THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.
MODERATOR: Good morning and welcome to the Washington Foreign Press Center briefing, “Navigating the New Normal: How Teleworking Is Changing the World.” My name is Bryce Johnson and I am today’s moderator. First, I will introduce our briefers and then I’ll give the ground rules.
This briefing is focused on the Survey of Working Arrangements and Attitudes, a survey established in May 2020 in response to the dramatic impact of COVID-19 on working arrangements. The survey, which is run jointly by the University of Chicago, ITAM, MIT, and Stanford University, collects information on workers’ experiences and attitudes regarding working arrangements in order to better forecast how working arrangements might evolve after COVID-19.
Our briefer today is Professor Nick Bloom. He’s a professor of economics at Stanford University. He’s been researching working from home for almost 20 years, winning a Guggenheim Fellowship for this in 2022. He has been heavily involved with policy, including meeting President Obama and speaking at the White House 2014 Working Families Summit. He has consulted with hundreds of CEOs and managers and has been covered extensively on working from home by international media, including The New York Times, Wall Street Journal, CNN, BBC, Financial Times, and The Economist. He was called the “prophet of working from home” by Fortune Magazine and “America’s best work-from-home expert” by Business Insider. I’d like to thank Professor Bloom for his expertise and time.
And now for the ground rules. This briefing is on the record. Today’s briefer is an independent expert and the views expressed by briefers not affiliated with the Department of State are their own and do not necessarily reflect those of the Department of State or the U.S. Government. Participation in Foreign Press Center programming does not imply endorsement, approval, or recommendation of their views. We will post the transcript of this briefing later today on our website, fpc.state.gov. Our briefer will provide opening remarks and then we will open it up for questions. If you’d like to ask a question, you can use either the raise-hand button or submit your question in the Q&A box.
And with that, I will pass it over to Professor Bloom. Over to you.
MR BLOOM: Okay. Thanks very much, Bryce. I’m going to go to share screen. Let’s just get this up and running. Here we go.
So I’m going to talk about interesting work-from-home trends. This is very topical. You probably saw yesterday there was a huge surge of interest around Elon Musk. In fact, the day before the – two days ago – I spent much of the last two days talking to journalists. What I’m going to do is to show you a few facts and figures, and then I’m going to go through six different tweets that I think are kind of individual stories in themselves. Then I’ll move to Q&A.
So as Bryce said, I’ve been working on working from home for a very long time. It was very boring really, mostly, until March 2020. I met President Obama, which was fantastic, in 2014, which is definitely a pre-pandemic highlight. Since the pandemic’s begun, I’ve been surveying around 5,000 Americans a month and about 20,000 people around the world. I’ll show you the countries. About a thousand U.S. firms. Probably most usefully, consulting with hundreds of organizations. Yesterday was a good example. I spent the day in a tech – with a tech firm in San Francisco, and then had a discussion with a Korean organization and in fact something in Australia later in the evening. It was kind of a – as well as talking to a lot of journalists throughout the day.
So I’ll just give you some broad trends, then happy to go to Q&A. I spend much of my time, probably almost all my time right now, thinking about and talking to people that work from home. So work from home is now standard in the U.S. and globally.
Here is paid work days from home. I’ll close it. Here’s – whoops – here’s paid work days from home each week. This is from a global survey. This is from the February 2022 wave. This is – in each country, we keep people with education from high school and above – so to be clear, this is people who are basically in school from 18 or over, so clearly this is not representative of, say, in India but it’s representative of kind of professionals, managers, people with high school, university education. And what you can see is around the world, people are currently working on average one to two days a week from home. Pre-pandemic, that would be less than half. So globally, not surprisingly, there’s been a huge surge in working from home.
If you look at where this has come from, most societies split into three groups. So this is U.S. data, but this is similar for Northern Europe, Australia, Japan – I was talking to last week some folks in Japan.
So there’s really three groups. There’s people that are frontline employees. They’re mostly nongraduates in that they haven’t been to university; they’re typically lower-paid. Think McDonald’s or manufacturing or retail, and they are working fully onsite. So that’s about half of society, a bit more. They cannot work from home. I mean, a good line and an interesting line that’s come up a lot when I’ve talked to companies is these employees feel upset and kind of angry that this work-from-home perk is missing them, they’re not getting it, they’ve had to go in throughout the pandemic, they’ve faced infection risk, and now they’re not getting any of this nice work from home which better-paid managers and professionals are.
