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I knew about. Here has to do with

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episode. if you've not heard it before the Planet My

1:01

team is back with a regular episode of the show

1:03

at the usual time later this week. So

1:12

the other day I called up

1:14

one of the world's top experts

1:16

in working from home, and he

1:18

himself was fittingly working from home.

1:20

Hello Jose and there are you

1:22

don't Very good yourself. Great. Banks

1:24

and. Was. A Marry A Better Arrow as

1:26

an assistant professor of Finance at a Time

1:28

university in Mexico City. He

1:30

says that before the pandemic, he

1:33

used to go into the office

1:35

every day, despite a fairly long

1:37

commute, now has mindsets changed. On.

1:39

Campus. Really? I'm on campus for a

1:41

reason and either for a seminar, to

1:44

talk to colleagues or to meet with

1:46

students and I cherish my working from

1:48

home difference lot more. kind of quiet

1:50

individual work. Dave I was spending it

1:52

talking with an Mp up August I

1:54

because Jose just came out with a

1:56

working paper coauthored with Nicholas Bloom and

1:59

Steven. Davis. Which reviews some

2:01

of the more recent evidence on

2:03

remote work and employees productivity. So

2:05

many of us on to know

2:07

right it like is working from

2:09

home better or worse than working

2:11

in the office and it's a

2:13

debate that's heated up during the

2:15

pandemic. It's touched businesses, employees and

2:17

even researchers trying to study this

2:19

year and get so measuring productivity

2:21

for many of the people who

2:23

can work from home as is

2:25

very very hard. Knowledge.

2:27

Jobs like Consulting like lawyers like

2:29

Engineers and kind of measuring the

2:32

productivity of these sorts of workers.

2:34

This is extremely hard, so I

2:36

think that's a big for to

2:38

provide. As a huge debate in

2:40

this literature. Earlier in the

2:42

pandemics, some of the research that Hussein

2:44

his colleagues conducted seem to suggest that

2:46

people who work for the remotely might

2:48

be just as productive or even more

2:50

productive them people who works in the

2:52

office. Now couple of years later, more

2:54

evidence has come in from around the

2:57

world that, oh, say it is, courses

2:59

of looks out for their favor And

3:01

there's a say when it comes to

3:03

fully remote work and productivity, it's not

3:05

so great. Is that

3:07

conversation? Thanks as always listening and for your

3:09

support of ton of money Plus. So.

3:13

I'm super interested in whether working from

3:15

home is more or less productive than

3:17

working on sites you have done. This

3:20

literature of the I kind of a

3:22

survey of the evidence so fire with

3:24

your courses. So from your rid of

3:26

the research one of the main findings.

3:29

And get so a lot of the

3:31

evans that we have about productivity while

3:33

working from home is coming from fully

3:35

remote and they're kind of. The evidence

3:37

is is not that positive on the

3:39

productivity of work from home and and

3:41

that to me some of the key

3:43

papers in that literature or include the

3:45

one Buy It In Italia Manual and

3:47

Emma Harrington that look at call center

3:50

workers basically comparing. Colleagues in the

3:52

same from some of them who were working

3:54

from home before the pandemic and continued to

3:56

do so, and others who were forced to

3:58

sift. When. Basically. we

4:00

closed down in 2020 from working physically at

4:02

the workplace to working from home. And then

4:04

kind of basically what they find is that

4:07

there seems to be a negative productivity effect.

4:10

And the reasons that they highlight is

4:12

that basically there's it's harder

4:14

to communicate with your colleagues when you need

4:17

kind of quick feedback from others. That'll

4:19

slow things down kind of even in this

4:21

occupation that it's fairly easy to do remotely

4:24

and in the sense that kind of you

4:26

don't really need to make big decisions and

4:28

have discussions and do creative stuff. You don't

4:30

want to write an email to say, do

4:32

I click on this button or that button?

