Afford Anything - The Human Side of Remote Work, with Nick Bloom

Episode Date: June 21, 2023

#447: We talk to Stanford economist Nick Bloom about his groundbreaking research on working from home. Nick has been studying remote work for more than 20 years – since the 1990’s, when people were “telecommuting.” His research, in real-time, looked at how events such as 9/11 shaped attitudes about remote work. The pandemic created a surge of interest in his research. It brought many newcomers to the field. But Nick has the benefit of historical knowledge. He’s spent his career deep-diving into this topic. Nick sheds light on the advantages and challenges of remote work, drawing from extensive data and analysis. He shares surprising numbers and statistics. We discuss productivity, collaboration, employee well-being and organizational dynamics. We also discuss the impact of remote work on cities and housing. Enjoy! For more information, visit https://affordanything.com/episode447 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Since the pandemic, work from home has become a hot, trendy topic. But Stanford economist Nick Bloom has been studying work from home for more than 20 years. Back in the 1990s when it was called telecommuting, he was studying this topic. He looked at 9-11 and how events like 9-11 shaped attitudes about remote work. And so he has the benefit of historical knowledge. And he shares that with us today. Welcome to the Afford Anything podcast, the show that understands You can afford anything but not everything.

And that applies not just to your money, but to your time, your focus, your energy, your attention, to any limited resource that you need to manage. And that opens up two questions. First, what matters most? And second, how does that impact your decision making? This show is dedicated to answering those two questions. My name is Paula Pan. I am the host of Afford Anything. Today, Stanford economist Nick Bloom shares with us the surprising numbers behind.

work from home data, and a deep discussion about productivity, collaboration, organizational dynamics, employee well-being, all of the challenges and the advantages of remote work. We talk about the way that remote work impacts you at the individual level, the way it impacts your team, your company or organization, the way it impacts your city, your home values. we talk about how it impacts different types of jobs and different sizes and locations of cities. We discussed the far-ranging ramifications, again, with an economist who has been studying this since before 9-11, since before it became a trending topic. Back when the word for it was telecommuting and Zoom hadn't been invented yet.

So today's episode is an economics lesson. It's a history lesson and it's food for thought in terms of how you want to think about your own career, your own path, company, trajectory. We dive into all of that with Stanford economist Professor Nick Bloom right now. Hi, Nick. Hi, thanks very much for having me on the show, Paula. Thank you so much for coming on the show. Before we get into your work from home research, I'd first like you to introduce yourself and talk about the wide array of research that you. you've done. I was looking at some of your papers that you've published and they span quite a number of

topics. Yeah, I mean, I don't want to bore people talking about it too much. But yes, I've been an academic for 25 years. I've worked a lot on uncertainty measuring how much it is, which you can imagine during the pandemic was a big issue. Actually, after 9-11, the financial crisis. I also done a lot of work on management. Long ago, I worked in McKinsey, the consulting firm, and kind of out of that spun this interest on work from home, which I've been working on for 20 years. You know, how does it work? What's the future? And I have to say, no one was that interested in work from home until March 2020.

And suddenly it became a topic of huge fascination. You've been studying work from home for 20 years. What prompted you to initially study it at a time when few people were interested in it? And I presume there probably wasn't a ton of funding around it either. No, a couple of things, kind of personal prompts. I'm one of four kids. I grew up, you can probably tell from my accent in the UK, in London, actually. And both my parents worked in the UK government, both would take it in turns to work from home to look after us.

I'm 50, so my childhood was in the 80s. And it was before computers. So they were, you know, carry piles of paper home. One of them would be home one day, one and the other. And I was wondered what that was like, how that affected their career. And then when I started work on this, myself as an academic, actually my wife, had been on maternity leave twice, and I was kind of thinking about

how different companies treated that. So it's part of a bigger bundle, to be honest, of being nice to employees. So think about maternity leave, paternity leave, you know, work from home, job sharing part-time. It's like, how does this work? Some firms seem really generous. For example, you know, Netflix would offer folks

a year of paid maternity leave and other companies in the US offer you none beyond, you know, the federal minimum. And how does that affect performance and who's going where? So I started just to collect data. You know, as an academic, I was like, can we measure what's going on and then figure out what works and what doesn't? You said you started collecting data.

What were some of the data points that you collected in your early initial studies? I know these days, many people are collecting data about worker attitudes. I know you've done quite a bit of that as well. 20 years ago, was that also the data being collected or was there a different data set that you were interested in? 20 years ago, things were so different. It is so hard to cast your mind back that far. So actually, work from home was kind of born 40 years ago. Jack Nillis coined the term. It was invented, telecommuting at least in the 70s. So when I first started looking at it, it was, you know, how common is it? And do low or high performing firms seem to offer it? And what we found

interestingly, when I first started working on this in the early 2000s, is firms that are profitable and well managed are actually more likely to offer employees the ability to work from home. And when you looked at it, it looked like a lot of it was around organizational capability. So look, imagine if you're in chaos, you've got a delivery, you've got to put out by tonight, and you haven't started it yet, you're going to haul everyone in the office, you know, shout at them and hold them until midnight to get stuff done. Whereas if you're a really together company, you have good monitoring, good feedback systems, you're humming along, you can quite easily let employees work from home on Fridays or Monday.