And then in the next group – this is the middle, this is hybrid. Every journalist I’ve spoken to basically is hybrid, like all academics, most policymakers, senior managers, professionals. This is about a third – a bit under 30 percent of the labor force is basically managers, professionals, graduates. Probably – I’m sure everyone listening went to university. Almost all of our friends from university tend to fall into this category. It’s 30 percent of the workforce. It’s about 50 percent of the payroll. So it’s about – half the economy pay weighted is here. This is a big group. I’m going to talk a lot about this group because this is the group that media and policy is very focused on because it’s the hardest to deal with.
And finally, there’s a group of about 15 percent in America, less in other countries, that are fully remote. These tend to be, like, IT support, payroll, often contractors, plus a few famous tech firm like Airbnb, Quora, Upwork, Automattic. These firms have gone fully remote. I think this is an interesting group, because over time they’re going to spread out. A lot of these jobs are going to move out of the U.S., say, to Mexico, India, South America, Africa. Basically I’ve talked to a lot of companies that have said: we’ve discovered these roles work really well fully remote, and in the long run we’re thinking of moving outside the U.S. So I think there’s about to be a huge surge of offshoring of American companies moving jobs abroad, and European companies as well.
So why do people like working from home? So we surveyed people on the benefits. Number one is kind of obvious: no commute. Number two is less obvious. Number two is something I’ve heard a lot, but it’s – until you see the survey data, it’s all-around flexibility. So when people work from home, a typical hybrid plan – take the plan, say – the company I was in yesterday was a startup. They have a plan that’s basically the same as Apple’s until recently, which is Monday, Tuesday, Thursday you’re in the office; Wednesday and Friday you work from home. And the idea is Monday, Tuesday, Thursday it’s, like, really social days, lots of meetings, presentations, events, meeting with clients. Wednesday, Friday, it’s more quiet reading and writing work.
The upside of that is on Wednesday, Fridays, if you want to go for a run, go pick your kids up from school, go to the dentist, you can do it. And in fact, I’ve heard anecdotes that would make a great story that various people have told me: the golf courses or the park has never been as – this full in the middle of the week. People are working from home, but they’re slipping out to go play a round of golf, go to the dentist, go to the doctor. So that pre-pandemic thing of Saturday, Sunday we did all these activities, Monday to Friday we were in work, is disappearing, and life is much more kind of evenly balanced throughout the week.
Employees really like hybrid work from home. Here’s, again, international data. We asked people how they value it. Typically it’s valued about the same as a 5-percent pay increase. So this is one of the reasons Tesla’s going to be in trouble. In the U.S., these numbers are a bit higher. This is 6 percent here, it’s 8 percent in another survey, but Americans in particular – I mean, most people value work from home. Americans seem to value it more highly. But if you’re going to have employees that are currently working from home two, three days a week, and force them back to the office full-time, to stop a bunch of them quitting you’re going to have to put up their pay. You’re looking at putting up their pay probably about 5 to 10 percent.
So work from home. One thing I’ve seen since the pandemic has begun is it’s like a – it’s a story in three parts. So part one was summer 2020, everyone thought work from home is a temporary thing to deal with the pandemic, and then post-pandemic we’ll go back into the office. So here is we’ve been asking 5,000 Americans a month: what has your employer told you you are going to do post-pandemic? The first month we have here is August, and you can see back in August 2020 people were mostly saying, “My employer’s told me I’m typically coming back. I might get to work from home one, two days a week after the pandemic.”
As the pandemic stretched on, work from home has become more and more popular. Last summer, you’re as close to two. It’s now raising in the later stages up to kind of 2.3, 2.4 days a week. So what’s happened is over the last two years, people have discovered work from home works, employees like it, firms like it, performances and profits have been great, and it looks like it’s here to stay.
So I’m going to now go through some of my favorite work from home stories. Each one of them is kind of like a media story, and in fact there was bits – some of them were picked up, some of them weren’t. I just thought they’re, like, interesting nuggets for talking to journalists on work from home.
So one is of course you probably all saw on Wednesday, Tesla – an email was leaked from inside Tesla quoting Elon Musk as saying – or the head of HR, actually, at Tesla, saying people have got to be back 40 hours a week or they should leave. Elon Musk reinforced that with a tweet saying yes, they better work that or they should get out of here. So I got bombarded with people asking what that’s going to mean. I’m going to give you the responses I tweeted out based on data.
