Excerpted from pp. 1–2 & 191–196 of Going Remote: How the Flexible Work Economy Can Improve Our Lives and Our Cities by Matthew E. Kahn, published by the University of California Press. © 2022 by Matthew E. Kahn. This article is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.
We are not going back to the work world of January 2020. Going forward, perhaps as many as 35 percent of the workforce will work from home at least a few days a week. Nobody anticipated this shift in our work arrangements. In recent years, major companies such as Amazon, Apple, Facebook, and Google have built new corporate campuses. They hired leading architects to design buildings and outdoor spaces where people would want to spend time, and in doing so, remove both the real and self-defined walls that often separate work, socializing, wellness, and creativity. One Apple executive told Wired Magazine, “We don’t want you to feel like you’re in a casino. We want you to know what time of day it is, what temperature it is outside. Is the wind really blowing? That was Steve’s original intention, to sort of blur that line between the inside and outside. It sort of wakes up your senses.” Apple built a 2.8 million square foot building that cost billions of dollars. The 175-acre Cupertino campus, Apple Park, opened in 2017 and was filled with 12,000 people.
For much of 2020 and 2021, these buildings have been quiet. The sudden onset of the COVID-19 pandemic in 2020 sent tens of millions of workers home. A “silver lining” of this national emergency is that millions of workers and many firms have learned how to continue to be productive while working from home (WFH). Such workers have experienced how working from home affects their productivity and their quality of life. The lessons learned in the recent past will influence how workers configure their lives in our post-COVID economy. In this sense, WFH is an “experience good.” This economics term refers to situations where we underestimate how much we value an experience until we try it. When the first Star Wars movie was released in 1977, I could never have imagined how much I would enjoy it. A written explanation of the plot would not have conveyed its power and excitement.
Over the next few years, workers who anticipate having the option to engage in WFH on at least a part-time basis will have strong incentives to reconfigure their plans and to invest in the skills to make the most of this new opportunity.
My book Going Remote: How the Flexible Work Economy Can Improve Our Lives and Our Cities explores how our recent nationwide experiment with WFH will influence our nation’s economic geography over the next decades. We are more likely to unlock the full potential of this new opportunity if we can anticipate the opportunities and challenges posed for workers, firms, and local governments by the WFH option. Just before the COVID crisis hit in early 2020, we faced four social challenges. First, we spent too much time commuting. Second, rents were too high in America’s most productive cities. Third, local economies were stagnant in many rural places and in post-industrial cities such as Baltimore. Fourth, many women and many minorities did not have the same economic success and access to opportunities as white men. The book explores how the rise of WFH can improve our quality of life and help us to overcome each of these four challenges.
Read more: Has COVID-19 Triggered an Urban Exodus? by Rudiger Ahrend, Boris Cournède, Paolo Veneri and Volker Ziemann, Centre for Entrepreneurship, SMEs, Regions and Cities & Economics Department, OECD
The gains from WFH differ depending on one’s life goals and responsibilities. A young ambitious person who is eager to make her mark will continue to value the face-to-face interactions at work as she seeks to build up her skill set, network, and reputation. At the same time, a middle-aged worker who has an aging mother in Iowa may greatly benefit from the flexibility offered by engaging in remote work. These two examples highlight a central theme of the book. We differ with respect to what we gain from working from home. No one expected that millions of us would have the opportunity to engage in WFH. Over the next few years, workers who anticipate having the option to engage in WFH on at least a part-time basis will have strong incentives to reconfigure their plans and to invest in the skills to make the most of this new opportunity. While the rise of WFH offers potentially large benefits for eligible workers, it also could impose costs on US workers. Such workers will face greater international competition as US workers compete with international remote workers. Economic analysis offers insights here about how younger workers can position themselves in terms of human capital investment to better adapt to the new “rules of the game.”
Each of us accumulates regrets during our life. We make choices and then wonder what our life would have been like had we chosen another path. WFH allows for more experimentation concerning one’s work field and the geographic place where one lives.
The rise of WFH poses a challenge for macroeconomists who seek to measure the average person’s well-being over time for a given nation and across nations at a point in time. In comparing living standards across nations, economists have compared health, per capita income, and leisure across nations. Until recently, the United States offered its residents a higher per capita earnings and less leisure than France. While much macroeconomic discussion focuses on a nation’s per capita gross domestic product (GDP), we have long understood the limitations of this measuring rod. In truth, “GDP measures everything,” as Senator Robert Kennedy famously said, “except that which makes life worthwhile.” The number does not measure health, education, equality of opportunity, the state of the environment or many other indicators of the quality of life.
When I was a student at the University of Chicago, a prominent professor started every lecture by saying to us, “If your head is in the oven and your feet are in the refrigerator then on average you feel good.” The point of this painful joke is that the fictitious average person’s well-being may not actually reflect anyone in our diverse society. If over one-third of workers engage in WFH and if a growing number of workers who are not eligible to engage in WFH move to cheaper, better-tailored for them places where they can find service-sector work, then the “average American” worker enjoys improvements in her well-being. By commuting less and by commuting when workers want to go to the office, this effectively increases a worker’s amount of time. How each worker allocates this time boost will vary across workers and for the same worker will vary on a daily basis. The greater control over one’s daily schedule will help eligible workers to feel that they have more control over their daily quality of life. Standard macroeconomic accounts of national well-being miss out on these nuances. […]
Are our lives getting better? How can policies improve our lives? Are we measuring the right things?
The OECD Better Life Initiative helps answer these questions by shedding light on what drives well-being of people and nations and what needs to be done to achieve greater progress for all.
Each of us accumulates regrets during our life. We make choices and then wonder what our life would have been like had we chosen another path. WFH allows for more experimentation concerning one’s work field and the geographic place where one lives. WFH offers great flexibility for switching one’s schedule as new “good news” (a family reunion!) or “bad news” (a sick family member) arises. I claim that WFH workers will gain from having fewer life regrets because they are better able to allocate their time so that they can be where they want to be and avoid being where they do not want to be. The synergy between how we allocate our time and where we spend our time has been a major theme in this book. WFH offers tremendous gains for those who have niche preferences for how they spend their leisure time (artists, environmentalists) and those with responsibilities for family and relatives. These individuals greatly value the flexibility offered by WFH as they are not tied down to living within daily commuting range of their employer’s headquarters. […]
Throughout the book, I present examples of how non-WFH workers can gain from the rise of WFH. Such service workers will be able to find different work opportunities in more affordable areas in places where they want to live. If such areas provide high-quality education, then their children will be more likely to participate in the future WFH economy when they are adults. There have been times in American history when the middle class have enjoyed sufficient income growth that income inequality declined. Economic historians point to the great compression era of 1945–65, when the US high school graduation rate soared and the middle class gained. Whether my optimistic claims turn out to be correct will determine whether the rise of WFH reduces or increases inequality in our post-COVID economy.