So that's what I found looking into it 20 years ago. And it kind of went against the grain a bit. So back then, it used to be called working from home, shirking from home or working remotely, remotely working. You know, huge skepticism. People joke that you're just goofing off or sleeping. The joke I remember back in the early 2000s is the three enemies of work from home is the bed, the television and the fridge. And everyone falls victim to one of them. And so it was kind of saying, well, look, we see actually this seems to work quite well.

It's not this disaster. But that was 20 years ago when people were very skeptical. Right. You said you also studied uncertainty. And of course, there's a lot of uncertainty post-9-11. Did that have any ramifications on what at that time was probably referred to as telecommuting? Yeah, it's interesting. You mentioned that.

So there are two or three episodes over history that I personally saw where you had these brief stints of work from home. One was 9-11. I remember in London, another one was the London Olympic. because they told Londoners, look, it's going to be super crowded. There's too many people. You've got to stay home for three weeks. There was one of these periods. And so everyone worked from home.

There was in Boston. There was a big, what was it called? Snowmageddon. I forgot what it was, the big freeze. It happens occasionally in US cities. They get so cold. No one can go into work for a couple of weeks. Often what you see in these little short episodes is it works out fine.

People work from home for a couple of weeks. The world doesn't come to an end. Companies perform well. of course the pandemic was really that on steroids. So the pandemic was kind of amazing because initially there was the lockdown. So everyone was forced into fully remote for about six months. And then the lockdowns came and went, but they were easing. But then what happened is we went into really tight labor markets.

So if you remember beginning of 2021, it was so hard to hire anyone. And so a lot of companies, when I talk to them, I mean, by now I've talked to, you know, easily more than a thousand managers and firms would say, I remember back then was it's so hard to hire anyone unless we let them work from home at least two, three days a week, you know, forget it. And so that dragged work from home on for about another year until you'll get to 2022, at which point you've had it running for kind of two years and people have come to the realization, look, this thing works pretty well. We maybe don't want to be fully remote, but we really quite like being able to work from home, say, Monday, Friday. Employees are just as productive. It's easier to hire and retain people, and that's kind of where it stayed ever since. We'll get to modern day post-pandemic work-from-home in a moment.

But given that you're one of the few who has this historical knowledge of what work from home was like far before anyone was paying attention to it, were there reasons it was not more adopted back then? We've always had the technical capabilities, the technological capabilities. I've been working remotely since 2010. Back then, we used to call it being location independent. Yes. That was a phrase for it. But I often wondered at that time why it was not more practiced. So it's really interesting, the percent of days Americans have worked from home going back to the 1960s.

So if you go back to the beginning of the date of 1965, I mean, this is, you know, almost 50 years ago, if you look then, what we see is half a percent of days will work from home. So hardly any, you know, basically one and two hundred. No one worked from home in the 60s. By the time you get to the 80s, it's like 1%. By the 90s, it's 2, 3 and it is crawling up. And in fact, it's actually rising quite fast from a low base. And it's all driven by technology. So the key technology is personal computers. So once you have your own computer at home, you're not shuffling pieces of paper. Then you have email and the internet. Really, the last jigsaw pieces for what we're using now came in about 2010, 2011, 2012, which was cloud and things like Dropbox. So we can share fun.

Paul, if you and I are working on the same file, I don't need to be emailing it back and forwards, say, sync automatically. And the other big thing was video calls. So Zoom in particular, but Skype, teams, etc. Zoom, for example, was founded in 2012. So if we look back about a decade ago, by 2013, we could have been doing this. Why we didn't adopt it in such numbers until 2020, I think was kind of slow to react. It was a bit of a mistake.

You know, there are other things. I always think I have kids in school and they have these massive summer holidays, like three months off. And we have these huge summer holidays because kids used to, 150 years ago, be let out of school to harvest the fields, right? No children are doing that anymore, but we still have these three months summer holidays. And it's kind of a legacy. And I think going into the office five days a week, but everyone was basically a legacy as well. And that legacy could have been abandoned 10 years ago. And it took the pandemic to shake it up.

Let's talk through some of the data that you've gathered. So just so we have some facts in front of us, I'm looking at the June 2023 update, and it's quite robust with regard to the data that you've gathered around the number of people who work from home, the number of days worked. Can you walk us through some of this? Sure. So two numbers to have in mind. One is how many days are worked from home now?

It's about 25% of days in America. and it's been flat since about September 2022. So we're kind of flattening out. So right now, a lot of folks say we're all heading back into the office. I'm like, no, this is the new normal. We basically had a huge surge during the pandemic. It was up at 60 percent. Most Americans are working most days at home.

