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Economy Central presented by

ECONOMY CENTRAL

Staying Home Is remote work here to stay? By Hannah Mayhew and Lynn MacDonald

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he way we do business has shifted dramatically in just one year. Lifestyle and working norms that we once took for granted have disappeared. Businesses that have relied heavily on face-toface interactions are finding their footing as offices lie empty. According to a September 2020 Gallup poll, 33 percent of workers were solely working from home, with 41 percent of workers never working from home, and the remaining 25 percent of workers toggling between remote and in-person

work. This is a stark contrast with pre-pandemic patterns. In 2018, less than 25 percent of workers reported working from home on a typical day. To better understand the variation in COVID-19related remote work decisions, economists Jonathan Dingel and Brent Neiman developed a measure of remote work feasibility by industry. Using survey responses related to both work context and general work activities, reflective of the typical experience of U.S. workers in approximately 1,000

Contributors ________ Hannah Mayhew, is an economics student at St. Cloud State University and Lynn MacDonald, is an associate professor of economics at SCSU

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occupations, they classified occupations according to how plausible it was for work to be done entirely from home. This measure reflects a feasibility constraint—it is the maximum amount of remote work that is feasible under current occupation characteristics. They found that 37 percent of U.S. jobs could be fully remote. The 37 percent finding hides substantial variation by sector and geographic location. The remote work feasibility ranges from a low of 28 percent in the Cape Coral-Fort Myers, Fla. Metropolitan Statistical Area (MSA) up to 51 percent in the San Jose-Sunnyvale-Santa Clara, Calif. MSA. The transition to remote work is contingent on the extent of physical activity and direct customer contact. Florida tourism and hospitality can’t make this transition as easily as the California tech sector. Industries that have transitioned to remote work are correlated with high-wage jobs and highly educated workers. The St. Cloud MSA’s remote work feasibility falls slightly below the average at 31.5 percent. St. Cloud’s leading sectors by employment include health care, manufacturing, and retail, all of which are largely unable to fully transition to remote operations. A team of economists led by Alexander Bartik set out to expand our understanding of remote work feasibility by analyzing survey responses from both large (average size of 532 employees) and small businesses (average size of 14 employees). These two surveys

provided strikingly similar responses with 45 percent of small businesses reporting some workers shifting to remote work early on during the COVID-19 pandemic and 50 percent of large businesses seeing a similar shift. Even as early as May 2020, businesses expected some increased levels of remote work to continue post-pandemic with at least 16 percent of workers who transitioned to remote work during the pandemic expected to remain remote after the crisis resolves. It is too early to know the long-term effects of COVID-19 on work patterns and productivity. While the post-pandemic prevalence of remote work will vary by location, it is unlikely that St. Cloud will become a remote economy given our industry composition, which is heavily reliant on physical activity and human contact. Firms that invested resources to enable remote work or saw increased productivity from remote work may allow workers to continue to work from home or may use a combination of in-person and remote work in the future. Face-to-face operations have been an integral part of doing business for many years. While it is possible that some jobs may stay remote, the ease of communication, collaboration, and knowledge transmission from face-to-face interactions still offers substantial benefits. Businesses that benefit greatly from interpersonal interactions, or find it more efficient to have workers centrally located, will bring workers back.

Profile for St. Cloud Area Chamber of Commerce

March/April 2021  

St. Cloud Area Chamber of Commerce Business Central Magazine

March/April 2021  

St. Cloud Area Chamber of Commerce Business Central Magazine