4:34

Exactly. So you might just try to

4:36

work it out yourself might take another five minutes just

4:38

to not embarrass yourself. That delay

4:40

seems to be kind of what is

4:43

what is dropping the productivity kind of

4:45

these frictions to communication. Same thing kind

4:47

of in in the paper about an

4:49

Asian multinational firm looking at kind of remote

4:51

knowledge workers that were forced to lock down in

4:53

2020. It seemed that

4:55

they had to use kind of more email,

4:58

more Microsoft Teams in order to communicate with

5:00

each other. And so kind of even though

5:02

they were completing their job kind of to

5:04

the same level of satisfaction to their managers,

5:07

they had to do it over more hours kind

5:09

of because their schedules were more jam packed. And

5:11

I think kind of being able to knock on

5:14

on your colleagues door if you're a knowledge worker

5:16

and again asked for a quick clarification

5:19

rather than kind of scheduling a Microsoft Teams

5:21

meeting getting on it and making sure the microphone

5:23

is working is a bit more efficient. So these

5:25

are the sorts of frictions that kind of you

5:27

just can't get around when you're fully remote. Whereas

5:30

when you're in hybrid, you can kind

5:32

of make sure that that at least

5:35

some of those activities that require interaction

5:37

collaboration are done on site where kind

5:39

of these communication frictions are a bit

5:41

less significant. Okay, so

5:43

communication, what else? So

5:46

there's collaboration and idea generation.

5:49

There's this paper looking at idea

5:51

generation and experimental settings. So both

5:53

in kind of a multinational firm,

5:55

and I believe this was an online experiment

5:58

looked at how people interact in general. generated ideas

6:00

when they're interacting basically via video

6:03

conference versus in person. And

6:05

it seemed that there were also cognitive frictions

6:08

to this process when people are virtual.

6:10

And then kind of one of the

6:12

hypotheses that they laid out was that

6:15

when you're interacting virtually, you're

6:17

being forced to kind of

6:19

focus your gaze on a screen and

6:22

that limits a little bit of your cognitive

6:24

processes. And so kind of the number of

6:26

ideas that get generated and the number of

6:28

creative ideas that get generated are

6:30

basically fewer when you're interacting virtually than

6:32

when you're interacting in person. What

6:35

kind of magnitude are we looking at

6:37

with the drop in productivity for fully remote

6:39

workers? Yeah, so that's a great question. I

6:41

think for the sorts of

6:43

jobs where you can measure this accurately,

6:46

it's anywhere up to

6:48

a negative 10% effect on

6:50

productivity. That's significant. I

6:53

mean, that is significant, but what's important to keep in mind,

6:55

and I think so this

6:57

is very clear in the paper

6:59

by Emma Harrington and Natalia Manuel,

7:02

is that if a firm

7:04

goes fully remote, and remember this negative 10% is

7:06

for fully remote, the firm

7:08

can basically make that up in other

7:10

dimensions. And so in particular in saving

7:12

up on floor space costs. Offices

7:15

or websites and air conditioning

7:18

and heating. Exactly. And Emma

7:20

and Natalia's paper, they actively

7:22

calculate kind of what

7:24

the savings are versus the productivity

7:26

costs are from basically shutting down

7:29

a call center. And

7:31

they find that it can easily turn out

7:33

to be a positive for the employer to

7:35

basically kind of get rid of their call

7:37

centers, maybe take a small hit

7:39

on productivity, but kind of get cost savings that

7:41

are even bigger. And I think

7:43

there's gonna be some occupations in which that makes sense. That's

7:46

probably not the case for most knowledge workers for

7:48

whom kind of interaction is still a big deal

7:51

and it would be potentially significantly hindered

7:53

if you went fully remote. And

7:56

so I think this Leads me on to talk

7:58

a little bit about hybrid work. And then

8:00

so kind of what we sound and in terms of kind

8:02

of the dynamics of working from home is that hybrid work.

