and productive. Falling into the trap of putting all the members of a team in the same box believing they will all deal with a task in the same way is a mistake.  

A team can only function well, in a productive and efficient manner within the virtual coworking space as long as each individual contributes to the team delivering their tasks only by following the path that works better for them. 

In the near future, more people will probably choose to work from home more than they did before, even when the pandemic has subsided. Yet, having the opportunity to commute and work physically from a traditional office is still important for some, but not for all workers. 

Some people feel they have the urge to meet their social needs and venture into crowded places more than others. They can work with background chatter, never-ending incoming calls and notifications, and being part of the fish tank. 

Some others find their personal daily routine where they completely manage their time as a recipe for more productivity, less distractions, letting them accomplish more in less time. Similarly, for some employers the quality of the work seems to be linked or influenced by the place where the work is done: Remote vs in-office.  

For many, working from home is still a relatively new concept with a learning curve they just started to incorporate into their life. With the help of some tips, everyone can quickly learn how to remote-work successfully. 

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