Who Is Not a Good Fit for Remote Work


The Covid-19 pandemic has had a huge impact on the economy. One of its main and long-term consequences is the transition to a remote work format. Experts continue to analyze this phenomenon, trying to identify the impact on areas that are not obvious at first glance, for example consumer behavior and career prospects. (Spoiler: remote work is the least suitable for young people who love freedom so much.)


Remote work damaging services

Before the pandemic, only 2.6 percent of US residents worked from home at least part of the week. At its peak in the second quarter of 2020, the share reached 47 percent, and since mid-2022 it has stabilized at the level of 20-25 percent, according to a Goldman Sachs survey of a number of studies and polls. 

Changes in the labor market have also led to changes in consumer behavior. The huge demand for goods ordered by people locked at their homes, which had to be turned into a workplace, has become one of the major drivers of inflation in recent years. Manufacturers did not have time to respond quickly to such demand; supply chains disrupted by the lockdowns led to significant delays in the delivery of goods. As a result, prices went up. Although consumer craze has mostly subsided, and production and transportation routes have improved, which led to a significant decrease in inflationary pressure, remote work continues to have a serious impact on the economy, Goldman Sachs analysts say.

One of the manifestations of this is the fact that remote work has become and remains the main factor behind a significant gap in the consumption of goods and services, which persists despite the end of the pandemic. In the service economy, common for many countries of the West, goods suddenly began to play a noticeably greater role.

Having collapsed after the start of lockdowns, the consumption of goods in the US returned to the pre-crisis trend (2016-2019) in the middle of 2020. At some point during the next year it went above it by around 15 percent and now remains 7.1 percent above trend. Meanwhile, the consumption of services has not returned to the pre-crisis trend and is now 1.1 percent below it. 

According to credit card spending data in cities, remote workers spend less on services related to office work or its location (for example, transportation, lunch, shopping), and more on household goods (including home office goods) and leisure and entertainment products. This means that the shift in consumer preferences is likely to persist in many ways, Goldman Sachs notes. 

Services have stumbled not only in the consumer segment, but also in the commercial sector. The entire ecosystem associated with businesses in and around office premises is experiencing difficulties, from cafes and restaurants aimed at office workers to architectural firms, cleaning companies, etc. One of the heaviest blows fell on the rental and sale of office real estate, which includes thousands of lawyers, financial professionals, brokers and realtors. Before the pandemic, the average office rental period was 10 years, and the broker's commission was 32-36 percent of the first year’s rent. Now contracts are mostly signed for just three years, and the commission has dropped to 12 percent, says Jim Wacht, President and Principal at Lee & Associates real estate company working across the US. 

Due to these developments, CBRE Group, the world's largest real estate services company, announced in 2022 a reorganization and $400 million in cost reduction.


Career prospects

A remote job may seem like the perfect solution to finding a work-life balance, but it turns out that there is at least one big disadvantage. Moreover, it concerns one of the most important aspects of a career – promotion.

Over the past year, fully remote workers were 31 percent less likely to receive a promotion compared to people who come to the office, whether full-time or several days a week. This was shown by an analysis by the employment-data provider Live Data Technologies, covering two million US white-collar workers. Remote workers get less mentoring, which ultimately affects their career development, especially for women and young employees. 

According to the Bureau of Labor Statistics, almost 20 percent of Americans with a college degree or higher continue to work remotely all five days a week. According to Live Data Technologies, 3.9 percent of such workers received a promotion in 2023. Meanwhile, the share was 5.6 percent among full-time in-office workers or those who spend there at least part of the week. 

Nick Bloom, a Professor of Economics at Stanford University who studies management practices and remote work, said to The Wall Street Journal that the further away a person is, the more biased they are. Almost 90 percent of CEOs said in a survey that when it comes to lucrative assignments, wage increase or promotion, they are more likely to reward employees who bothered to come to the office. 

Most managers want to see their workers in their workplaces. According to the 2023 KPMG CEO Outlook, conducted online with 1,325 CEOs of large companies in 11 countries, almost two thirds of respondents predict a full return to in-office work within the next three years. People may not like it, but I can't build a company based on the lowest common denominator, says Vineet Jain, CEO of California-based software developer Egnyte, adding that if an employee doesn't show up at work and doesn't communicate with colleagues, there will be problems in interaction and lack of participation. 

Egnyte monitors employee attendance at several of its offices using badges. It has asked employees living within 80 km away from an office to physically show up at work three times a week. According to the company, 46 percent of more than 1,000 employees are required to come in person, while the rest work remotely. 

Some people, however, are willing to sacrifice the benefits of in-office work for the sake of greater flexibility and liveability. On average, employees view the option to work from home 2-3 days a week as equal in value to 5 percent of earnings, Stanford University economists found after conducting a survey in 27 countries during two waves of research in 2021 and 2022. According to their data, Russians were willing to pay 4.7 percent of their earnings for the work from home option.

The good news is that from the point of view of promotion, there is no difference between visiting the office five days a week or less, according to the paper by Bloom and co-authors, written in 2023. Their data shows that those who are fully remote have higher productivity than those who are fully on-site. More than half of managers and employees in lower positions feel the same way, according to a Gallup poll.

Work from home damages relationships between employees, and as a result, the chances of their promotion decrease, Bloom and co-authors say. In their opinion, remote work is more suitable for those who have already climbed the career ladder and hold a stable position in their profession, having also broad experience and ties that can help them in their further career development. 

Bloom believes that being in the office for three days a week is enough for a worker to stay in the sight of the manager and not be forgotten.


What LinkedIn shows

The demand for remote jobs is very high: about half of all applications are looking for remote work, says Nadia Kotova, a graduate of the NES and HSE Joint Program in Economics, who has been working at LinkedIn after receiving her PhD at Stanford Graduate School of Business. But the share of job openings that promise or guarantee remote work is falling: it shrank by half in just a year from about 20% last May. 

You also need to come to the office in order not to lose not only to colleagues, but also to artificial intelligence (AI), says Kevin Ellis, the Chair of PwC UK. Junior staff should spend more time in the office to get quicker promotions, as AI is poised to take on routine tasks traditionally given to younger workers. Generative AI is removing "tasks that in the past our more junior staff trained and cut their teeth on," Ellis said in an interview with Bloomberg at the World Economic Forum in Davos. 

"It’s a lot more face-to-face time being important and a lot more developing," he notes. “So you have to get people in the office more working together.”

Face-to-face work is very important and develops employee skills much better, Ellis believes: "If you’re asking me my opinion on how you succeed in your career, I’d be in the office four to five days a week."