Remote work has little impact on productivity growth – Fed study

CALIFORNIA, UNITED STATES — A new study from the Federal Reserve Bank of San Francisco found no major change in productivity growth between industries more amenable to remote work compared to those requiring in-person activities since 2020.

The analysis examined productivity data across 43 industries and assigned each a “teleworkability” score based on the share of occupations suitable for remote work.

“If remote work boosts productivity in a substantial way, then it should improve productivity performance, especially in those industries where teleworking is easy to arrange and widely adopted, such as professional services, compared with those where tasks need to be performed in person, such as restaurants,” said San Francisco Fed economist John Fernald and his co-authors.

But the data showed little correlation, indicating hybrid and remote arrangements ushered in during the pandemic have not significantly hampered or improved productivity.

The authors noted the shift to flexible work policies has profoundly impacted society, allowing for less time commuting and moving out of cities.

“Despite these noteworthy effects, we find little evidence in industry data that the shift to remote and hybrid work has either substantially held back or boosted the rate of productivity growth.” 

According to the report, as of December 2023, around 30% of paid workdays were still happening remotely, down from a peak of over 60% in 2020 but well above the 5% rate pre-pandemic.

Other economists previously implied that productivity decline is historical, not necessarily linked to remote work.