8:05

As. An Twenty Twenty Three as the dominant

8:07

form of of working from home, at least

8:09

in in advanced economies. So in

8:11

the Us I think of recent number say that

8:14

it's about three times as many people are are

8:16

in the hybrid mode coming into the last couple

8:18

of days a week. Then are

8:20

fully remote. And. And we think it's

8:22

because exactly kind of for and and in particular

8:24

for jobs that require lots of interaction. kind of

8:27

doing those interactions and person. Is

8:29

better than doing them are most. And

8:31

so my A coauthor Nick Bloom has

8:33

a nice paper where they basically ran

8:35

an experiment to try out hybrid work

8:37

among knowledge workers at a at a

8:39

company in China. So so this was

8:41

basically workers who are on the engineering,

8:44

the marketing in the finance departments. And

8:46

a randomized them to being either hybrid

8:49

are being fully in person. And.

8:51

Basically with will be found as people really

8:54

like Hybrid so they avoid the commute they

8:56

get to kind of were comfortably from home

8:58

a couple of days a week, especially if

9:00

they have the right equipment in the right

9:02

setup. And. With

9:05

a copy of that, it's very hard to measure

9:07

the productivity of of these sorts of workers. It

9:09

seemed that there was no kind of clear effect

9:11

on productivity. And. So with

9:13

hybrid sounds like this, we

9:15

don't know the exact magnitude.

9:18

Boats doesn't really seem to

9:20

be a quantifiable productivity loss.

9:23

So. Why?

9:25

Would accompany even want to do hybrid? I mean, if it

9:27

doesn't really matter, So. I think it

9:29

might not. Really matter for the

9:31

company in from the productivity but it might

9:34

matter and other dimensions and and and for

9:36

one in particular and I think this is

9:38

very real in next paper. The

9:41

big difference is kind of job

9:43

satisfaction and attrition rate rise. Basically

9:45

workers really like working from home

9:47

so can kind of in our.

9:49

Surveys. Running back to Twenty Twenty, people

9:51

consistently tell us that they would really like

9:53

to work from home and that that they would

9:56

like to do some more often on average

9:58

than their employer. Is. Planning. Them

10:00

to do so and. Basically not

10:02

offering working from home and can therefore

10:04

potential be. Be. A big cost

10:06

to companies as they want to attract talent.

10:09

So if your competitor is offering somebody any

10:11

they're fully or a motor a hybrid job

10:13

and you are not, You're forcing people to

10:15

come into the office every day. You're. Getting

10:18

the employee kind of potentially an objective li

10:20

worse set up for them in the sense

10:22

about commutes five days a week, but you're

10:24

also kind of failing to compete with the

10:27

from across the street. So. Sounds

10:29

like for people who are able to your

10:31

big fan of hybrid ones. Yeah.

10:33

So I think that's that's been our position

10:35

in that it seems to work very well

10:37

in and I mean this is kind of

10:39

taking opinion based on what we see on

10:41

the Saxon and visited. The fact that we

10:43

see is that people. Really

10:46

like working from home, it

10:48

seems to work reasonably well

10:50

in many jobs, in particular

10:52

for knowledge jobs. That. The

10:54

college graduates have. And. You

10:56

can do a little bit of the best

10:58

of both worlds. Maybe What I haven't quite

11:00

emphasized that as much as that. Companies.

11:03

Tend to say over going to be

11:05

hybrid and and kind of stop there

11:07

they they need to think about this

11:09

and design a hybrid and manage a

11:11

hybrid workforce kind of in i'm in

11:13

a more deliberate way. So for example,

11:15

asking you have a whole organization to

11:17

come in. at the same

11:19

time or asking. For

11:21

teams to come in at the same time as

11:23

key because this is exactly what generates kind of.

11:26

The. In person interactions. That he

11:28

wants to have in the office. So. We

11:30

the kind of the worst form of hybrid. I think that.