So we’ve been surveying 5,000 Americans a month. We have – of those, of those that work from home, which is about half of them, we asked them this question, which is: If you were asked to return full-time to the office, what would you do? So again, this is roughly two and a half thousand Americans a month that are currently working from home typically two, three days a week. We asked them: If you are asking to return to the office full-time, what would you do?
What you can see down below is somewhere about 7 percent say they’ll quit on the spot, they just would not go back, they’d quit immediately. About 35 percent say they’d go back, but they’d look for another job while they’re back. And the remaining roughly 60 percent would go back and return.
So if you apply this to Tesla, I think the predictions are for Tesla, if you’re a cutting-edge engineer working on some amazing driverless car, you probably would go back to the office. There isn’t really much else to compare to Tesla out there, maybe Lucid and – there are a few other driverless car companies, but it is a pretty unique company. But that’s not most of their employees. Most of Tesla employees are in finance, IT, HR, back office. These people are almost certainly thinking, “If I have to go back to the office five days a week, why don’t I go work for Google or Apple or Amazon or Microsoft? They’ll let me work from home three days a week and pay me probably just as much.”
So I think Tesla is looking at a large increase in quit rates over the next six months to a year if they enforce that. They could, of course, as I make out here, pay people 10 percent more as compensation. It doesn’t sound like they’re going to do that, so I think the front cutting-edge engineers will go back. They’re going to find a lot of their back office, IT support staff will quit.
In fact, recruiters tell me they’re actively now targeting Tesla employees, going to LinkedIn, search for Tesla, find all the Tesla employees, send them a message saying, “Hey, I know you’re supposed to come back to the office. I have a client of mine that would like to interview you, and you can stay working from home.” So I think this is going to be costly for Tesla. They’re going to lose a lot of staff because of this.
Second question I get asked a lot is: Is working from home here to stay? As we know, interest rates are rising. You’ve probably seen – I mean, the hiring numbers from this morning are pretty good, but I think there’s some reasonable chance the U.S. will enter a recession, Europe will enter a recession, that Asia will. China maybe already is in it because of the lockdown. The question is will work from home survive going into recession. So this is the tweet on the left, and I think the answer is yes, and the reason is – there are four main reasons when I talk to companies that adopt work from home.
One is it keeps employees happy, which we just talked about that. That’s the problem with Tesla. You’re going to make them unhappy. Second, it allows you to save a bit of space. Third, it turns out it’s useful for diversity. If you look at minorities by race, by gender, in fact, by age, religion, politics, all of these breakdowns, they tend to have a slightly higher preference to work from home. So it’s an important pro-diversity tool. And finally, productivity: it looks like probably work from home employees are maybe more productive. All of those four reasons are not particularly cyclical. So even if there is a recession, I don’t see work from home dropping back that much. The drivers of work from home are not the business cycle; they’re more fundamental, long-run things.
On the right is a positive story, which is we’ve scraped all the patents that are posted by the U.S. Patent and Trademark Office, the applications each week. They have several thousand new patent applications each week; they post them. We scrape the data, the text inside them, and look for the frequency of words around work from home, so like “telework” and “work from home” and “remote working,” et cetera. About half a percent of patents before the pandemic seemed to be relevant to work from home. Soon as the pandemic started, this has gone up and up and up.
And what this tells you is kind of econ 101 – the number of people working from home has dramatically increased. So every tech firm, software, hardware company have said: the market is now five, six times bigger, there’s a lot more money in work from home; let’s go out and make products to service that market; it’s more profitable. So think of virtual reality, holograms, AI to make – or cameras, splice people together from different angles. Whatever it is, technology for work from home is going to get a lot better, which means I think it’s pretty safe to say by 2025 or 2030 we’re going to look back at, like, 2022 and say: I can’t believe we had such bad software and hardware.
In fact, as an anecdote, I turned on a machine I hadn’t used since March 2020. It was an old laptop, and it actually opened on Zoom, the March 2020 version of Zoom, and it looked horrible. And I forgot, like, how much even Zoom, which we’re using now, has improved over the last two years. So long run, work from home is going to grow. This thing is – I think the growth rate is just starting.
