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What is the relationship between remote work and productivity? Recent research in BLS Beyond the Numbers, October 2024, "The rise in remote work since the pandemic and its impact on productivity" by Sabrina Wulff Pabilonia and Jill Janocha Redmond, economists in the Office of Productivity and Technology, finds a positive relationship between total factor productivity and remote work.
According to the American Community Survey (ACS), remote work increased dramatically across all major industries between 2019 and 2021. Then, with the removal of all social distancing restrictions in 2022, the percentage of remote workers fell slightly. However, it was still higher than its 2019 level in all industries except agriculture, forestry, fishing, and hunting, which returned to its 2019 level. (See chart 1.)
Chart 2 shows the relationship between TFP growth and the percentage-point change in remote workers across 61 industries in the private business sector from 2019 to 2021, when remote work was at its peak. The horizontal axis measures the change in the percentage of remote workers, while the vertical axis measures the annual percentage growth of TFP. The size of the bubbles represents the industry’s share of total private business sector output in 2019. The fitted line shows the output-weighted average relationship between the two measures: a one percentage-point increase in the percentage of remote workers is associated with a 0.08 percentage-point increase in TFP growth. This association is 0.09 in the 2019–22 period, and relationships in both periods are statistically significant.
To better measure the association of the rise in remote work with productivity, we plot the relationship between the increase in the percentage of remote workers and the excess in TFP growth in the pandemic period (2019–21) over the prior-business-cycle TFP growth (2007-19). The vertical axis in Chart 3 represents the percentage point difference between the pandemic-period TFP growth and the prior-business-cycle TFP growth (2007–19). The horizontal axis represents the percentage-point change in remote workers (2019-21). Using this excess TFP growth measure, we still find a positive and statistically significant association between the rise in remote work and TFP growth, although the magnitude of the association is slightly smaller (significant at the 10-percent level). A one percentage-point increase in remote work is associated with a 0.05 percentage-point increase in TFP growth.
A 1 percentage-point increase in the percentage of remote workers is associated with a 0.1 percentage-points decrease in growth in unit labor costs. Our findings, shown in charts 4-6, also demonstrate a consistent pattern: the larger the increase in remote work, the larger the decrease in growth in unit capital, energy, material, and service costs across industries. These relationships, with the exception of energy costs, are statistically significant, reinforcing the reliability of our research. The associations are notably stronger than the link with unit labor costs, with values ranging from -0.2 to -0.4. A 1 percentage-point increase in the percentage of remote workers is associated with a 0.4 percentage-points decrease in growth in unit office building costs.
See chart data in Excel.
For more research related to productivity and remote work, you might find these historical articles useful:
Bureau of Labor Statistics (BLS) has many Monthly Labor Review (MLR) articles related to telework/remote work you may find interesting. Economists have also written the following research articles on telework/remote work: