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Work From Home: A 21st Century Revolution

Link to monitoring data source: https://www.kastle.com/safety-wellness/getting-america-back-to-work/

The pandemic propelled Work From Home (WFH) into the mainstream as the risk of infection drove individuals, employers, and governments to adopt WFH when hospitalizations and deaths were skyrocketing. Office occupancy plummeted to 10-20%, and what had not previously been considered was now embraced—a monumental change in behavior. Although occupancies have since rebounded, current data shows that occupancy rates have only reached 50% and are declining in certain cities  (Fig. 1) [1]. This indicates that a fundamental shift in behavior is taking place for non-frontline workers.

A major benefit of WFH continues to be avoiding Covid and other airborne infections that are commonly transmitted in poorly ventilated, shared-air environments found in many offices and transport [2, 3, 4]. WFH also offers other advantages. These include reduced time, expenses, pollution, and energy consumption related to commuting [5,6]; expanded availability of long distance work and for individuals with disabilities [7]; and increased flexibility of lifestyle and family responsibilities and less burnout [8,9].

Employers also recognize the benefits of WFH, especially in terms of overcoming location limitations for workers [10,11]. By hiring in remote locations there can be a larger pool of potential high quality employees to choose from, and experienced employees can be retained even if they relocate. Studies have shown that WFH leads to higher productivity, and the advantages it offers can attract and retain staff [6, 8,12,13,14,15,16], in part due to eliminating the burdens of commuting. Some argue that it enables better work focus by avoiding the distractions of an office environment. Moreover, WFH significantly reduces office space costs.

There may be tradeoffs, as concerns have been raised about staff avoiding work. This may be linked to difficulties in supervision and there may also be importance of casual encounters such as ‘water cooler conversations’ in offices. Challenges in remote supervision and observations of higher productivity may be due to individual differences, organizational structures, or the effective adoption of WFH technology. This includes broadband, headsets, video meetings, and platforms for collaborative work.

The benefits that some businesses experience can result in losses for others. Commercial real estate owners and investors, in particular, may suffer significant financial setbacks. Already, there have been reports of substantial defaults on debt, and it is important to note that the consequences of this trend are just starting to unfold, considering the long-term nature of office leases, especially for larger tenants [17,18,19,20, 21]. Moreover, downtown shops are encountering a significant decline in customer footfall [19], leading to a decrease in tax income for city governments. This poses a severe threat, especially since these local governments often rely on property, sales, and entertainment taxes to support their operations [22].

Employers that are pressuring workers to return to the office (RTO) for “hybrid work” or full office work have been finding it difficult to overcome the workers’ perceived benefits [23,24]. Indeed, many workers are willing to forgo additional pay to work from home [25]. With the flexibility of WFH to find work across the globe, worker preferences can lead to changing patterns of employment.

The challenges faced by office real estate and core city governments are leading to economic stresses. However, consistent with the substantial health, lifestyle, and other benefits of WFH, data indicates that WFH is not going away [1,26].

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References

  1. https://www.kastle.com/safety-wellness/getting-america-back-to-work/
  2. How States Can Better Regulate Indoor Air Quality https://publichealth.jhu.edu/2023/regulating-indoor-air-quality
  3. Healthy indoor air is our fundamental need: the time to act is now, Lidia Morawska Guy B. Marks Jason Monty, Medical Journal of Australia, Vol.217, Issue 11, 14 November 2022 https://www.mja.com.au/journal/2022/217/11/healthy-indoor-air-our-fundamental-need-time-act-now
  4. Prevention and control of COVID-19 in public transportation: Experience from China https://www.sciencedirect.com/science/article/pii/S0269749120359790?via%3Dihub
  5. Climate mitigation potentials of teleworking are sensitive to changes in lifestyle and workplace rather than ICT usage https://www.pnas.org/doi/full/10.1073/pnas.2304099120
  6. Time Savings When Working from Home https://bfi.uchicago.edu/insight/research-summary/time-savings-when-working-from-home/#:~:text=The%20average%20daily%20savings%20in,week%20per%20worker%20post%20pandemic.
  7. Remote Work is Enabling Higher Employment Among Disabled Workers https://eig.org/remote-work-is-enabling-higher-employment-among-disabled-workers/
  8.  Remote-Work Options Can Boost Productivity and Curb Burnout https://www.catalyst.org/reports/remote-work-burnout-productivity/
  9. Flexible work is feminist–and women won’t return to a system that hasn’t served them well to spare the feelings of powerful men https://fortune.com/2023/05/14/flexible-work-feminist-women-return-office-power-men-careers-erin-grau/
  10. Collaborating during Coronavirus: The impact of COVID-19 on the nature of work https://www.nber.org/system/files/working_papers/w27612/w27612.pdf
  11. Return to the office? No way, say some tech companies that are letting workers stay remote despite rival firms imposing mandates https://fortune.com/2023/08/16/atlassian-airbnb-remote-work-return-to-office/
  12. Remote employees work longer and harder, studies show https://thehill.com/business/4110598-remote-employees-work-longer-and-harder-studies-show/
  13. Working From Home Increases Productivity https://www.businessnewsdaily.com/15259-working-from-home-more-productive.html
  14. Does Working from Home Work? Evidence from a Chinese Experiment https://doi.org/10.1093/qje/qju032
  15. Bosses, you’re wrong: Remote workers are more productive than your in-office employees https://finance.yahoo.com/news/bosses-wrong-remote-workers-more-163938678.html
  16. Employees want remote-work tools, not in-office mandates, Atlassian says https://www.computerworld.com/article/3699768/employees-want-remote-work-tools-not-in-office-mandates-atlassian-says.html
  17. Defaults on Commercial Real Estate Loans Surge to 14-Year High https://www.investopedia.com/distressed-cre-loans-rose-to-5-2-in-february-7373644
  18. A $1.5 Trillion Wall of Debt Is Looming for US Commercial Properties https://www.wealthmanagement.com/finance-lending/15-trillion-wall-debt-looming-us-commercial-properties
  19. Remote work could lead to office building valuation taking an $800bn hit, McKinsey says https://www.thenationalnews.com/business/property/2023/07/14/remote-work-could-lead-to-office-building-valuation-taking-an-800bn-hit-mckinsey-says/
  20. The Next Crisis Will Start With Empty Office Buildings https://www.theatlantic.com/ideas/archive/2023/06/commercial-real-estate-crisis-empty-offices/674310/
  21. Office Lease Terms Might Be Shrinking, But Not for Everyone https://www.metro-manhattan.com/blog/office-lease-terms-might-be-shrinking-but-not-for-everyone/
  22. How Local Governments Raise Their Tax Dollars https://www.pewtrusts.org/en/research-and-analysis/data-visualizations/2021/how-local-governments-raise-their-tax-dollars
  23. We’re Now Finding Out The Damaging Results of The Mandated Return to Office — And It’s Worse Than We Thought. https://fortune.com/2023/08/01/research-damaging-results-mandated-return-to-office-worse-than-we-thought-rto-remote-work-careers-leadership-gleb-tsipursky/
  24. Amazon is seeing some employees quit instead of moving to a new state as part of relocation mandate https://www.cnbc.com/amp/2023/08/22/amazon-employees-are-quitting-after-they-were-told-to-relocate-states.html
  25. Employees Willing To Make Less Money To Stay Home https://www.teamblind.com/blog/employees-willing-to-make-less-money-to-stay-home/
  26. Another Labor Day Came And Went Without A Spike In Office Occupancy https://www.bisnow.com/national/news/office/labor-day-return-2023-120650