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Underpopulated Workplaces May Hinder Productivity
Flexibility for remote work does not mean more time spent working.

Travel has been very heavy since the beginning of September, so I haven’t been in my office much. But I have been in a variety of offices while on the road. Some were full (Texas, Singapore) while others were more sparsely populated (Silicon Valley, Melbourne). Differences were driven by both personal preferences and local rules and customs.
Clients that I spoke to across locations were curious about our views on how returns to workplaces might evolve over the next twelve months, and how they might affect economic performance. Employers and employees have very different views on this topic: firms are generally expecting more attendance in the year ahead, while few workers are planning to be in more often. Some companies are anticipating regaining leverage over location of work as the labor market cools, while others say that workers still hold most of the cards. One client said it best: there are no unquestioned success stories yet surrounding hybrid work.
Firms and workers also differ in their views of how remote work has affected productivity. Most employees, citing reclaimed commute times, suggest that their output has improved. But employers, skeptical of competing calls on people’s time, have their doubts. A recent study by the Federal Reserve Bank of New York based on Census data concluded hours saved by not commuting have been more than offset by increases in time spent at leisure and sleeping. To be fair, hours worked do not correspond perfectly to output. But the study is an interesting data point.
Attendance at work places is still well down from pre-pandemic levels. |
One thing that everyone seems to agree on is that people should not go into work if they are unwell. This is an important change from pre-pandemic conditions, when a little sniffle was usually not cause for missing a day. Absenteeism due to illness remains elevated from its 2019 levels, and this represents an important loss of productivity in industries where remote work is not possible.
Both of these trends suggest diminished productivity in the post-COVID era, which is not good news, especially given the toll the pandemic took on the labor force. I’ll be back in the office next week, hoping to make up some of the deficit.
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Carl R. Tannenbaum
Executive Vice President and Chief Economist
November 4, 2022
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