Future Battles on the Advantages of Working from Home

It’s not hard to see how employers can do it. With all the commute time spared, what can stop employees from asking to work from home longer—from preparing that report in the morning before the meeting starts, or answering emails or communicating with clients, or filing these forms around the clock? day or night? Blurring the lines between work and the rest of life need not ultimately benefit workers. That’s what actually happened worried people about working from home before the pandemic started.

Economists call this a “probability” question: who ultimately benefits from an unexpected drop. It’s just like a tax case question: Economists routinely analyze whether consumers or sellers actually pay when, for example, a government raises its sales tax.

The first rule of thumb is that it depends on market conditions. The incidence of work-from-home reward will depend on whether labor will be scarce in the long run and how strong employers are. Who needs the other side more? If workers have many options and are able to leave time-consuming jobs, they will tend to hold the prize. If employers can choose from a large number of workers, working from home may be far less convenient than it might seem at first glance.

The job market looks tight right now and if employers put extra strain on workers, it would likely be a serious mistake. They have a hard time attracting people and possibly wave of resignation. However, will this still be the case a few years from when things get “back to normal”?

The last 40 years of wage growth in the United States offers a note of warning. For decades, median wages followed average worker productivity—the output a typical worker produces—quite closely. Later, starting in the 1970s, this correlation Destroy. 1979 to 2019, workers’ average productivity rose 72 percent, but the median wage rose less than a quarter of that — just 17 percent.

important discussion between economists why about pay and productivity seems to be separated. Some consider the relationship remains strong despite variation in grand total numbers. Some cite one or more of these factors: a change in the balance of bargaining power due to globalization, technological change, or the decreasing power of unions or increased employer concentration.

Beyond the subtleties, the basic problem is simple. Companies demand greater its share in the country’s economy as usual. If productivity growth over the past 40 years has benefited shareholders and corporate profits more than wages, the same could well be true for the newfound productivity benefits and time savings of working from home.

Now might be the perfect time to enjoy the little things – read the newspaper in your pajamas, have an extra cup of coffee and not just have to deal with traffic. Even if you don’t wear real pants, know that your employer may tell you to return to work soon.

Austan Goolsbee is a professor of economics at the University of Chicago Booth School of Business. Follow him on Twitter: @austan_goolsbee