And it's been falling, falling, falling. But it's basically flatlined for the last six to nine months. And it's interesting. I often talk to folks, they're kind of surprised and say, look, in the media, I read stories all the time. you know, about Twitter or J.P. Morgan or Goldman Sachs hauling folks back in. And I'm like, yes, that's true. But what's not reported is there are just as many firms saying things like, I need to cut costs. I'm going to reduce the office space and have more people work from home,

particularly actually back office staff. So like HR support payroll. So what fact one is about one quarter of days of work from home in the US. The other fact is who's doing that? what we see is about 60% of Americans don't work from home at all. So the biggest group, these are folks, you know, think of working McDonald's, in schools and hospitals, transport. They tend to be lower pay, but not entirely. Like airline pilots, you know, they never work from home. No one really wants their plane flown remotely or, you know, top surgeons.

So the biggest group don't work from home, that's 60%. There's another 30%, which I'm guessing would be many of your listeners, is what's called hybrid. So they're typically in the office, let's say Tuesday, Wednesday, Thursday, work from home Monday, Friday. That's a lot of my graduates from Stanford. A lot of, you know, basically college grads tend to be in that. And then the third group, the smallest group, is fully remote.

These are people who never really go in at all. That group is shrinking pretty rapidly. The reason is, you know, firstly who are they? If you look at that group, a lot of them, I mean, Paula, you mentioned you're fully remote. You're probably in some ways unusual for that group. If you look at most of that group, it's now kind of payroll, HR, IT support, a lot of back office processes. That stuff, some of it's being shifted overseas and some of it is going to be slowly replaced by AI.

So if you think of chat GPT4, you know, imagine in three years what chat GPT6 will be like. Right. I think the future is really two types of workers, you know, mostly the those that come in every day and in others that are office workers, managers, professionals that are coming in Tuesday to Thursday, typically working from home Monday Friday. One piece of data that surprised me is that workers in their 50s and 60s are more likely to work from home than younger workers. Yes. So what we see is, you're right, as people get older, they tend to go to one extreme or the

other. It's kind of interesting. So folks in there, you know, I'm 50, so that's my bucket. But people 50 plus tend to either be fully in person and it's partly the job they do, but also partly a little bit of, you know, by the time you're 50, I've been working now for 30 years, you get, you know, settled into a habit and you quite like going in every day

and you, you know, typically don't have kids often in the house anymore. And then there's another group in that age bucket that are fully remote. That's often people who maybe find it harder, you know, they have some mild disability or maybe they're walking isn't as great or they live further out out in the suburbs or rural areas. It's just hard for them to get in every day. I think of my parents, for example, before they retired, they started doing more and more remote work. Because the commute is pretty tiring, particularly in big cities.

You know, if you're in New York, it's up to an hour each way. If you're on the subway, it's quite an arduous journey. So you're right. If you look at 2030s, they tend to be more like to be hybrid. If you look at 50 pluses, more like to be either fully in person or fully remote. What ramifications does remote work have for collaboration and creativity? Yeah, this is, you know, the $64,000 question. So why is hybrid dominated for professionals and managers? The reason is you're really trading off a couple of things. So on the one hand,

the reason people want to come into work and why firms want their employees in is for collaboration, creativity. So the big three of coming in, when you talk to managers, they say, look, we want mentoring as much. It turns out to be better in person. We want collaboration, building, culture, and want innovation. And there's a lot. And there's a lot. And there's a lot of There's a bunch of evidence and papers and studies and stuff. It looks like all of that is better face-to-face. On the other hand, there are some real benefits of work from home. And the big two there are you save on commute.

And the average American, European, you know, saves something like 70, 80 minutes a day, of which almost half of them they spend working more. So if you're an employer and you let your employee work from home, they're probably working about 30 minutes more that day because, you know, A lot of their commute they're using for, you know, leisure, child care and stuff, but they're working more. And then the other thing is it's on average quieter at home. Not for everyone, but typically people say home is quieter than the office. And that's really important for concentration.

What's called deep work. You know, a very standard week might be Monday, Friday I'm at home. Doing more reading, writing, kind of heavy thinking work, preparing presentations, you know, pondering stuff. Maybe Zoom calls one-on-ones with other offices. is Tuesday, Wednesday, Thursday, Thursday. I mean, every day, it's kind of frenetic, it's high-frequency, meetings, presentations, you know, training sessions, lunches, very social. I feel like I don't have a minute to think, but I'm bonding, I'm mentoring people, I'm creating ideas. And it looks like

that maybe is the best of both worlds. It's kind of a mix of three in-person, high-intensity days, and then maybe two days that you have some greater reflection and quiet work on Monday, Friday. What's interesting about that model also is that if a company were to implement that model, then the days that people would come in for hybrid work would be uniform as the same days. Because I've anecdotally heard many people complain that when given a hybrid schedule with the option of which day to come in, which days to come in, which days to stay home, they end up in an office that is only sparsely populated. And so those opportunities for collaboration still aren't there because the right people, aren't there at the same time? You're totally right. So this is why firms are moving much more towards picking days. So there's a real battle here between what I call choice and coordination. So one extremist choice whereby you say to employees, let's say, look, I want you in two days

