It’s not hard to see how employers could. With all the commute time freed up, what is to stop them from simply asking employees to work longer from home — to prepare that report before the meeting starts in the morning or to answer emails or contact clients or file those forms at all hours of the day or night? Blurring the lines between work and the rest of life does not have to benefit workers in the end. Indeed, it was the thing that worried people about working from home before the pandemic began.
Daily Business Briefing
July 19, 2021, 5:11 p.m. ET
Economists call this an “incidence” question: who ultimately benefits from a windfall. It’s just like a tax incidence question: Economists routinely analyze whether consumers or sellers truly end up paying when, say, a state raises its sales tax.
The first rule of incidence is that it depends on the conditions in the marketplace. The incidence of the working-from-home bounty will depend on whether labor remains scarce over the long run and on how powerful the employers are. Who needs the other side more? If workers have many options and can quit jobs that encroach on their time, they will tend to keep the bounty. If employers can choose among lots of workers, working from home may end up being much less favorable than it first seems.
The job market seems tight right now, and if employers put extra burdens on workers, it would probably be a serious error. They would have a hard time attracting people and would probably face a wave of resignations. But will that still be true in a few years, when things are back to “normal”?
The last 40 years of wage growth in the United States provide a note of caution. For decades, median pay tracked average worker productivity — the output generated by the typical worker — quite closely. Then, starting in the 1970s, this correlation began to break down. From 1979 to 2019, the average productivity of workers rose 72 percent, but median pay rose less than one quarter of that — only 17 percent.
There is considerable debate among economists about why pay and productivity seem to have diverged. Some think the relationship remains strong despite the shift in the general aggregate numbers. Some cite one or more of these factors: globalization, technological change, or a change in the balance of bargaining power due to the declining strength of unions or the rising concentration of employers.
Beyond the subtleties, though, the basic issue is simple. Corporations claim a greater share of the national economy than ever before. If the last 40 years of productivity growth ended up benefiting shareholders and corporate profits more than it did wages, the same thing could very well happen with the newfound productivity benefits and time savings of working from home.
So now may be the perfect time to savor the little things — reading the newspaper in your pajamas, having an extra cup of coffee and simply not having to deal with traffic. Just know that even if you aren’t wearing real pants, your employer may soon be telling you to get back to work.
Austan Goolsbee is a professor of economics at the University of Chicago’s Booth School of Business. Follow him on Twitter: @austan_goolsbee