What Are the Limits of Capitalism?
What can capitalism do for society, what can’t it do, and what should it do?What Are the Limits of Capitalism?
Hal Weitzman: Hybrid work—part in person, part remote—has been widely touted as the future. Polls suggest that most employees who can work from home want to continue to do so, at least for some of their working weeks, and most employers seem happy to let them do that. But what challenges does this pose to organizations and managers? And how will hybrid work shake the labor market?
Welcome to The Big Question, the video series from Chicago Booth Review. I’m Hal Weitzman, and with me to discuss the issue is an expert panel. Steven Davis is the William H. Abbott Distinguished Service Professor of International Business and Economics at Chicago Booth. Michael Gibbs is a clinical professor of economics at Chicago Booth. And Melina Hale is the William Rainey Harper Professor in Organismal Biology and Anatomy at the University of Chicago, and she’s the university’s vice provost, leading remote-work planning for the Provost’s Office. Panel, welcome to The Big Question. Steve Davis, let me start with you because you’ve done a lot of research about working from home. Tell us, just, what is the evidence that working from home is really going to stick with us in the years to come?
Steven J. Davis: Sure. Thanks, Hal. Several pieces of evidence, starting with what employers plan for the employees to do after the pandemic’s over. According to our survey evidence, about a quarter of all paid workdays will be done from home after the pandemic’s over, in 2022 and later. Then, when we try to drill down and see why, one big reason is to understand the nature of what happened. It was a mass compulsory experiment for individuals and for organizations. When you’re forced to experiment, you learn things, like: My wife made me experiment with avocados. I learned that I liked them.
But more seriously, when you get to organizations and individuals, some organizations figured out it works well for some things and not for others. Individuals figured out, well, maybe it works for me. Maybe it doesn’t. Maybe it works for these tasks. Maybe it doesn’t. When we ask individuals directly: How did things work out compared to what you expected? They say, on average, much more positively. More important, what we see is the people who had the positive productivity surprises from working from home are the same ones whose employers plan for them to work from home more often after the pandemic’s over.
And then we see several other things. Of course, we all know we’ve made big investments in time and equipment, as individuals, as organizations, in making work from home work better. So that means we’re better at it than we used to be. In addition, there have been technological improvements—many kind of behind the scenes in terms of how the audio and video processing works and so on—that are ongoing and suggest that working from home will get better and better over time. There’ve also been big attitudinal shifts, including something I expect to persist: lingering fears of infection risks, even after the pandemic is over, even if everybody were to get the vaccine, which may not happen, unfortunately. And finally, it’s just the duration of the pandemic itself. We’ve been at this for 18 months now. So habits, work processes, lifestyles have had time to get entrenched in a way that makes working from home more likely going forward.
Hal Weitzman: OK, and you talk a little bit there about productivity. And that was an interesting finding in your research. It’s something that I’m sure a lot of employers are wondering: Are employees—there’s a huge amount of trust involved in letting people work from home—are they really doing an eight-hour workday? Are they really managing their projects as most efficiently as they can? Or are they, you know, getting drawn away by the cat, or the refrigerator, or the TV, or whatever? What have you learned in your research about working from home and its effect on productivity?
Steven J. Davis: So there’s a lot to say here, but let me just start with the most important thing. And this is the part that’s somewhat counterintuitive. It’s not that people are more productive working from home on average. That may be true to a small extent, but that’s not where the gains are coming from. The gains are coming from those organizations and those individuals who learned that for certain kinds of activities, for certain tasks, you can be just as productive or maybe even more productive working in the quiet of your own home. So once the pandemic’s over, those will be the things we do from home. Things that didn’t work out very well, that may even include entire organizations, they’re gonna go back to the way things were before the pandemic. So it’s what we learned, coupled with selecting on what works at home and what doesn’t.
And then there’s a really obvious but big point to make, which is the savings and commuting time. If you’re commuting 60–90 minutes a day and you don’t have to do that, that frees up a lot of time, some of which, according to our survey evidence, is devoted to working more on your primary job. The rest goes to leisure, looking after your kids, housework, and so on. So that’s where the productivity or gains are coming from. We can get into more in some of the specifics if you want, but that’s the single biggest point to take away.
Hal Weitzman: And is the single biggest contributor to productivity, then, that saved commuting time you talked about?