a week, but you choose the days. And then everyone chooses their day, some folks are on Monday, some Tuesday, some Wednesday, etc. The other version is you say, I want you in two days a week and it's going to be Tuesday, Wednesday. Now, you're correct in the first, the choice version, you can probably save a bit of space. It still turns out most people don't really want to come in on Fridays, but there's less people on an every day. The downside is you come in. You want to have a meeting of, you know, your team of six and like, you know, Sarah or Ron is at home. So what do you have to do? You come in and four of you're in the office, too, at home. And you say, well, we're going to have to, you know, connect them in by Zoom. And then you think, okay,

maybe the four of us go into a meeting room and we link the others to in on Zoom. But you know, that doesn't work very well because the folks at home feel kind of left out. The four in the room are having side conversations. They're like little heads. And so then typically my experience of companies have said, look, why don't we just be equal and everyone goes on their own laptop? But then you get the situation people have come into the office and they spend three, four, five hours a day on their laptop on Zoom or Teams.

And they just say, like, what's the point? Why have I come in for this? So increasingly from experience, companies are saying, look, coordination is where it's at. The reason, as you say, is when you come in, you really come in to work with others face-to-face and, you know, to be off screens as much as you can and more have interpersonal contact. And so there's been much more moved towards coordination. In some ways, it's not that radical because if you cast your mind back to 2019, most jobs had a five-day week and 9 a.m. to 5 p.m. And so, you know, the week is 168 hours.

You could have said anyone you can work. You have to do your 50 hours a week. You can do it nights or weekends. But, you know, that didn't happen. Nobody was working. No firm was saying, look, if you want to work from 7 p.m. to 4 a.m. Monday to Friday, you can do that. Pre-pandemic, we coordinated on five days in the office.

It's why post-pandemic, the same reasons are forcing us increasingly to coordinate on three. That's definitely a win or two, whatever it is. But there's clearly less choice than some people want. The big trade-off is, you come and everyone else is there. And you're right. I hear a lot of complaints. There's really a 20-21 issue about low energy. So in 21, a lot of managers were saying, won't you back? We want to keep density down. We're still worried about social distancing. So why don't you choose? And in fact, if you want to choose different days, that's great. But then you had this horrible experience of coming in

and dead offices. So yes, you're exactly right. We're not using the office fully. In fact, there's now a lot of startups that are trying to exploit that and saying, let's take two firms, have one that, for example, is Monday, Tuesday, Wednesday, pair it with another that's Thursday, Friday, and they can share the office. And, you know, one of my students is starting up a company doing exactly that. And so that, I think, is the future and how we may more efficiently use space. Right. And that leads to, of course, the many conversations about the ramifications that this has on office spaces, particularly class B office space, which has higher vacancy rates than it previously did. in major cities, as well as the donut effect on cities. Can you talk about that?

Yeah, you are exactly right. You're spot on. There are a couple of things going on. So one is the donut effect named after the American donut, which is, you know, has all the is hollow in the center. So with one of my co-authors, Arjun Romani, we've actually looked at, we used what's called United States Postal Service data. So it's amazing data. You can see by zip code, by month, where people are moving. Because whenever you move, the Postal Service updates your address and it has this what's called the master address file. So you can see incredibly accurate moving data. And what we see is about a million people have left the center of America's biggest cities. I think New York, San Francisco, Chicago, you know, Los Angeles since the pandemic.

They mostly left in 2020 and they've not come back. So it's not that they left and returned. They left and stayed gone. Why is that? Take New York. Imagine you're in tech or finance or law or something. You used to go in five days a week in 2019. Now at 2023, you're only going in the office, let's say, two, three days a week. You're thinking to yourself, you know, I want a home office, I want a bit of space and I can put up with a longer commute. So we've seen about a million Americans move out to the suburbs of basically the same cities. It's not like they've gone to Hawaii. You know, a few people have, but mostly they've stayed in the same rough areas that just moved out. And so that's created what we call a donut effect. For anyone owning housing or an apartment,

relatively city centres become cheaper. I mean, they're definitely not cheap, but their prices have gone up less in the centres versus the suburbs. You can see this very clearly in Zillow. So big city suburbs have gone up about 50%. Big city right in downtown has gone up about 10% since pre-pandemic on average. That's one big change that's happening. That's on kind of residential.

If you look at commercial real estate office buildings, you're totally right. There has been a bit of a drop in the demand for space because enough companies have either gone fully remote or they've had a bunch of employees, let's say, HR, IT support, call centers, you know, benefits gone remote within the office, they've shrunk. So there's less demand for office space. What's happened is companies that said, look, we're going to do hybrid. But when you come in for those two, three days a week, you want it to be nice. Like, no one wants to come into a nasty office with blinking, flashing lights and a kind of scummy entryway and bad facilities. So if you're going to come in, we're going to have a Class A

or sometimes called a trophy office building. Those things have not done too badly in central, you know, New York, San Francisco, et cetera. What's really suffering is kind of nasty, small, pokey offices that, I mean, why are you going to travel 45 minutes into the center of town for them? The hope is those things can be converted to apartment blocks, but some of them can't. The nightmare office is something built in 1980 with massive floor plans, hardly any windows, like you can't do anything with these buildings. and they're right now sitting empty and they have been for the last two or three years.

