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The evidence on remote work is changing

AILSA CHANG, HOST:

At the beginning of the pandemic, many economists thought working from home was just as productive as working in an office. But three years later, the data is changing. Darian Woods and Adrian Ma from our daily economics podcast, The Indicator From Planet Money, found new evidence suggesting that working from home - at least full time - may not be as productive as we once thought.

DARIAN WOODS, BYLINE: Jose Maria Barrero is one of the top experts in working from home.

JOSE MARIA BARRERO: I'm an assistant professor of finance at ITAM in Mexico City, which is one of the main universities here.

ADRIAN MA, BYLINE: Jose says, yes, working hybrid - coming in a couple of days a week - is about as productive as being fully in the office.

WOODS: But working fully remotely five days a week, the productivity there is a whole different story. Now, measuring productivity is tricky business, especially because the kinds of work that can be done remotely tends to be knowledge work, things like marketing or legal work. So the best evidence Jose looked at studies jobs where a clear output is measurable, like police dispatchers in Manchester in the U.K.

BARRERO: Basically, the communication seemed to be more efficient when these two people - the person who receives the call from the citizen and the person who sends the officer to attend to the incident - are in the same location.

MA: And when you tally up a bunch of other studies on fully remote work in other industries, as Jose's done, the evidence for worker productivity...

BARRERO: It's anywhere up to a negative 10% effect on productivity.

WOODS: That's significant.

BARRERO: I mean, that is significant.

MA: In various studies, like the one observing police dispatchers, face to face meant workers could complete tasks faster.

BARRERO: You could write an email asking for those instructions and for that clarification, and it might delay your action a couple of minutes. That delay seems to be kind of what is dropping the productivity, kind of these frictions to communication.

MA: Another cause of productivity loss - mentoring and training. We spoke to Emma Harrington, who's an assistant professor at the University of Virginia. And she and her colleagues worked on this study of software engineers and looked at how much these coders helped each other when they were working in the same space versus when they were working apart.

EMMA HARRINGTON: You receive about 20% less feedback if you're on a distributed team than if you're all co-located with your teammates. The effects are much more pronounced among those young workers, among those workers who are new to the company, who are the ones who have the most to learn from their more senior coworkers.

MA: And just extrapolate these findings out a few years across the world, and you can see that there is a real long-term cost here. Jose agrees.

BARRERO: I think a lot of why companies, especially in knowledge jobs that require interaction, are going for hybrid is because they need the in-person interaction to develop these qualities in workers and basically this human capital and kind of sense of belonging to the firm.

MA: The way this evidence is stacking up is not a good look for remote work.

WOODS: I mean, I want to say this is not a takedown of fully remote work. Like, there are a ton of reasons why a company might want to do it. Jose says that companies might save on office costs. Plus, it means you can hire talent from around the world. Either way, it seems remote work is here to stay.

MA: Adrian Ma.

WOODS: Darian Woods, NPR News. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Darian Woods is a reporter and producer for The Indicator from Planet Money. He blends economics, journalism, and an ear for audio to tell stories that explain the global economy. He's reported on the time the world got together and solved a climate crisis, vaccine intellectual property explained through cake baking, and how Kit Kat bars reveal hidden economic forces.
Adrian Ma
Adrian Ma covers work, money and other "business-ish" for NPR's daily economics podcast The Indicator from Planet Money.