Third fact: work from home is a big driver of house prices, particularly in the suburbs. Again, this is a global phenomena. I’m showing you U.S. data, but I just did a presentation yesterday evening, actually, my time in Australia – it’s a very big issue there, big issue in the UK, big issue in Germany. So on the left, there’s a paper, someone else’s paper but showing something which is work from home is pushing up house prices on average. Why is that? Well, when you think about a typical household where you have an employee, a professional manager that’s now working from home let’s say two, three days a week, they’re thinking, “Look, I’m spending much more time at home. I really care that my house is nice. I’m spending more time here so I’m going to spend more money on housing, spend less money on other things like eating out and shopping, traveling, et cetera.”
And if every household in the U.S. or at least – or whatever country, UK, Australia, Asia, wherever you are – spends more money on housing, that pushes up the price of houses because there’s really only – or apartments – there’s really a near-fixed stock. So work from home is a phenomenon that’s driving up apartment and housing prices, because people care more about that. They care less about other things like maybe their cars or eating out, and they’re shifting expenditure to that. So it’s one factor pushing up globally house prices.
On the right, it turns out it’s pushing them up most strongly in the suburbs of big cities. So this is called the donut effect. This is my data, my paper. What we see from change of address data, from Zillow data, from Google mobility data is people have left the centers of big cities – some people have – and moved out to the suburbs. So think about – this is San Francisco. Think about you’re a tech or a finance worker in central San Francisco. Before the pandemic you had to come in five days a week. Now, after the pandemic, you’ve been told by your employer, say Google, look, you’ve only got to come in two or three days a week. Now you’re thinking: I need more space at home, I need a home office, I want a nice backyard, but I don’t need to commute in. So we’re seeing people move out to the suburbs, so house prices and apartment prices in the suburbs are really going up a lot.
This is also impacting retail. So I talk to journalists about this and city planners that the centers of big cities are suffering a bit in terms of retail expenditure. So of office workers, here’s a graph of where – how many days or what percentage of their days office workers in big U.S. cities are coming in. You could do this for other cities around the world, it’s going to look similar. I saw data for Sydney and Melbourne yesterday.
So people are coming in typically three days a week. They used to spend about $10,000 to $12,000 a year in the city center throughout the year on spending, food and drink, shopping, entertainment. That’s roughly going to halve, so we’re seeing a big drop in retail expenditure in city centers. If you’re a Starbucks in the center of a city or a McDonald’s, that’s problematic – less employment at city centers. But a lot of this is moving out to the suburbs. This is not lost. It’s just that retail is going away from city centers, some of it out to the suburbs and some of it to online.
And it’s a big issue for cities. So if you’re London Breed in San Francisco or Eric Adams in New York, this is a problem. You get tax revenue off this. Suddenly, less office workers are there, there’s less office, there’s less tube, there’s less public transport. Cities are really suffering. Big cities around the world are really suffering on tax revenues, and this is where this really comes to bite.
Another different story on working from home, you’ve probably heard anecdotes. So I heard lots of stories about this, so I followed up with some surveys. On the left: Is it easier to have more than one job if you’re working from home? The answer is yes. So we surveyed people, and it turns out that if you’re working from home, 3.5 percent or 3.3 percent of people have two or more jobs in which neither employer knows about the other one. This is, I think, in American English called moonlighting. So the idea here is I work for Stanford, but maybe I also do some teaching for Berkeley, and I don’t tell either of them. It’s rare, but at 3.3 percent it’s not that rare, and you notice it’s four times the level if you’re not working from home. So it looks like working from home makes it easier to hold two jobs at the same time.
It’s a good question whether this is good or bad. In some sense, as an economist, you may think it’s good. It increases labor supply. We know we’re short of workers right now. That’s one of the things pushing up inflation. The more workers we have, the more it controls inflation. On the other hand, maybe it’s bad if you’re an employer. You think you don’t want your employee doing two jobs, so maybe not focusing.
On the right is a different take, but it’s kind of similar in spirit. Turns out it’s much easier to interview for jobs if you’re working from home. So I’ve talked to companies and a bunch of employees, and the story we’re getting is look, if you have to interview for a new job, pre-pandemic when you had to do it in person, you’d have to probably take the morning off, you have to travel to the other firm, you have to turn up early, you don’t want to be late for a job interview. You have the job interview, you’ve got to travel back. It’s difficult. If you’re interviewing for lots of jobs, what are you going to do? You’re going to have to lie to your employer, probably make up – I mean, it’s difficult. You’ve got to take many mornings and afternoons off. It looks suspicious.
