Working from home and realizing what matters

2023-05-27T10:40:00.172Z

Highlights: Although there are drawbacks, telecommuting is a very good thing despite Musk hating it (or maybe mostly because of it).. The US economy has experienced a remarkable recovery following the Covid recession in 2020. The much-feared lasting effects of the pandemic have never been realized. Employment, labour force participation and GDP once again correspond to forecasts prior to the health crisis. But the change in the way of working seems to be permanent and will have profound economic repercussions if it continues.

Although there are drawbacks, telecommuting is a very good thing despite Musk hating it (or maybe mostly because of it).

The US economy has experienced a remarkable recovery following the Covid recession in 2020. The much-feared lasting effects of the pandemic have never been realized: employment, labour force participation and GDP once again correspond to forecasts prior to the health crisis. We are still waiting to see if House Republicans squander this achievement by pushing America into a totally arbitrary debt crisis. But today I thought about taking a break from the burden and talking about something important in which the US economy is performing even better than the usual figures imply. One positive aspect of the coronavirus crisis has been a major shift in the way Americans work: we now waste less time and resources commuting.

A few days ago, my colleague Fahrad Manjoo wrote an article about the benefits of reducing travel between home and work that inspired me to delve into the subject. Although it has its drawbacks, the shift to telecommuting and hybrid work is, in general, a very good thing despite Elon Musk hating it (or perhaps especially if he hates it).

The change to teleworking is also a very didactic moment, in at least two ways. First, it offers a practical lesson from the fact that harnessing new technological possibilities often requires major changes in how businesses operate. Second, it reminds us that economic figures such as GDP, while useful, can sometimes be misleading indicators of what really matters in life.

First things first: reducing travel time is a very serious matter. Before the pandemic, the average American adult spent about 0.28 hours a day, or more than 100 hours a year, on work-related commuting. (Since not all adults work, the figure for those who do was considerably higher.) By 2021, that time had dropped by about a quarter.

Attributing a dollar value to the benefits of this reduction is complicated. It's not enough to multiply the time saved by the average wage, because people probably don't consider the time they spend on the road (yes, most people go to work by car) as totally wasted. On the other hand, there are many other expenses, from fuel to vehicle wear and tear and psychological strain associated with trips to work. And a third consideration: the option of teleworking or hybrid work is usually available especially to workers with a high level of education who receive salaries above the average and, therefore, with a high value associated with their time.

However, it is not difficult to argue that the overall benefits of not commuting to work every day equate to a gain in national income of at least one percentage point, and perhaps several. This is a lot: there are very few proposals for measures capable of producing benefits of this magnitude. And yes, the benefits are real. CEOs may rant against lazy or (according to Musk) "immoral" workers who don't want to go back to their cubicles, but the purpose of an economy isn't to make bosses happy.

What's interesting is that this transformation of the way many Americans work has not been driven by new technologies. It wouldn't have been possible if many people didn't have fast internet connections, but the big increase in household broadband took place between 2000 and 2010, and then leveled off. Companies only learned to take advantage of the technological possibility of teleworking under the pressure of the pandemic.

The point is that, while the pandemic economy has been left behind, the change in the way of working seems to be permanent. Overall, telecommuting looks like a classic example of a nascent sector: at first it is uncompetitive, then it gets a temporary boost (usually provided by tariffs or subsidies, but in this case, by a virus), it learns by doing, and it remains competitive even after it removes the stimulus.

If the increase in telecommuting ends up being indefinite, it will have profound economic repercussions, with some losers (such as commercial real estate and the tax bases of many cities), but many winners. However, what it will not do is manifest itself in the form of an increase in nominal GDP; The time Americans waste in traffic jams is not subtracted from national income, and the time they spend with their families does not add up.

I am not one of those detractors of GDP who claim that it is a useless figure; It is an informative statistic and is not easy to replace. But it can be misleading when societies opt for something different. Anyone who makes international comparisons knows that the United States has a higher GDP per capita than European countries, but that much of the difference does not reflect higher productivity; It reflects the fact that Europeans have many holidays, while we are the "country without holidays". So, are we better off? Are you sure?

We currently see great benefits in households that are not included in GDP. It is true that these gains fall mainly on workers with higher incomes, which is deplorable. However, there have also been significant wage increases in the lower echelon, and that mitigates some of the injustice. One consequence is that, if you look at what an economy is for—namely, to meet human needs, not to generate favorable statistics—America's recovery from the pandemic has been even more impressive than you imagine.

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