By John Hood
Raleigh, NC – It was bound to happen. The percentage of adults working from home has fallen significantly from its pandemic-era peak. Nevertheless, telecommuting has established itself as a lasting and consequential fact of modern life.
Before COVID struck in early 2020, the share of full paid workdays performed at home by Americans aged 20 to 64 was about 5%. By May 2020, it had shot up to 61%. As of this April, that share had tumbled to 39%.
Which is still, of course, vastly higher than the pre-COVID figure. Here in North Carolina and around the country, employers and employees in many telecommuter-friendly occupations are likely to bargain their way to a middle ground — with wide-ranging implications for productivity, workplace culture, family life, and public policy.
Take housing, for example. Soaring prices and rents have roiled North Carolina’s housing markets for months. While there are many explanations, including shortages of labor and materials and loose monetary policy, the substitution of telecommuting for physical commuting is a driving factor in many places.
As workers gained full or partial respite from daily commutes, their housing preferences changed. Some now want larger houses that can accommodate home offices. Others want to move further away from urban cores to expand their lawns and gardens, reduce their taxes or other costs, live nearer to extended family or recreational amenities, or otherwise improve their quality of life.
New research by John Mondragon of the Federal Reserve Bank of San Francisco and Johannes Wieland of the University of California at San Diego suggests that this shift in housing preferences can explain more than half of the 24% increase in average housing prices since late 2019. “Our results imply,” they write in a new National Bureau of Economic Research working paper, that “the future path of housing costs may depend critically on the path of remote work.”
If workers themselves have any say in the matter — and in today’s tight labor market they clearly do — remote work will remain far more prevalent in the pandemic’s aftermath than it was before. According to a Pew Research Center poll taken in February, 59% of Americans who work in telecommuter-friendly occupations were working from home all or most of the time. That’s also down from peak-COVID but still far higher than the 23% who were doing so before early 2020.
Although their experience may have begun under duress, most telecommuters now say they prefer the arrangement. Of those Pew respondents currently working from home most of the time, 61% say it is by choice while only 38% say their workplaces remain closed to them.
I’ve written before about the need for North Carolina leaders to adjust their policy choices to the new reality. What I think I failed to do in past columns is convey the urgency of this need. Our major cities need to rethink mass-transit plans based on now-outdated assumptions. All communities, large and small, need to rethink how they permit and regulate the construction of housing, offices, retail, and other buildings.
Above all, policymakers need to keep in mind that their job is to accommodate and respond to the preferences of North Carolinians, not to attempt to shape those preferences.
Change can be disorienting, yes, but it’s also a source of vitality and innovation. Workers choosing to stay at home for at least part of each week certainly recognize there will be tradeoffs. In the Pew survey, 64% of those who’ve recently begun telecommuting said that working from home has made it easier to balance work and personal life. At the same time, 60% said working from home made them feel less connected to their co-workers.
The best answer, in my view, is to let employers and employees work out the right balance among themselves. There’s no right answer applicable in every situation. Government should adapt to emerging market conditions in a way best suited to delivering public services at an affordable cost, and otherwise stay out of the way.