If instead you’re interviewing remotely because you’re working from home, it’s very easy. You just block out an hour, you take your remote interview. And the other thing that’s interesting is we’re seeing stories of people that get really angry at their boss – they have a terrible performance review, it’s Tuesday afternoon, they’re very angry, they’re really upset. They go on Tuesday night, apply for a bunch of jobs. The labor markets are tight. Wednesday morning they have the interviews, it goes really well. It’s possible for some of these jobs they get offered a job and they’ve quit by the end of Wednesday. So it’s like impulse – it’s like impulse shopping, but instead for changing jobs.
I think what this tells us is work from home is likely to lead to much more quitting, much more job interviewing going forward, because people find it easier to change jobs. Some of them do it – there’s a bad boss, the next day you’re so angry with him or her you just think fine, I’m leaving, I’m quitting, and by the end of the week you’ve got another job.
Two more things. So this is second-last. So this is something that I put out on Twitter about nine months ago, went kind of viral. It’s kind of – it’s scary. It’s an amusing figure. So we wondered about how much people spent time getting ready when they go to work versus when they work from home, so we surveyed them. This is 4,000 people. Turns out people spent 10 minutes a day, or 9 minutes a day, less grooming, as in getting ready for work, when they work from home versus when they go into the office. Why is that? Well, people are less likely to wash, they’re less likely to wear fresh clothes working from home, they’re less likely to brush their teeth, much less likely to shave, much less likely to put on makeup, less likely to put on deodorant.
So you can interpret this in many ways. For me, one of the most amazing things is actually the blue bar, the number of people that are going into work – 15 percent that apparently haven’t washed, 6 percent haven’t worn clean clothes, 5 percent that don’t brush their teeth when they go. I mean, some of these numbers are pretty scary. But you can read this either way, but I think it’s a very interesting fact. It’s clear that working from home is leading us to spend less time getting ready, but there’s also a scary number of people that don’t seem to properly wash or brush their teeth even when they go to the office.
And then – that was it. So I’ll stop now, happy to take Q&A. I have a website called wfhresearch.com. We put out facts and data, and then obviously I’m on Twitter, which I just showed you.
MODERATOR: All right, thank you so much.
MR BLOOM: Hold on, I should then say I put my slides in chat. If you’re interested in the slides, if you scroll back to the – I mean, I can – I’ll put it in now in case you joined afterwards, but —
MODERATOR: Excellent. And if anybody’s interested in seeing the slides later and is watching the livestream or wasn’t able to participate, feel free to reach out to email@example.comError! Hyperlink reference not valid. and we can get those slides to you.
All right, so we will now begin the Q&A for today’s briefing. As a reminder, if you would like to ask a question, please use the raise hand button or submit it in the chat. When you’re called on, unmute yourself, and if you’d like to you can turn on your camera.
I was actually going to kick things off with an advance question that involves Elon Musk from Katharina Kort with Handelsblatt, Germany, but I actually see she’s in the chat now. So if you’d be interested in asking the question yourself, Katharina, feel free to. Otherwise – I’ll give you a second to turn on your camera and unmute. Otherwise I can ask it – to you, Katharina.
QUESTION: Yes, hello. Good morning. You can’t see me. So hello, Nick. Thank you for taking the time. Yeah, just a question. As it is, you already mentioned Tesla and Musk, who has told people to come back or quit, or even telling them to minimum 40 hours in the office or quit. Do you think there will be other corporations who do that?
MR BLOOM: I don’t think there’ll be that many. I spoke to – I know Goldman Sachs – I actually spoke to David Solomon. Goldman Sacs – so, to be clear, Goldman Sachs is the biggest company that’s been mentioned for forcing people back full time. They are not entirely forcing people back full time. I more – I think they have a more nuanced and balanced view. In Goldman there are some people like traders that have to be there in the office, and it makes sense. There are a number of roles there that need to be in. For others they’re a bit more flexible.
Tesla is the most extreme. I mean, Elon Musk – when I spoke to David Solomon, I think the media has misrepresented a bit what he said, actually, so I don’t think he’s as hardcore as presented. Elon Musk actually now has gone out on a wing.
What was interesting is I have heard some individuals – there’s a mix. There are some CEOs that are hiding it. It’s a bit like you see evidence of racism, sexism in hiring, but no CEO will ever – there’s no one’s ever going to say I’m a racist or a sexist CEO or anti-environment. This greenwashing thing – I think the fact is one of the German companies that’s had problems with greenwashing, so this idea you claim to be environmentally friendly and then behind the scenes – so you’re pumping pollutions out. I think that’s bit like this with work from home. Every executive claims that they’re in favor of it. I think right now it’s so impossible to claim anything else that they don’t – there may be some privately. I don’t hear that. What I do hear sometimes from companies is lower-level managers, some old-fashioned 55-year-old manager may be in favor of people coming in, but typically CEOs are smart enough not to say that.
