Remote Work Is Growing In Spite Of Musk And Dimon’s Opposition

Has remote work become a permanent feature of the labor market? A recent New York Federal Reserve report gives a qualified “yes,” but ultimately raises more issues than it answers.

Not all employers are fans of remote work. Earlier this year, Elon Musk e-mailed Tesla employees to stop “phoning it in,” ordering them to “spend a minimum of 40 hours in the office per week,” and not “in some remote pseudo office.” Tesla’s
TSLA
headquarters are in Texas, so we can guess that Musk wasn’t part of the New York Fed regional survey.

Jamie Dimon, CEO of JPMorgan Chase
JPM
, is in the Fed’s region. He apparently would also have said “no” to remote work’s future. Last year, Dimon said remote work “doesn’t work for people who want to hustle, doesn’t work for culture, doesn’t work for idea generation.” And he recently told investors that remote work is like “management by Hollywood Squares” with people on Zoom meetings “texting each other, sometimes saying what a jerk that person is.”

But Musk and Dimon aside, the New York Fed’s blog argues “Remote Work Is Here To Stay.” Using their survey of regional manufacturing firms and business leaders, Fed economists find “about 20 percent of all service work and 7 percent of manufacturing work is now being conducted remotely.” Further, regional businesses don’t expect the percentage to change much in the coming year.

As with other analyses, the Fed finds the COVID-19 pandemic has driven remote work to much higher levels. Before the pandemic, their survey found 8% of service work and 3% of manufacturing work being done remotely.

But remote work has fallen in the past year. One year ago, the survey reported “about a third of all service work and just under 10 percent of manufacturing work” being done remotely.

So you could view the survey as showing a sharp decline in remote work compared to last year—in services, from 33% to 20%.

In the current survey, employers expect the new levels to stabilize in the coming year, but that could change. And this survey is just one of many attempts to figure out how much remote work was caused by the pandemic, and how much of it will be permanent instead of transitory.

Remember that remote work has two components. Can the tasks of the job be done remotely? And if so, are employers allowing it and are workers doing it?

In June of 2020, the federal Bureau of Labor Statistics (BLS) estimated that just under 45% of all jobs could be done via telework. But they also reported percentages of actual telework—the “takeup rate” for jobs that could be done remotely—were only around 20% to 25%.

I’ve been more skeptical than other economists about how permanent the telework shift will be. For me, the ability for workers to telework depends a great deal on their relative bargaining power—how much in demand they are, for what occupations, and what kind of business arrangements.

But in addition to the Fed’s recent survey, there’s a good deal of serious economic research arguing for a sharply increased—and likely permanent—share of remote work in the future, at least for college-educated professionals. (One thing all research agrees on is that remote work is heavily concentrated among those with a BA degree or higher, in professional and technical occupations.)

Stanford economist Nick Bloom, who argues for the significance of remote work, oversees an excellent web site on the issue, “WFH Research.” Economist Adam Ozimek at the Economic Innovation Group has dug into the growth of remote work and its implications for the economic future of different regions. And BLS continues to survey the workforce on telework and COVID-19, issuing monthly reports showing substantial, but declining, levels of remote work due to the virus.

I’m now convinced there will be more permanent telework post-pandemic, although the actual levels are still up for debate. And there remain lots of issues to understand, some of which I’ll be exploring in future blogs.

For workers, what are telework’s effects on promotion, advancement, and careers—will remote workers climb the ladder as fast as those in the office? What about the impacts on women, especially those with young children? Will it contribute to even greater inequality, as it is an option primarily for higher educated workers, which also has a racial dimension? Can remote workers organize unions or protest exploitation or unfair treatment?

For companies, what will higher levels of teleworking do to innovation, often thought to be driven by face-to-face interaction? Can corporate cultures accommodate significant permanent telework? And can productivity be maintained with remote work, and without extensive surveillance by employers how employees are spending their time? (Remember Musk’s ordering Tesla employees to stop “phoning it in.”)

So the Fed’s recent regional snapshot tells us that COVID-19 is changing telework and remote work, with many unknown implications for the labor market and the economy. But it ultimately raises more questions than it answers. Everyone—workers, businesses, and policy makers—will be wrestling with these issues for many years to come.