The Major Impacts Covid’s Work From Home Has Had

Millions have a sense that working from home has had a bit impact on society. The National Association of Home Builders pointed to economic research from the National Bureau of Economic Research, and some analysis of its own, to shed some light, and some numbers, on the topic.

In the NERB paper, researchers at Stanford, Princeton, the University of Chicago, the ifo Institute in German, the Instituto Tecnologico Autonomo de Mexico, and the European Bank for Reconstruction and Development surveyed people from 27 countries with controls for age, gender, education, and industry. The researchers used the U.S. mean as a baseline and controlled everywhere for age, gender, education, and industry, making six major observations.

“We find, first, that WFH averages 1.5 days per week in our sample, ranging widely across countries,” they wrote. “Second, employers plan an average of 0.7 WFH days per week after the pandemic, but workers want 1.7 days. Third, employees value the option to WFH 2-3 days per week at 5 percent of pay, on average, with higher valuations for women, people with children and those with longer commutes.”

The researchers continued. “Fourth, most employees were favorably surprised by their WFH productivity during the pandemic. Fifth, looking across individuals, employer plans for WFH levels after the pandemic rise strongly with WFH productivity surprises during the pandemic. Sixth, looking across countries, planned WFH levels rise with the cumulative stringency of government-mandated lockdowns during the pandemic.”

More specifically, as the NAHB post noted, the paper “stated that full WFH days averaged 1.5 days per week across 27 countries, and employees wanted more WFH days than employers’ plans in every country after the pandemic.” Why? Because there were significant benefits like saving time and costs while adding flexibility. Employees saw the ability to work from home two to three days a week as worth 5% of pay.

Ultimately, there are also implications for CRE. Many employees want to work from home a significant portion of time. So long as there’s an acute worker shortage in the U.S.—and even with likely layoffs and increased unemployment from the Federal Reserve’s push on interest rates to fight inflation this could go on—many employers will have to scale back desires to have everyone in the office.

Then there are also the demographic changes. As the NAHB notes, “WFH does not only change where we work but also where we live. Homebuyers with WFH options have more choice when they choose where to live. As homebuyers are looking to relocate to low-density areas (residential outmigration), many populous urban areas have experienced especially large declines for inward commuting. Consequently, WFH has raised the preference and attractiveness of the suburban and exurban living, and reshaped the housing market in many remarkable ways.”