QUESTION: One more question about that, because today it also came out Reuters, an exclusive that Tesla might actually shed 10,000 jobs. So might that just be a smart move from Musk, getting rid of the people he wants to fire anyway?
MR BLOOM: Maybe. I mean, so here’s what will happen. Who are you going to lose? You’re likely to lose people whose roles are not particularly front, so it’s going to be payroll, finance, IT support, admin. You’re also slightly more likely to lose minorities, people with young kids, disabled people. I’m not sure they want that. I mean, I noticed in our survey data – we ask people and it varies – you ask people by race, age, gender, religion, politics. If you’re a minority, as in less than 10 percent of your coworkers fall in that bracket, you have a higher preference to work from home.
So like, I’m basically – I’m almost – I’ll be 50 next year. If my workplace was full of 20-year-olds on TikTok, I might not feel as comfortable coming in. And if my boss was going to make me work – come into the office five days a week, I may think that’s not a very nice workplace, I’m going to move on. That’s true for anyone that’s in a minority. Take politics – it’s a big issue in America. And so if you’re the only Democrat in the office and they force you back in, you’re more likely to quit.
So I think for Tesla it’s not the case – sure, you’ll get people quitting. So they just want to shed – randomly shed staff, skew it a bit towards minorities, they’ve achieved that. If they want to kick out low performers, that’s not the way to do it. I mean, you could just cut everyone’s pay by 10 percent. You’re also going to quit – kick out a lot of people that way. It seems like there’s more than one way to randomly upset 20 percent of your employees and force them to leave.
QUESTION: Thank you.
MODERATOR: All right, thank you very much. I believe we might have a question from Mouctar Baldé with Guinee News. Mouctar, so please ask your question.
QUESTION: Yes, sir, thank you. International organization like the United Nations and its affiliates, big corporation, private corporations, they are spending millions or even billions of dollars in air travel, in hotels, in other accommodations. Would you recommend teleworking as a way for poorer – the poorest countries to save money and the international organization to allow their employees to telework?
MR BLOOM: It’s a great question, sir. It certainly goes – I’ve spoken to the UN. I spoke to the World Bank. I’ve spoken to the – I’ve spoken to a lot of – I’ve spoke to hundreds of organizations. Bryce was saying he used to – oh, no, you were connected to the NIH as – but I spoke to certainly different organizations, the ECB two weeks ago. They are all embracing work from home, but to be clear, they’re all embracing hybrid. So it’s not that these people are mostly fully remote. They’re coming to the office three days a week rather than five.
So Mouctar, on your question, it’s also the case that when you talk to businesses, they are saying for sure the two of us were going to meet for an hour, we can just do this over Zoom, there’s no need for me to fly, particularly internationally. On the other hand, I remember I was on a World Bank mission to Malaysia about 20 years ago and that lasted a week and we met lots of people. That is not an activity you can replace on Zoom. So I think what we’ll see is maybe a 20-30 percent reduction in travel for things that are marginal, but for things that are important or long-lasting, we’ll still see travel.
So you’re right. It will save some money on travel and I think maybe some of these organizations – going out to some conferences that are fringe value, maybe they’re better off saving the money. I don’t think if I was going on a five-country – going to visit, say, I don’t know, Ghana or something for the World Bank and I was going to be out there for two weeks, I wouldn’t – you just can’t replace that on Zoom.
It also depends on where you’re going. So say you’re going to Ghana. The connectivity may not be perfect, not everyone may easily have – it’s fine in Silicon Valley where everyone’s on broadband, but soon as you get outside of, say, North America – so business travel will be down, but I think what’s going to be cut is non – I’ll forecast. We asked, by the way, just to give a date to put on this, we asked American firms in two waves their forecast on long-run business travel. They said both times they would reduce it by about 30 percent because short meetings can be done on video calls. So the numbers I was getting is about 30 percent.
It’s also – I looked at data from Mastercard yesterday for the U.S. Currently in the U.S., business travel is back to its pre-pandemic levels, but that may be a temporary thing. There may be people who have been wanting to meet for two years, so it will go up and then come back down again. I think long run, there’s clearly going to be a lower level. I mean, it seems obvious. There’s many of us could meet like this. I mean, I could have come up to D.C. pre-pandemic; now we’re going to do it on Zoom.