Steven J. Davis: It is according to our evidence. About three-quarters of the gains are simply coming from the fact that you don’t have to spend 60 or 90 minutes commuting when you work from home.
Hal Weitzman: So that does suggest, does it not, that some of those gains could accrue to, as you said, to employees as much as employers, and everyone would still benefit?
Steven J. Davis: Yeah, well, the gains accrue directly to the employees, but of course everything we know about economics says over time we would expect pay to adjust to reflect that. If you really value and others value working from home, well, probably the employer is gonna get some of that benefit over time as well.
Hal Weitzman: OK, all right. Well, Mike Gibbs, let me bring you in because you’ve also done research on productivity and work from home. Tell us what you found where there are overlaps with Steve’s results and where there might be differences.
Michael Gibbs: Sure. Thank you, Hal. I was in a unique situation where I was preparing with colleagues to do research at a large IT-services company. In March 2020, that company, as most of the world, went into work from home, 98 percent of their employees almost immediately in the middle of March. So our experiment could not be run, but we had a working relationship with them. We already had plans to collect data, and so forth. So we were able to exploit that opportunity to collect fairly extensive and rich data from a company on 10,000 of their IT-services professionals. So we have information on their productivity. We also have information on the hours that they worked because they used company devices, even working from home, which had tracking software that could track the time they were working, the time they weren’t working, and so forth and so on.
This company has a pretty rigorous approach to measuring what I’ll call productivity, but key performance measures that are set for each employee by the supervisor and so forth. We have data on the characteristics of the employees. And we were able to collect information on whether they had children at home and their commute time. Since we knew their address, or the company did, and their office address, we can estimate that.
So with that background, what we did is we compare their productivity before the pandemic for about a year and then during the first five months of the pandemic. And what we found was, first of all, employees’ performance basically stayed about the same, declined just slightly, but their working hours increased very significantly, and therefore their performance measured per hour of work, which is I think a good measure of productivity, fell by something like 10–20 percent, on average. We also found that those who had children at home had a larger decline in productivity, but with no difference between mothers and fathers. We found that women had a larger decline in productivity than men independently of whether they had children at home or not. And we found some other patterns, which maybe we’ll get into later, but I think I’ll turn it back to you.
Hal Weitzman: OK, so I mean the headline that’s been, because this research has been widely written up in the media, and the headline has often been: People are less productive working from home. That’s not necessarily quite what you’re saying there, right?
Michael Gibbs: Well, I think I would say that in this one company. Let’s be careful. So it’s just a case study. Now, that said, this is an IT–services companies, one of the largest in the world. All of their employees are used to working with company laptops and so forth. If there was ever a company that was in a good position to shift to working from home, this is that company, but I would definitely say we found a productivity decline.
Hal Weitzman: Right, so you, in an economic sense, that’s correct. I guess the point is that the work was getting done. You’re saying that people were distracted, and it was taking them longer to get that work done, is that right?
Michael Gibbs: Yes, and you mentioned distraction and Steve mentioned something about when working from home, you focus, you try to do tasks where you can focus, and we have a measure of that, which we call focus time. When they’re tracking the employees’ behavior on the computers, they can look at the apps they’re using and they can look at: Are we communicating by chat or messenger or email or phone calls or Zooms or whatever it would be? And they have a measure of time when the employee is working in an undistracted way. And so what we found is that there was a significant decline in focus time during work from home compared to working in the office. And that this was probably the strongest determinant statistically of the decline in productivity, this loss of focus time. So people are getting distracted by spending a lot of time in various kinds of meetings and communications with each other.
Hal Weitzman: OK, Steve Davis, I just wanna give you a chance to come back. Do you have any—so Mike Gibbs’s research is about the kind of quality of work that’s being done—do you have any data about the quality of the work that’s being done when people are at homes if they’re saving that time commuting? Are they actually being as productive as they would have been were they in the office?
Steven J. Davis: Yeah, thanks for the question, but let me just start off by saying there’s less difference between the results I cited than those that Mike cited than meets the eye. First, the productivity measure is different. So we are explicitly factoring in the savings of commuting time. I don’t think Mike is, but Mike can correct me if I’m wrong.
