Data: Work-from-home tools boosted productivity but widened income disparities amid COVID

Working from home

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The widespread adoption of work-from-home (WFH) technology during the COVID-19 pandemic dramatically changed the way Americans live and work, according to a Rutgers University–led study.

The researchers evaluated the effects of the adoption of work-from-home technology with an equilibrium model in which people choose where to live, how to allocate hours between home and the office, and how much physical space they need to work at home and in the office.

Their findings were published today in the Review of Economic Studies.

Home workdays may quadruple

The shift to work from home began before the pandemic. From 2003 to 2019, the rate of only-WFH full workdays increased substantially, almost solely among workers with more than a high school diploma.

For those with a bachelor’s degree or higher, the proportion of only-WFH full workdays more than doubled, from 4.0% to 8.5%, and for those with some college but no bachelor's degree, the proportion more than tripled, from 1.5% to 5.0%. But for those with a high school diploma or less, the share of only-WFH full workdays doesn't show a strong time trend.

The researchers said that surveys suggest that, postpandemic, workers will roughly quadruple the time they work from home compared with before the pandemic. Some experts estimate that the full days of WFH quadrupled from 2019 to 2022. The boost in productivity of a day of WFH relative to a day at the office needed to quadruple the number of days worked from home is large: 48% for low-skill workers and 82% for more skilled workers.

The authors said that these productivity gains would have likely happened eventually but were accelerated by the pandemic.

Rising home prices, falling office value

WFH productivity didn't increase evenly, however. For example, the authors said that most workers can efficiently complete routine work tasks from home but may find it more efficient to complete collaborative work at the office.

A side consequence of the increase in productivity of working at home is a widening of income inequality.

The increased productivity lowered the demand for office space and led to a roughly 7% decline in office rents in central business districts, while residential rents rose, particularly in the outer suburbs, owing to higher demand for home office space. This translated into a 14% increase in housing costs near downtowns and 24% in the outer suburbs.

In an Oxford University Press USA press release, lead author Morris Davis said the pandemic triggered a radical economic shift. "The increase in productivity is predicted to lead to higher lifetime incomes for those workers in occupations with tasks that are most easily accomplished at home—predominantly high-skill workers—and thus a side consequence of the increase in productivity of working at home is a widening of income inequality," he said.

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