The question is: What share is that? My guess would be 20, 30 percent.
MODERATOR: All right. Thank you very much. It looks like we have a question from Yu Jin with Sina News. Please unmute yourself and, if you’d like, turn on your camera and ask your question.
QUESTION: Hi, thank you. Thanks for – this is a great presentation. We heard a lot of the benefit on the employee side, so I would like to hear more about the perspective from the executive side. What are the bosses’ considerations? Will there be a two-trend – a trend where some companies going fully remote or some other companies where the bosses still value the traditional office culture very much? So would that be a totally – two different trends that we will see?
And also, can you also talk about if there will be a change in the office locations, like the lease where there used to be a lot of office buildings? And what will happen to those office buildings if we go along with the remote working trend?
MR BLOOM: Great questions. So Yu Jin, are you in – is Sina Singapore?
QUESTION: No, we’re from China.
MR BLOOM: Okay. I was going to say, in which case, I have a – I didn’t show it, but I have a very – you know Trip.com?
QUESTION: Yeah, Trip, dot – yeah.
MR BLOOM: So I’m actually working with Trip.com with James Liang, the chairman who was my former student. I’m actually going to meet him next week, I think, for breakfast, but we’ve been running a big randomized control trial with Trip out in Shanghai. It’s obviously paused now because of the COVID epidemic, but we were running it last year, and it’s a good example.
So they took 1,600 engineers, IT coders, finance professionals, and up until the second half of last year they were all coming into the office five days a week. They randomized and had people that had an odd birthday – so if you were born on the 1st, 3rd, 5th, 7th, 9th of the month, you got to work from home two days a week. If you had an even birthday, you stayed at coming in five days a week.
They ran it for six months. Trip.com was so happy with the results, which showed big reductions in quit rates, employees much happier, performance up a bit, that they rolled it out to the whole company. The last thing I knew is in about February 2022, Alibaba had seen this data and was thinking of doing it.
So I think for China and for much – I talked to Japan – so I talked to a whole bunch of Japanese countries last week. Senior management, you’re right, are reluctant to allow people to work from home. The Trip.com data, which was reported a bit in the Chinese media, was very, very positive, and I think some of the tech firms are now rolling this out. So I think within five years from now, you’ll see a very large increase on work from home.
It’s not going to be fully remote, but it will be typically employees allowed to work from home, say, Fridays. Friday is the most popular day. And in fact, when we interviewed the Trip employees, a lot of them wanted to go home to see parents, back to their home villages or towns, and that having three days off allowed them to travel on Thursday night. So I think you’re right that Asia is a bit behind because of a more kind of – it’s the same in Japan or Korea. I was just speaking to folks in Korea yesterday, more folks on FaceTime. But I think they are going to increase a lot.
On office space, it’s interesting. In the data average best for the UK and the U.S., we are not seeing much reduction in office space. The reason is companies are typically having people come in on the same day. So if you think of Apple, they’re asking people to come in on Monday, Tuesday, Thursday, you can’t easily reduce office space. You can’t sublet on Wednesday, Friday. In the longer run, I think office space will be reduced, but it’s a complicated thing to do. And I talk to managers. They’re like hybrid and work from home is so complicated and hard; I can’t do that and reduce office space. So the office space reductions are like, in the U.S. it was 2, 3 percent, in the UK it was 6, 7 percent, and not very large.
Five years from now, three years from now, I think we’ll have much larger office space reductions. People will get smart. They’ll have some teams come in on Monday, Tuesday, Wednesday, others on Tuesday, Wednesday, Thursday, et cetera. But in the short run, the pandemic is making it hard to do that. So if you look in the data, leased – the amount of space used by firms – is not down that much, but buildings have become less valuable, because everyone can see that three, five years from now office space demand will be down.
QUESTION: Thank you. Oh, can I just have one little bit following-up question? Do you also see a very drastic change in the city – in the population in different cities, like the population will decline in the traditional big metropolitan cities —
MR BLOOM: Yes.
QUESTION: — like San Francisco and – where some small cities will more thrive after that?
MR BLOOM: I think so in the U.S., and again, I can – China in some ways may be more seriously impacted by this. So in the U.S. in big cities, people have moved out from the city centers of it. So I’m guessing you’re in – are you in Washington, D.C.
QUESTION: Yes, sir.
