Whether remote work has been good or bad for productivity is an ongoing debate. Some say that it’s
The San Francisco Fed noted that a lot of previous research on this question used very specific occupations with quantifiable outputs, such as call center workers. The researchers noted that this is a very narrow scope of empirical evidence, which lead them to explore this matter further.
So instead, researchers chose to measure industry productivity by output, using value added, per hour. The data focused on 43 industries that span the private economy, including, for example, chemical manufacturing, retail trade, and accommodation and food services. It excluded the real estate, rental, and leasing industry because a large fraction of output in this industry is imputed rather than directly measured. To do this, the San Francisco Fed combed national accounts measures of output by industry from the Bureau of Economic Analysis (BEA) and all-employee aggregate weekly hours from the Bureau of Labor Statistics (BLS). Its industry-level productivity data set is available quarterly starting in the second quarter of 2006 and ending in the first quarter of 2023. For each industry, it calculated the average annualized growth in quarterly productivity to measure changes in industry productivity over the pandemic.
While productivity growth varied significantly across industries the Fed said it appears unlikely that the differences in performance during the pandemic across industries have much to do with differences in teleworking. Even after accounting for some industries being more “teleworkable” than others, they found no link between remote work and excess productivity gains or losses.
“There is essentially no relationship between teleworkability and pandemic productivity growth. We found similar results using only data during 2020 when firms were first adjusting to new work arrangements. The results are also similar for 2021-23, when firms had more experience with remote work and were also shifting to reopening office workspaces and, increasingly, to hybrid work,” said the study’s conclusion.
The researchers noted that the findings do not rule out that this might change in the future as remote work becomes more common, saying that the economic environment has changed in many ways during and since the pandemic, which could have masked the longer-run effects of teleworking.
“Working remotely could foster innovation through a reduction in communication costs and improved talent allocation across geographic areas. However, working off-site could also hamper innovation by reducing in-person office interactions that foster idea generation and diffusion. The future of work is likely to be a hybrid format that balances the benefits and limitations of remote work,” said the San Francisco Fed.
