In mid-March, the University of Chicago was among the schools and institutions forced to close amid the Covid-19 pandemic. Students went home; teaching and research had to go remote overnight. For economists Jonathan Dingel and Brent Neiman, both professors at the university’s Booth School of Business, the hasty transition meant a crash course in giving classes over Zoom, and balancing research with domestic chores.
Dingel says he was surprised at how easily he transitioned to online work, but was acutely aware many workers and occupations would be much less able to. As the crisis threatened to stretch many months longer, it became clear those who couldn’t make the switch would be at serious risk of losing their income and even their jobs. That meant working out how many occupations could feasibly be done remotely would be essential for anticipating the long-term impact of the pandemic.
The pair assessed more than 800 occupations to work out which ones could be done remotely, before checking US employment data to see how many of each of these jobs exist in the US. They calculated that up to 37% of jobs in the US could be done from home.
But their study also highlighted that the jobs best suited to going remote were well-paid, white-collar occupations in big cities, while those in industries like agriculture and hospitality were much harder to switch. This suggests that the economic impact of the pandemic could be highly unequal, severely impacting some industries and regions while leaving others relatively unscathed.
While about 97% of legal work and 88% of jobs in business and finance could be done remotely, only 3% in transport and 1% in farming, fisheries and forestry could (Credit: Alamy)
The ability to transition to remote working also comes with a host of other benefits beyond simply holding onto your job, says Dingel. And with a growing number of companies now committing to remote working for the foreseeable future, there are concerns these advantages may stay unequal long after the current emergency. The sustainability of this remote work revolution remains unclear – but if it becomes the new normal, experts say we may need to intervene to ensure people aren’t left behind.
Dingel and Neiman’s findings were based on results from two US Department of Labor surveys, in which researchers collected data from more than 25,000 respondents in more than 1,000 occupations on what activities and conditions their jobs involved. They marked occupations as unable to complete from home if respondents reported things like working outdoors, operating heavy machinery or working directly with the public.
The economic impact of the pandemic could be highly unequal, severely impacting some industries and regions while leaving others relatively unscathed
They found jobs involving “knowledge work”, like those done by office managers and accountants, had a much easier time shifting work online compared to manual or customer-facing occupations like construction workers or hospitality staff. While they estimated that about 97% of legal work and 88% of jobs in business and financial operations could be done from home, only 3% in transportation and 1% in farming, fisheries and forestry could. The 37% of jobs that were remote-friendly were also better paid – accounting for 46% of all wages – and geographically concentrated.
While more than 45% of jobs in San Francisco and Washington, DC could be performed at home, in Las Vegas and Florida’s Fort Myers, the figure was less than 30%. These disparities are also evident on a global scale: in Sweden and the United Kingdom, more than 40% of jobs could go remote, but fewer than 25% in Mexico and Turkey could. An EU survey in May showed the number of people working remotely in its member states largely matched Dingel and Neiman’s predictions.
The main takeaway, says Dingel, is that the burden of the pandemic will disproportionately fall on the least well off. And while wealthier cities and countries can keep large parts of their economies ticking amid lockdowns and restrictions, poorer ones face tough choices on how to balance public health against the economic disruption caused by social distancing. “Inequality both within countries and across countries we would expect would be exacerbated by the crisis,” he says.
Less than 50% of the world has a computer at home, and only about 60% has access to the internet (Credit: Alamy)
The gap between the developed and developing world could be starker, adds Era Dabla-Norris, an economist at the International Monetary Fund. She and colleagues recently extended Dingel and Neiman’s analysis by combining their data with responses to an OECD survey of workers in 35 countries. They found that even within the same occupations, considerably fewer jobs could go remote in less advanced economies than developed ones.
A major factor is access to technology – less than 50% of the world has a computer at home, and only about 60% has access to the internet. “An accountant in the US is going to use technology very easily, and she has no problem whatsoever working from home,” says Dabla-Norris. “An accountant in a smaller city in India may be using a pen and paper, and have a ledger instead of a computer.”