And it's not clear what, you know, what's ever going to happen to them. Right, right. Because if you are more than between 25 to 30 feet away from a window, then it can start to feel quite cave-like. And if you've got like a football field-sized floor plan, which was popular back in the day when everyone wanted big open office spaces, then essentially the perimeter of the building could serve as residential. But you've got this entire interior that is just deep interior.

I've heard of a few cases in which, again, with the donut analogy, I've heard of a few cases in which architects and engineers have donodded out the center of the building, creating an interior courtyard, but that's incredibly expensive. Are there any other plans, even ones as extreme as that, or any other solutions for what to do with all of this commercial space, unused Class B commercial? Yeah, first off, you're exactly right. If you look at buildings, in let's say 1910, 1920. It's before we had mass electrification. So all the offices needed to have daylight, they're relatively easy to convert into apartments. You take, you know, each floor and you could break it up into six apartment buildings. To be clear, there are some real legal

restrictions. So in New York, every bathroom has to have a window. So if bathrooms have to have windows, bedrooms have windows, living rooms have windows, kitchens, not always, but often have windows. You can imagine it's very hard to take some massive football field-sized office and build, you know, small apartment. So little ones are fine. The ones that are cursed are, think of something built in 1983 for Goliath National Bank, which said he wanted massive floor plans. It's now, you know, 40 years later, it's looking kind of out of date jaded. It has low ceilings, nasty tiling. I mean, it's not easy what to do with these buildings.

You can either slash the rent so it's so cheap that somebody moves in and has this cavernous building. building, or you can punch huge holes down the center of it to generate light, which is incredibly expensive. Or in some cases, some of these things are going to remain empty for the next three years and probably eventually be demolished and then replaced. But yeah, it is very hard. I mean, another version for folks that are politically active is maybe push to change the regulations. You may think, look, if you can take some of those buildings and generate a lot of very low cost, very affordable housing, maybe there is some trade-off to say have bathroom. without windows in. Maybe every apartment has to have windows in at least two rooms,

but maybe you can have some internal bedrooms. In London, I actually had an apartment that had no windows in one of the bedrooms. It wasn't great, but if you can get up and, you know, go to the living room, it's not so bad. And certainly if you say your rent will be half the amount for that, there's a lot of folks that will go for it. Yeah. Typically, the pushback tends to come from fire safety, because without a window for ingress and egress, it becomes a fire hazard. Yeah, no, you're right. I mean, in California, every building, including home buildings have to have inbuilt sprinkler system. So I think what it's going to take is a combination of market forces are going to push the rents down to these things. You know,

people, it's worth to punch holes or they get scrapped. And also we're going to have to be more flexible in regulations. But it is a big issue. I think the city where it's most problematic, the cities tend to be the ones on the West Coast. So I take San Francisco, I live in 50 miles from there. I'm in the Bay Area. And that's been hit by multiple things. You know, first has worked from home. Then there's the big tech slow down. And then somewhat unfortunately pre-pandemic, if you cast your mind back to, let's say, 2015, 2016, there was an enormous push against tech in San Francisco. If you remember, the demonstrations against the Google buses and everything. Right. San Francisco politicians passed what at the time seemed kind of reasonable anti-business

laws and tax increases, etc. But that turned out just to be horrible timing. So you got this, you know, triple whammy of work from home, downturn in tech, anti-business taxes, and suddenly, you know, the city's kind of half empty. So that is ground zero. San Francisco is the hardest case of all. We'll come back to this episode after this word from our sponsors. The holidays are right around the corner and if you're hosting, you're going to need to get prepared. Maybe you need bedding, sheets, linens. Maybe you need serveware and cookware. And of course, holiday decor, all the stuff to make your home a great place to host during the holidays, you can get up to 70% off during Wayfair's Black Friday sale. Wayfair has can't miss

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Well, one thing is we see outside, once you move outside kind of the top 25 cities by size, they don't really have much of a donut effect. So if you think of someone like, I know, Columbus, Ohio or Portland, Oregon, these are more, you know, medium-sized cities. I don't have the numbers on the top of my head, but you're looking at, you know, places of maybe two, three hundred, four hundred thousand, those places, the suburb is still pretty approachable. The donut effect tends to be in these massive places like Chicago, D.C., New York. Interesting enough, if you look at smaller towns and cities across the US, so look at, think of,

I was talking something about Bangal, Maine. So, you know, that has 30,000 people living there. They've actually done pretty well. And the reason is a lot of people have left, say, central in New York, moved out to smaller towns and cities. They have jobs that may require them in once a week or maybe for three days every three or four weeks. If it's like that, you can afford to live three, four hours away from a big city. You know, you only have to come in every four weeks. There's enough flexibility in some roles that you can do that.

