In the same week, JP Morgan claims an internal study found that workers across the board had seen a fall in productivity, while The Economist produced an article which provided a broad overview of the benefits and pitfalls of working from home. The Economist article took a mostly favorable view of work from home (WFH) while JPM bemoaned that “creative combustion” has taken a hit.

However, if you read between the lines there are some key distinctions between the headlines. The exposé in The Economist cites a number of independent studies from academia both before and during the Covid pandemic which support similar or even higher productivity during WFH. All we got to support the claims from JP Morgan were that Jamie Dimon, the bank’s boss, discussed internal findings with KBW, an arm of an investment bank. Some loose details were added to the JPM claims, such as that productivity slipped particularly on Monday’s and Friday’s and that it was seen across age groups but was light on any other specifics. Here’s a portion of what The Economist cites in terms of the benefits of WFH and productivity:

A study in 2015 by Nicholas Bloom of Stanford University and his colleagues looked at Chinese call-centre workers. They found that those who worked from home were more productive (they processed more calls). One-third of the increase was due to having a quieter environment. The rest was due to people working more hours. Sick days for employees plummeted. Another study, looking at workers at America’s Patent and Trademark Office, found similar results. A study in 2007 from America’s Bureau of Labour Statistics found that home-workers are paid a tad more than equivalent office workers, suggesting higher productivity.

My own personal experience has seen similar advantages. Even in discussions with friends and acquaintances in other industries, they have raved about the advantages of WFH, not because they can slack off but because they feel it makes them more productive as well as improving their general quality of life.

This is a big shift for me personally and I’m sure I’m not the only one. Initially, I preferred the office for lack of distractions and productivity but the pandemic has flipped this on its head. I can lie down and work without getting looks when my back hurts, take a power nap at lunch and am not bothered typically while reading up on documents. If a meeting is not productive and I’m not speaking, I can listen while completing house chores.

A Productivity Boost

There are a number of reasons, some of which are location specific for me and the people around me, and some are general and will apply to most people, in terms of why WFH can make you more productive.

The first and most obvious is that you lack a commute. Commuting is one of the least desirable activities that many people still have to do. Cutting it out of our day gives us more time with friends, family and for work. The other advantage of not having a commute which is a bit more specific to NYC but I have found to be common: workers are better rested.

Commuters who take public transit on average face almost an hour (53 minutes to be exact) commute each way to work. NYC was considered the least accessible city by commuters in the country. From personal experience, I can tell you that this undercounts actual the time out of the day a commute takes up. There is the prep in terms of getting dressed and waiting for the train or bus to come, then the walk to the office, getting on the elevator and firing up the computer. That whole process could easily take 2 hours. On the way home, traffic delays or stopping for food before heading home due to being hungry can have the return taking up just as much time. That’s not to mention if you need to take kids to school and other activities that need to get done before the commute to work is even started. Not doing this adds an additional 10 valuable daytime hours to your week.

Better rested workers are happier and make better decisions which just adds to the virtuous cycle when workers feel better. Happier workers tend to stay with employers more and recruit other good workers into the company. For those companies with a headquarters in a large coastal city, studies have shown that those in large coastal cities can be up to 50% more productive than workers in other locations in the US, why would you not want your most productive workers getting even better.

The Backlash

I have a strong suspicion that government and vested interests are at play in the push to return to the office. I think the only reason many companies haven’t already ordered more people back to the office is that there isn’t yet a vaccine for Covid so they don’t want to end up as a headline in the newspaper for forcing their employees back and risking an outbreak.

Real estate developers and owners have a huge incentive to pressure government and other businesses to try and get their workers back into the office. From the loss of low skilled jobs that depend on office workers such as in food prep and restaurants, to the $16 billion hole that the MTA is facing in New York, politicians can easily become short sighted in their pursuits to maintain the old status quo. Even the president himself has a strong vested interest in workers coming back to the offices in midtown given that he owns property there.

Whether workers are less productive is not really the question to ask in the first place. The real question companies should be asking themselves is if working from home is more cost effective for what they get in output than an office setup and the answer seems to be yes.

One study found that working from home saw productivity per worker drop by 5% while real estate costs per worker dropped 20%. The question is, which is more in absolute terms and this is what should be guiding corporate decisions.

The counterpoint to the “collaboration” argument which is qualitative and tough to be proven, is that silence allows more actual work to get done. In that study of the Chinese call center mentioned in The Economist, a third of the productivity boost in WFH was due to quiet and less distractions while the rest was made up of longer working hours.

The collaboration argument flies in the face of the argument that many companies, especially banks, have been making in the last few years which is that they need to outsource or move much of their operations to cut costs and compete. The same JP Morgan has moved many operations out of high cost NYC to places like Tampa Florida and Austin Texas, not to mention places like India for certain services and functions. These locations save on real estate and worker pay, but as noted above and on a personal basis, the reality is that workers in these areas simply tend to be less productive than those in high cost NYC. If collaboration is worth the cost, then why would they split parts of the bank apart and move them to cheaper locations? This argument seems flimsy and likely only applies to particular teams which would depend on the type of work the team is doing. This could be one reason why JPM did not want to share the data behind their claims.

The Downside

There is a downside to working from home which portends what the eventual outcome of what WFH may look like in a post Covid world. In that study of Chinese call center workers, many workers from home were eventually itching to get back to the office because they had spent too much time alone. The ideal mix for many would not be the binary choice of WFH full time or be in the office full time but a mix of both.

Those in sales will need to see clients and asking for a raise in person usually has more pull than asking for it over a video conference call. There is also some sense in seeing your own colleagues in person from time to time and exchanging experiences as well as ideas that could lead to better collaboration down the road.

There is also the uncomfortable fact that only about 50% of workers in the US can work from home on a full time or majority time basis. Other workers will have to tough it out physically and keep commuting. Many of those that need to be there in person will make less money and have longer commutes than those who get to work in their pajamas, and this could lead to resentment and backlash.

There is always going to be a contingent of workers that prefer to be in the office. Whether it’s the way they tend to focus or to get away from their home situation, the option should be there to go to a traditional office setting at least some of the time. It seems likely that a hybrid model will emerge and real estate footprints of companies will shrink. For the workers who enjoy working from home, which I feel the young especially do, they will have to push back against the logic in terms of sitting in an office setting from 9-5.

Just a year ago, many dreamed of becoming a digital nomad. Covid has provided many with the opportunity of essentially becoming a digital nomad without giving up their traditional role. The personal benefits are too great to let corporate world scare workers into trudging back into an unnecessary office.

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