The impact of these disparities could cast a long shadow. Workers whose careers are disrupted can earn lower wages for decades afterwards, says Dingel, so countries and cities less able to shift to remote work could face severe “economic scarring”.
Widening the divide
This may not be the only long-term impact, though. Many companies that have long been reluctant to experiment with remote working have seen the pandemic force their hands, says Dingel, and for many the transition went better than expected. A PwC survey from June showed that 83% of US office workers want to work from home at least one day a week after the pandemic, and 55% of employers expect to offer that option.
The 37% of jobs that were remote-friendly were also better paid – accounting for 46% of all wages – and geographically concentrated
Multinationals including Ford, Google and Amazon will stay fully remote until at least 2021, while others including Facebook, Fujitsu and Siemens have announced permanent shifts to remote-friendly working. Tellingly, a recent KPMG survey of large company CEOs showed more than two-thirds plan to downsize office space. In August, Pinterest paid nearly $90m (£69m) to cancel a 490,000-square-foot lease in San Francisco, citing a remote-work future.
This could have significant benefits for employees of these transitioning companies, says Dingel. Not traveling to an office lets workers squeeze more hours out of the day, reduces transport costs and could let people escape inflated commuter-belt property prices. Those working from home may also find it easier to fit professional responsibilities around family and social commitments, leading to a better work-life balance.
The problem is that these advantages will accrue to the already privileged, says Juan Palomino, an economist at the University of Oxford. His research shows remote working in Europe is strongly tied to higher earnings, so existing income inequality could be compounded by a widening gap in access to the benefits of remote work. This could also feed back into greater professional success, says Palomino, creating a feedback loop that further widens economic differences.
An exodus from the office could also undercut jobs reliant on a bustling urban economy like cleaners, taxi drivers and restaurant staff. Research by Enrico Moretti at the University of California at Berkeley shows that in innovation hubs like Silicon Valley, every high-skilled worker supports three times as many service jobs.
The jobs best suited to going remote were well-paid, white-collar occupations in big cities (Credit: Alamy)
Rebalancing the scales
There are reasons to believe the remote-work revolution won’t be as dramatic as some predict, though, says Dingel. Working from home has been technologically feasible since the advent of high-speed internet 20 years ago, but even in developed countries, the proportion doing it full time has been negligible.
“We didn't see a mass exodus from cities,” he says. The conventional wisdom among economists is that there are significant benefits to the spontaneous in-person interactions only possible in a shared office.
Employee satisfaction with work-from home arrangements will also largely depend on how companies structure their business processes, says Dingel. Remote work is often conflated with flexible hours, but that relies on asynchronous ways of working where people don’t need to collaborate in real-time. If you still need to be on call for a typical 9 to 5, the benefits of working remotely are significantly reduced.
But while in most countries the proportion of jobs that go remote long-term is unlikely to get close to the percentages identified in his paper, Dingel expects a significant uptick after the pandemic. And that could require creative approaches to head off a widening gap between remote workers and those clocking in in-person. A government’s standard tool for dealing with inequality is redistribution via the tax system. “There isn't such a tool analogous to the tax system if we're talking about increases in unequal flexibility or unequal life satisfaction,” says Dingel.
One option would be to focus policy on problems affecting those unable to work from home, says Palomino. That could include subsidising commuter transport, or incentivising companies to provide better childcare options. “It could be more targeted and nuanced than just giving out money and taxing the people that do telework,” he says.
Perhaps more important, though, will be helping more people access these higher-paying, remote-friendly jobs. Many countries will require significant investments in infrastructure, such as high-speed internet and reliable power supply, says Dabla-Norris, as well as proper childcare options. When the pandemic shuttered schools and day-care facilities, it highlighted the difficulty of juggling domestic and professional responsibilities without support, particularly for women carrying the bulk of this burden.
In his research, Palomino also found the biggest factor in whether or not someone can work remotely is access to higher education, which also governs earning potential. That suggests that the most important action governments can take is investing in training. “Looking into the future, I would say the impact of education, which has always been key, is going to be even greater,” he says.