So it turns out, interestingly enough, smaller town, cities have done well. The other place that's seen as a boom is kind of what I call holiday resort locations. So Tahoe, you know, the beach. places with great national parks, because there's enough people that are still fully remote, that they have this incredible geographic flexibility. And if you're going to live somewhere, you want to live somewhere that's beautiful outside if you can. And so we've seen those kind of holiday resort locations also done very well. Do you see that continuing or shrinking as fewer people remain fully remote?

Shrinking a little bit. So to put numbers on it, right at the peak of the pandemic, in April, May, 2020, 60% of Americans are fully remote. I mean, that's an enormous, it's an astounding number. So the typical person, everyone listening, you know, more than half of your listeners, I'm sure, I was you, I mean, pretty much everyone we know is mostly was fully remote in the peak of the pandemic. That fell relatively fast as folks were called back in. It's continued to trend down. It's now about 10%.

It does look like it's trending down. That does put a bit of downward pressure. You're right. And take someone like Tahoe. On the other hand, for folks that are only going in one or two days a week, they may put with three, four-hour commutes. You know, I can imagine there are people I know our friends who decide to have the lifestyle that live three hours away and they drive up for three hours on, you know, they get up, they leave the house at 6am on a Tuesday, they're in work at 9 a.m.

They stay overnight near work in a hotel and drive back at 5 on Wednesday. And, you know, they have two days of horrible commute with a quid pro quo as they get to live somewhere far away with a lot of space. Right. How do work from home arrangements intersect with isolation, loneliness, some of these emotional and psychological challenges that people face when they don't have colleagues that they interface with on a regular basis? Hybrid looks like it actually improves mental health, at least getting to work from home one or two days a week, is better than going in five days. I finished a large randomized control trial with a company called trip.com.

They're a big global travel agency. They're quoted on NASDAQ. They have about 40,000 employees. and there we took 1,600 people in two divisions, and we randomized. So if you had an odd birthday, so if you were born on the first, third, fifth, seventh, sixth of the month, you got to work from home on Wednesday and Friday. And you have an even birthday. You had to keep coming in five days a week. And we saw folks that work from home saw a 35% reduction in quit right. But importantly, we had these surveys on work life balance, happiness, stress, all of these improved a lot. And the stories you hear is starting from first.

five days in the office, if I go down to four and three, that is typically seen as positive. It's less commuting. It's less stress. In fact, the surveys going back. I remember I was at the London School of Economics 25 years ago, and someone there called Richard Layard was working with Danny Cameron, the Nobel Prize winner, and they had all these surveys and happiness. And it turns out, if you ask people hour by hour, whether they're feeling happy or unhappy,

the second most unhappy activity in people's days is work, but the most unhappy is commuting. People hate commuting even more than they hate work. So if you let people work from home at least two days a week, it looks like that clearly improves kind of mental well-being and work-life balance. It's less obvious once you start to go four or five days a week because you get this offsetting effect of more isolation. In fact, in another randomized control trial I did, we had people that were randomized into working from home four days a week.

We ran the trial. They're all volunteers. We ran the trial for nine months at the end of it. About half of them opted to go back. and they said they found it very isolating and lonely. So what we see is, I think, in the data, if you'll say 38, you have three kids, an active social life, you may easily feel that, look, I've got a lot of connectivity at home.

I don't really feel like I need to go into the office. I'm fine. If on the other hand, you're maybe 24, you're single, you're living in a small apartment. You may really feel very lonely and isolated being at home, particularly if you have to work in your bedroom because you don't really have any other room. And so it depends a lot.

demographics as to how people find fully remote. But in the survey data, we find that 30% of Americans want to be fully remote, the other 70% want to come in at least one day a week. In the survey data, the attitudes between workers and managers differ. Why is that? Yes. So managers in advance are much more negative on work from home than non-managers. In fact, in the randomized control trial we did in China, in advance of the randomized control trial. We surveyed everyone and said, what do you think the impact of work from home will be on productivity? And managers gave us a number is about minus 3% of allowing folks to work from home two days a week. And non-managers gave us about plus 2%. So there's not an enormous difference,

but that's quite a big gap. We ran the experiment. At the end of it, we re-pulled them. And managers are basically, you know, gone from negative to positive. So managers, I think, a very nervous in advance of losing control, losing visibility, losing mentoring. I think if you can manage the process well with good performance management, so, you know, well, if you were like my manager, would you be assessing me and giving me feedback, evaluating how I was doing? If you can set these kind of things up, it makes sense to allow me to work from home, you know, a couple of days a week. If on the other hand, you're pretty disorganized and chaotic and you use what I call management by walking around, you tend to manage you by walking past my desk, seeing am I there typing

is the screen on? Does it look like Excel or Word or something sensible? Then it's harder to let me work from home. And so managers early on tend to be skeptical. What we've seen over time is their views have tended to align more and more. They've had experience of it. You know, it's like you're worried about something. You try it out. We've tried it out now for three years. And it isn't as bad as people feared, but both for managers and work is generally, it's tending towards moderation. So typically on both sides of managers, non-managers, they tend to head towards something like two, three days a week on average they want to come in and the other half they want to work from home. Interesting. The big buzzwords right now are both AI and AR.