MR BLOOM: So Washington – yeah, Washington is one of the 12 cities we’re seeing in large U.S. cities where people have moved out. The centers are expensive. A lot of people like Bryce, like me, don’t have to go into the office five days a week, maybe have to go in two or three, and they’ve moved out to the suburbs. When I talked to the Trip.com. team, they said the same thing is happening there. If you only have to go in three days a week, it’s very expensive to live in central Shanghai. People are moving out.
The other thing that I think is very interesting is skyscrapers, those very tall buildings, are also problematic because of density. So the other reason – and this is a much bigger issue for Asian cities, which have many skyscrapers – which is people are less comfortable getting into very crowded elevators. So if you look at skyscrapers in the morning, on the way up the elevators are jammed. You’re like crushed in with other people to get in, and the same at the subway and in the evenings on the way down. And that is quite problematic with COVID. And when I talk to at least American firms, they’re now having people space out in elevators, space out in lobby ways, space out in kitchens. And that means you can’t fill these buildings up.
So I actually think very tall buildings, these very impressive glass buildings like Salesforce Tower in San Francisco, the Empire State Buildings, or a lot – Shanghai is absolutely full of these buildings. When I was – they are going to be hard to get up to a hundred percent capacity compared to pre-pandemic. So that’s another driver. I think people are going to move out, but you just can’t fill these buildings as full, so people are going to work from home a bit more and move out to the suburbs.
QUESTION: Interesting. Thank you very much.
MR BLOOM: Yep.
MODERATOR: All right, thank you very much. I will give any other journalists just a second, if you’d like to raise your hand. All right, we’ve got another question from Markus Bernsen with Weekendavisen. Please unmute yourself, and if you’d like to turn on your camera and ask your question.
QUESTION: Yes, thank you very much, Professor Bloom, for that very interesting presentation. I’m curious as to whether you have any data on how the activities that actually do take place at the office, whether they’re changing as more people work from home. Is the work that’s still happening at the office, is that changing in any way?
MR BLOOM: Yes. So it’s actually – the best way to think about it is what’s called a task-based model of what we do. So go back to pre-pandemic and think about all the activities we did throughout the week. So you think about meetings and presentations and mentoring, lunches, trainings, reading, writing, et cetera. And then think of breaking that into two buckets, the stuff that’s better in person and the stuff that you can do on your own. So better in person presentations, big meetings, lunches; on your own reading and writing. What firms are trying to do is try and get the first bucket to happen in the office. Say that’s two or three days a week of activity – all of that gets pushed into office days, and the reading, writing, doing data all gets pushed into stuff at home.
So as a journalist, for example, writing stories, maybe even interviewing people one on one is fine at home. Maybe going – talking to bigger groups, finding out what’s going on on the newsroom floor, et cetera, is best in the – I mean, journalists, actually, are slightly unusual. Like academics, you guys can work pretty remotely quite well.
But companies are basically trying to change what activities happen so that when people are in the office, if it’s only two or three days a week, they’re not in the office quietly working in their own offices, because there’s no point coming in just to quietly work. When they’re in the office, they spend all day in meetings and presentations, so it means it’d be very tiring. Like a work from home schedule, it means you have two or three days in the office, so it’s very social. If you’re an introvert, it’s like at the end of the day, oh, I never want to – I don’t want to talk anyone, I spent all day in meetings, I’m really tired. If you’re an extrovert, it’s probably okay, but it means your home days are going to be very quiet.
So maybe that’s not ideal. You have three days of really social, let’s say, and two days of quiet time at home. But the upside of that is you don’t have to commute for two days, and that saves people a lot of time and mostly people are happy with it.
By the way, I should say offices are being redesigned a bit because of that. The future office isn’t going to have lots of individual offices where people sit and quietly work. It should have more open plan areas, more meeting rooms, more together space, more canteen. So in future offices are more focused on larger groups spending time together, and less like the American TV show Mad Men whereby people just sit in their own office all day.
MODERATOR: Thank you very much. It doesn’t look like we have any more questions. If we have any more, we’ll have it as a last question. So if anybody has one last question, feel free to unmute yourself and ask.
All right. I think we are done for the day. With that, we will conclude today’s briefing. On behalf of the U.S. Department of State and the Washington Foreign Press Center, I’d like to thank our briefer, Professor Nick Bloom, for speaking to the foreign press today. Thank you very much, and good morning.
MR BLOOM: Thanks, guys.