High work-from-home rates persist in 2023

The number of people in the United States who work from home has grown steadily since the 1960s. In 1965, the share of full days worked from home was less than 0.5 percent of all paid workdays. By 2019, this work-from-home share had risen to 7 percent, with most observers expecting the rate to continue to increase gradually in the coming decades. But then the COVID-19 pandemic led to a sharp rise in the work-from-home rate, and it remained at 28 percent in June 2023, even as the effects of the pandemic subsided. In “The evolution of work from home” (Journal of Economic Perspectives, fall 2023), José María Barrero, Nicholas Bloom, and Steven J. Davis examine the history and future of remote work, including the technological changes that made it possible, the radical shift that occurred during the pandemic, and the changed perceptions about working from home that occurred among both managers and workers as a result of the “mass social experiment” induced by the pandemic.

As the authors explain, the pandemic prompted a huge shift toward working from home, but the conditions that made it possible developed earlier. In particular, access to broadband internet service in the home increased from near zero percent in 2000 to more than 70 percent in 2018. In addition, web-based video-conferencing platforms and other internet-related technologies advanced rapidly in the 2000s, providing the necessary infrastructure for the widespread shift to remote work. By most accounts, the pandemic-era work-from-home experiment has been relatively successful, and the authors cite that as one of the reasons for the work-from-home rate remaining high in 2023—about 4 times higher than it was in 2019.

Barrero, Bloom, and Davis develop two hypotheses to explain the persistently high work-at-home rate in 2023. First, the pandemic-induced social experiment provided new information and experience that altered perceptions about the feasibility and effectiveness of working from home. Second, employers and employees changed their work-at-home arrangements in light of this new information and experience—specifically, those with more favorable experiences during the height of the pandemic tended to extend their work-at-home arrangements as conditions returned to their prepandemic norms. The authors test their hypotheses by surveying thousands of workers across numerous countries. They find that most workers were favorably surprised by their ability to work productively from home. Moreover, the number of work-from-home days included in employers’ plans for the postpandemic period tended to increase strongly with the percentage of workers at those firms who had such favorable surprises.

The article includes a detailed analysis of the differences in work-from-home rates by occupation, industry, and various demographic characteristics. They find that occupation, industry, and educational attainment are strong predictors of whether someone works from home. The information sector, for example, had the highest work-from-home rate in 2023 (2.6 days per week), while finance and insurance (2.3 days per week) and professional and business services (2.0 days per week) had the next highest rates. More traditional work arrangements continued to prevail in retail trade, hospitality, food services, transportation, and manufacturing, where work-from-home rates ranged from 0.7 to 0.9 days per week in 2023. Work-from-home rates also rose sharply with a worker’s education level. The authors found little differences in work-from-home rates between women and men, although the presence of young children in the home tended to increase the likelihood of working from home for both sexes.