We've got chat GPT on one side, which simplifies a lot of work on one side. And then we've got Applevision Pro, which, as of the time that we're recording this, they made the big announcement, what, yesterday? Yeah. And that's almost as a user experience, the opposite of chat. One is chat GPT is simple and minimalist. Applevision Pro is immersive. And so it's been kind of fascinating to watch these two trends develop simultaneously. They're both widely talked about. And I think everyone has a sense that both are going to change everything in ways that we're not quite sure how. How will either or both impact the future of remote work? So super interesting question. AI, I think, is going to make it harder to be fully remote for a bunch of fully remote workers.

So AI, let's break down into like hardware and software. So software is pretty impressive. So chat GPT4 and eventually five and six looks really incredible. These things are starting to pass the Turing test. You don't know if you're typing in commands where this is a human or not. The hardware is not that good. I don't know, 10, 20 years at least from having. Terminator land whereby someone walks in, you can't tell the human and robot. Currently, robots

are like incredibly clunky, expensive, you know, massive. So if you go into an office, you're not going to replace. We're nowhere near replacing, you know, Gary at the front desk or Susan just doing catering, for example, with a robot. I mean, they're far from being able to do that. Some tasks you can automate, but a lot of stuff needs in-person people. So hybrid and fully in-person jobs are mostly safe. where AI is threatening, I think is for relatively repetitive, relatively low level, fully remote jobs. So think of payroll, HR, call centers, IT support, benefits, a bunch of these jobs, which are the majority of the current 10% of remote jobs, they are under threat from AI. They're actually under threat from offshoring as well. So I thought to, you know, so many companies that are saying, these are things we are going to offshore to Mexico or Colombia, Argentina, or the Philippines, etc.

because the folks there are, you know, doing basically about as good job as we can get someone in the U.S. and they cost, you know, 40% the rate. So I think AI is the thing. The most threatened by AI is fully remote jobs. It's not so much, you know, accounting professionals, for example. It's more people that are fully remote doing more repetitive things. The Apple Vision is very different. Apple Vision, I think, supports kind of hybrid because I think it makes, my prediction is it will make what we might think of a Zoom calls now much more appealing.

So it's funny, everything you see in Star Wars comes to pass. And that Jedi council, you can imagine, you know, you have one of these headsets on it. It could look like your other seven co-workers are there in space. And look, it's not as good as being there in person, maybe, but it's getting closer to it. It's getting better and better. And so a remote Zoom call is 60% as good as in person, an Apple Vision meeting maybe 80% as good. And there'll be a bunch of things you decide, look, rather than coming in three days, we probably need to come in two days. So I see actually Applevision supporting hybrid work, making it more appealing and probably cutting at the margin in a number of days when you have come in.

Interestingly, I think it also supports multinationals. A lot of what I heard from the pandemic is a lot of big companies said it was amazing. The pandemic brought the offices, different offices closer together because they're all on a level playing field. I remember one person saying pre-pandemic, he was the only person in London. And he said he always felt left out because there'd be these in-person meetings in the US in Cleveland office, Chicago office. is also remote. Now everyone's on the same Zoom screen and he feels completely on a level playing field with all the others. So I think Apple Vision, to the extent it makes us more remote, will also bring people together and kind of globalize us in a sense. Well, those are all of my questions. Is there

anything that I haven't asked about that you'd like to emphasize? No, great. You did a huge amount of background reading and research, or you're incredibly informed. I couldn't, you know, some combination of both, I suspect. But you totally, you totally knew your stuff and I was very impressed actually. Thank you. Thank you so much for spending this time with us. Where can people find you if they'd like to look for you on the internet? I have a LinkedIn page. I post new facts, new data by every other day. So you just look, you know, Nick Bloom, Stanford, it will come up on LinkedIn. Thank you to Dr. Nick Bloom. What are the three key takeaways that we got from this conversation? Number one. Ideas and attitudes to

towards remote work may still take time to evolve. We carry with us historical legacy. And even when our technology, when our capabilities allow us to break free of that legacy thinking, the legacy thinking often still permeates the culture. In other words, technology often moves faster than our attitudes. The key technology was personal computers. So once you have your own computer at home, you're not shuffling pieces of paper. Then you have email and the internet. Really, the last jigsaw pieces for what we're using now came in about 2010, 2011, 2011, 2012,

which was cloud and things like Dropbox so we can share files. Paul, if you and I are working on the same file, I don't need to be emailing it back and forwards, say sync automatically. And the other big thing was video calls. So Zoom in particular, but Skype, teams, etc. Zoom, for example, was founded in 2012. So if we look back about a decade ago, by 2013, we could have been doing this. Why we didn't adopt it in such numbers until 2020, I think was kind of slow to react as a bit of a mistake.

