Working from home and understanding what matters

The US economy has experienced a remarkable recovery since the 2020 COVID recession.

The much feared scarring effects of the pandemic never materialized:

Employment, labor force participation and gross domestic product are once again in line with predictions made before the pandemic.

We’re still waiting to see if House Republicans squander that result by pushing America into an entirely gratuitous debt crisis.

But today I thought I’d take a breather from the anxiety and talk about one major way the US economy is doing even better than the standard numbers suggest.

One of the positives of the COVID-19 crisis has been major change the way you workr from Americans:

we waste much less time and fewer resources traveling.

A few days ago, my colleague Farhad Manjoo He wrote an excellent article on the benefits of short commuting, which inspired me to dig deeper.

While it has its drawbacks, what doesn’t? -, the move to remote and hybrid work is, overall, a great thing, though Elon Musk he hates it (or maybe especially if he hates it).

The transition to remote working is also a teachable moment, in at least two ways.

First of all, it’s an object lesson in whether taking advantage of the new technological possibilities it often requires major changes in the way businesses operate.

Second, remember that economic numbers like GDP, while useful, can sometimes be indicators. misleading what really matters in life.

First is first:

THE travel time reduction work is very important.

Before the pandemic, the average American adult spent about 0.28 hours a day, or more than 100 hours a yearon business trips.

(Because not all adults work, the figure for workers was considerably higher.)

By 2021, that number had dropped by about a quarter.

Assigning a monetary value to the benefits of reduced commuting is difficult.

You can’t just multiply the time saved by the average salary, because people probably don’t view time spent on the road (yes, most people drive to work) as a total waste.

On the other hand, there are many other expenses, from fuel to wear and tear and psychological stress, associated with the commute.

On the other hand, the option of remote work or hybrid It is often available primarily to highly skilled workers with above-average salaries and therefore a high value associated with their time.

But it is not difficult to argue that the global benefits of not commuting daily are equivalent to an increase in national income of at least one and perhaps several percentage points.

And it’s a lot:

There are very few policy proposals that can produce gains of this magnitude.

And yes, they are real benefits.

CEOs may rail against lazy or (according to Musk) “immoral” workers who don’t want to go back to their cubicles, but the purpose of an economy is not make the bosses happy.

Interestingly, this transformation in the way many Americans work has not been driven by new technologies.

It’s true that it wouldn’t have been possible if many people didn’t have fast internet connections, but the sharp increase in broadband in homes occurred between 2000 and 2010, and then leveled off.

Only under the pressure of the pandemic have companies learned to take advantage of the technological possibility of remote work.

The point is that, despite the economic pandemic being behind us, the change in the way we work seems definitive.

Overall, working from home looks like a classic example of a fledgling industry:

an initially uncompetitive industry that gets a temporary boost (usually provided by tariffs or subsidies, but in this case a virus) that learns by doing and remains competitive even after support is removed.

If the rise in remote working proves permanent, it will have profound economic effects, with some losers (like commercial real estate and many city tax bases) but many winners.

However, it will not be reflected in a measured increase in GDP:

The time Americans spend in traffic is not subtracted from national income, and time spent with their families is not added.

I am not one of those who criticize that GDP is a useless figure; it is an informative statistic and is not easily replaceable.

But it can be misleading when companies make different decisions.

Anyone making 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 US productivity; It reflects the fact that Europeans take a lot of holidays, while we are the “nation without holidays”.

So are we better off? Are you sure?

We are now seeing significant gains at home that are not reflected in GDP.

It is true that these earnings largely correspond to the highest earning workers, which is a pity; however, we have also seen steep wage increases at the bottom end, which alleviates the unfairness somewhat.

And one of the consequences is that, if we look at the purpose of the economy, that is, satisfy human needsby not generating favorable statistics, US profits have been reduced in recent years.

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