11:33

That. I could think of would be one where

11:35

it where there's a company that allows people to

11:37

choose how many days and what days they come

11:39

into the office. Every week. We're

11:42

there's basically no coordination kind of people want

11:45

to be in the office when their colleagues

11:47

and and are in the Us. Is

11:49

as you let everybody choose what state they come

11:52

in. You might end up with lot of people

11:54

who are in the office and who are on

11:56

zoom meetings with her colleagues who are Florida. And

11:58

that's exactly what you don't want. That's what I

12:00

did. I come into the office every day

12:03

to go on to Zoom, which feels a

12:05

little strange, almost as if I've. I've

12:08

got. I've got the computer plus the

12:10

zoom cause it's a well yeah so

12:12

it's a. I

12:14

talk to my colleagues on Zoom

12:16

at work. the answers that produces

12:18

the interns they're in different cities

12:20

scattered across America allow it says

12:22

he say I had to the

12:24

zebra August arrested for his for

12:27

us. I mean as. So

12:29

the media I was a little too negative but

12:31

I think as as you want people to interact

12:34

and. And and and to build

12:36

rapport with each other, That's. I

12:38

mean that's a set of the doesn't lend itself

12:40

to to that's earth and at it can work

12:42

from some job that seems to work for you

12:44

but for many jobs it's it has the least

12:46

probability of success. Okay, so

12:49

the pandemic changed everything in

12:51

regards to do work, especially

12:53

for knowledge workers. Do.

12:56

You think we're in a better world Now

12:58

I do And and and I think the

13:00

main reason for that is is is in

13:03

some sense we were. In twenty

13:05

nineteen caught in a equilibrium were.

13:08

More. Or less everybody. regardless of what your

13:10

job was, You went into the workplace five

13:12

days a week basically because that's what everybody

13:14

did and kind of. Trying.

13:16

To break that equilibrium and you doing

13:18

something different just wasn't gonna work. Kind

13:20

of the example that we asked give

13:23

people it's think about lawyers. Lawyers are

13:25

people who do. Knowledge Work.

13:27

But. They typically require an internet connection and

13:30

and then a computer. And they

13:32

could easily do their job remotely. And

13:34

and twenty Nineteen or or Hybrid. And

13:36

twenty and key. They didn't why, because

13:38

it would have been weird for them

13:41

for up a imagineer big law firm

13:43

in New York. All

13:45

of your competitors and your clients are coming

13:47

into the office five days a week. you

13:50

start not doing that and and it's just

13:52

weird and you're probably going to lose out

13:54

on business is you might be signaling the

13:57

in not taking the job as seriously as

13:59

your competitors Yeah, I think that's how

14:01

people would have interpreted it. And

14:04

exactly, the pandemic sort of broke that

14:06

equilibrium, kind of reduced the stigma associated

14:08

with working from home significantly, and in

14:11

the process probably taught us that working from

14:13

home is actually more productive than we expect,

14:15

that saving the commute time that we save

14:17

is probably kind of more productive

14:19

than coming in and having to chit chat

14:21

with your colleagues over the break room while

14:23

you're sitting down and so on. And

14:26

it opened our eyes to this possibility. The

14:29

fact that the pandemic was long was obviously a terrible event

14:31

for humanity, but I think it helped

14:33

ingrain some of these new dynamics of working

14:35

from home a bit better and really

14:38

helped us open our eyes and see kind of

14:40

both the good things about working from home and

14:43

later when we came back, kind of what we were

14:45

missing from being in person. Thank

14:50

you again to Jose Maria Barrero. Once

14:53

again, we make episodes like this one every

14:55

other week for our Planet Money Plus supporters,

14:58

two extra episodes a month, and usually

15:00

they're a bit more wonky, a bit more nerdy,

15:02

but not always. Sometimes we talk about

15:04

how Planet Money and The Indicator come together behind the

15:07

scenes. You can sign up for

15:09

Planet Money Plus at plus.npr.org. I'm

15:11

Darian Woods. Thank you so much for listening to Planet

15:13

Money from NPR.