You know, there are other things. I always think I have kids in school and they have these massive summer holidays, like three months off. And we have these huge summer holidays because kids used to 150 years ago, be let out of school to harvest the fields, right? No children are doing that anymore, but we still have these three months summer holidays. And it's kind of a legacy. And I think going into the office five days a week, but everyone was basically a legacy as well. And that legacy could have been abandoned 10 years ago.

And it took the pandemic to shake it up. Understanding this can help manage expectations around remote work. And this has been in the news quite a bit lately. There are headlines that say that X percent of people, X percent of employees say that they would quit if their bosses wanted them to work fully back at the office five days a week. There are a lot of headlines right now around differing expectations, battles between management and employees. And in the context of that, understanding that we still, like he said, summer break at school, the whole concept of a summer, a three-month summer holiday, you know, that's a legacy as well. So once these things get baked in, it can be quite hard to change them.

And recognizing that is the first of three key takeaways. Key takeaway number two, there are many unexpected reasons and benefits that drive hybrid work arrangements in which a workplace, a company and organization, can often get the best of both worlds. some of these are obvious on the days that you don't go into work, you save the commute. But some of these are less obvious. The collaboration, for example, collaboration and innovation, there's a lot of data that backs the idea that collaboration and innovation works best face to face.

That's why people go to conferences. That's why writers who are collaborating on a script or on a script or on a song, writers will sit together around a writing table because that kind of brainstorming, that creativity and brainstorming and mentoring does work better in person. On the flip side, when people don't have to commute to get to that writer's room, they often work more. And so there are pros and cons to both arrangements. And that's much of the impetus behind the hybrid model, the hybrid model recognizes that there are pros and cons to both. The reason people want to come into work and why firms want their employees in is for collaboration creativity. So the big three of coming in,

when you talk to managers, they say, look, we want mentoring. It turns out to be better in person. We want collaboration building culture and innovation. And there's a bunch of evidence and papers and studies and stuff. It looks like all of that is better face-to-face. On the other hand, there are some real benefits of work from home. And the big two there are you save on commute. And the average American, European, saves something like 70, 80 minutes a day, of which almost half of them they spend working more. So if you're an employer and you let your employee work from home, they're probably working about 30 minutes more that day because a lot of their commute they're using for, you know, leisure, childcare and stuff, but they're working

more. And then the other thing is it's on average quieter at home, not for every one. but typically people say home is quieter than the office and that's really important for concentration. It's called deep work. You know, a very standard week might be Monday, Friday I'm at home, doing more reading, writing, kind of heavy thinking work, preparing presentations, you know, pondering stuff, maybe Zoom calls, one-on-ones with other offices. Tuesday, Wednesday, Thursday. I mean, every day, it's kind of frenetic.

It's high-frequency meetings, presentations, you know, training sessions, lunches, very social. I feel like I don't have a minute to think, but I'm bonding, I'm mentoring people, I'm creating ideas. Now it looks like that maybe is the best of both worlds. And so that is the second key takeaway. Finally, key takeaway number three, your work environment has a massive impact on your sense of well-being and your sense of happiness. Professor Bloom talks about randomized control trials that look at the overall efficacy of a work-life arrangement and found that the impacts are very different depending on your demographics, your age, your relationship status, the number of people in your

household. These characteristics create a wide dispersion in how work from home impacts people. We saw folks that work from home saw a 35% reduction in Quit, right, but importantly, we had these surveys on work-life balance, happiness, stress, all of these improved a lot. And the stories you hear is, starting from five days in the office, if I go down to four and three, that is typically seen as positive. It's less commuting, it's less stress. In fact, the surveys going back, I remember I was at the London School of Economics 25 years ago, and someone there called Richard Layard was working with Danny Cameron, the Nobel Prize winner, and they had all these surveys and happiness.

And it turns out if you ask people hour by hour, whether they're feeling happy or unhappy, the second most unhappy activity in people's days is work. But the most unhappy is commuting. People hate commuting even more than they hate work. So if you let people work from home at least two days a week, it looks like that clearly improves kind of mental well-being and work-life balance. It's less obvious once you start to go four or five days a week because you get this offsetting effect of more isolation.

In fact, in another randomized control trial, I did, we had people that were randomized into working from home four days a week. We ran the trial. They're all volunteers. We ran the trial for nine months at the end of it. About half of them opted to go back, and they said they found it very isolating and lonely. So what we see is, I think in the data, if you'll say 38, you have three kids, an active social life, you may easily feel that, look, I've got a lot of connectivity at home. I don't really feel like I need to go into the office. I'm fine. If on the other hand, you're maybe 24, you're single, you're living in a small

apartment, you may really feel very lonely and isolated being at home, particularly if you have to work in your bedroom because you don't really have any other room. And so it depends a lot on demographics. Those are three key takeaways from this conversation with Dr. Nick Bloom, an economist from Stanford, who has been studying remote work since before 9-11. Thank you so much for tuning in. I hope you enjoyed today's episode. I hope it gave you. you insight, context, things to think about, food for conversation. If you enjoyed the episode, please share it with a friend, a family member, a colleague, your boss.

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