Jan 23, 2024 - Economy

Does working from home boost productivity? We're starting to get answers

Illustration of a person clocking in on a time clock shaped like a house

Illustration: Sarah Grillo/Axios

Two new papers out last week shed light on one of the big questions of the remote work era: Does working from home make you more or less productive?

Driving the news: Nearly four years into the start of the country's remote experiment, we're starting to get some answers.

Why it matters: Increasing productivity is good for the economy and for businesses.

The first paper, a report from the Federal Reserve Bank of San Francisco, looked across 43 industries in the private sector to see if more remote-friendly occupations saw increased productivity during the pandemic period.

  • They didn't find any meaningful effect.

Another report, a working paper from economists at the New York Fed, University of Virginia and Harvard, looks at just one unnamed Fortune 500 company and found more nuanced answers.

  • Before the pandemic, software engineers at this company either worked all together in one building — one team in close proximity —  or were more dispersed across buildings, a system that more closely mimics a WFH environment.
  • Researchers looked at the differences between teams before and after the pandemic.

What they found: Working close together boosts mentorship, but may decrease productivity in the short term.

  • Those working in close proximity to each other, pre-pandemic, received more feedback on their code. Sitting near teammates meant more senior colleagues gave more feedback to their juniors, the researchers explain.
  • Once everyone went remote in 2020, the mentorship gap between workers in the two arrangements disappeared.

Meanwhile: Engineers who worked in closer proximity before the pandemic wrote fewer software programs than those who were more dispersed. The decline in productivity was most pronounced for the senior coders — who were presumably busier mentoring colleagues.

  • Once all the employees moved to remote work, junior workers who'd been on the close-together team were more likely to get a raise, perhaps benefiting from that early-on mentorship.
  • During the pandemic period, the close-together workers had higher quit rates. The better training allowed them to score better paying jobs, the researchers theorized.

The intrigue: Once proximity wasn't possible in an all-remote setting, the company began hiring workers with more training. Buying talent instead of building it.

  • That move suggests that in the long run, businesses adapt to the way work is performed and could help explain why remote work didn't significantly change productivity rates in that first paper.

The big picture: At the highest level, the Labor Department measures productivity by looking at how much gets created divided by hours worked.

  • But once you start zooming in from there, things get tricky. Especially in the realm of knowledge work, where WFH is most prevalent and typically workers are not producing easily measurable outputs (like widgets, say).
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