Second, Mike mentioned a couple of, he dug in and mentioned a couple of results that are quite similar to what we find. So two of the big productivity killers for people who work from home and our study are: you’ve got young kids and you don’t have a separate room to work at at home—or even you don’t have a separate room apart from your bedroom and there’s somebody else in the house. I suspect that Americans tend to have bigger houses, with more rooms and fewer family members in the same residence than Indians.
The other thing is, we also find that if you don’t have high-speed internet connection or if the service isn’t very good, that’s another productivity killer. Again, I don’t know. Maybe Mike can speak to this, but I suspect that on average, access to broadband service is better in the US than it is in India. So those are two things that, that kind of would go in the same direction, and I think are kind of consistent with Mike’s study.
Also, I have a question for Mike. I wonder, is there anybody in this company who’s more productive working from home or as productive working from home? Because the thrust of our analysis is, look, if you’re not more productive working from home, then once the pandemic is over, you’ll be back in the office. But if there’s 20 percent of the people who are more productive working from home than they are in the office, those are the ones you want to keep working from home. That’s where the productivity gains are coming from in our study. And so for all those reasons, both the selection effect and the other two effects that I described, there’s not necessarily an inconsistency between our results and Mike’s results. And as Mike said, he’s got one company, and there are certainly companies in our surveys and people in our surveys for whom working from home is a productivity disaster.
Hal Weitzman: Mike Gibbs, you wanna come back, or?
Michael Gibbs: That’s a fair question, Steve. In the paper, we didn’t focus on those for which productivity increased, but no doubt some did. And now you’ve spurred me to go back to my colleagues and say, let’s dig into that a little bit, that fraction, and I can tell you that some teams had an increase in productivity, although most had a decline in productivity. I can tell you that more-experienced employees were the ones who had less of a hit in productivity, at least, and therefore I suspect are more likely to be those who in some cases had an increase. I already mentioned men tended to be affected less adversely than women, independent of whether there were children at home. I think that the number of people in the person’s group that they have to collaborate with was also a factor. Larger groups and the need to coordinate and collaborate with more people tended to be adverse to productivity, and therefore the opposite would also be true.
Hal Weitzman: Melina Hale, I want to bring you in because you’re actually managing this whole process for the University of Chicago, which is of course a vast organization with many, many employees. And of course, we’re not picking between working from home and working in the office. Most of us are now heading toward a hybrid setup, and it’s just about how we manage that. How do you, stewarding this effort for a large organization, think about when it’s appropriate for people to come in, what cadence they should be coming in, how to manage that?
Melina Hale: Yeah, thanks, Hal, great questions. And first to say that I am working on this in the Provost’s Office, and we’re partnering very closely with Human Resources, who brings a lot of expertise to this work. So we actually went and looked at the literature. We looked at Steve’s papers and Mike’s papers. We looked at papers on remote work before the pandemic and during the pandemic, which is a unique situation, working during a pandemic at home. And what we decided is that there’s a lot of great research, but there are a lot of open questions too. And so we wanted to go into the year at UChicago with a spirit of experimentation. And I’m a scientist like these guys. We aren’t doing experiments like they can do on big data sets. But we wanted to go in and be creative and try to really understand what was working for people and what wasn’t. We were, as soon as we started talking to unit leaders and staff, we realized that they had different ideas of what would work in their groups or what they would like to do. They had different experiences of what was effective with remote work or hybrid work during the pandemic. And so we really decided to, both in order to experiment and in order to try to match approach to the unit, to let units really develop their own plans, their own pilots for this coming year, with the idea that they could go forward, try things out, change them and adapt if they weren’t working, try new things if they saw a best practice coming from another unit that they wanted to test out, and then, toward the end of the year, to really evaluate that and come together as an institution or with the units and their officers or the provost and figure out what makes sense to do next.
Hal Weitzman: And so, I mean, just both as an employee of the University of Chicago and as a, just as part of this conversation, I’m interested in: How long is this process going to take? Is it just something that we’re all, it’s gonna be evolving for years to come? And we’re gonna continue to evaluate whether it’s working or not? Are we gonna kind of set in stone: this is what it looks like?
Melina Hale: Well, right now we’re working through the end of this fiscal year, so the end of June ’22. And I think we’ll have to see how the evaluations come in, how productivity fares in the coming year, and go from there. Really, what we’ve focused on is the next year. And I’m really hoping that at some point in this year we come out of these sort of deeply constrained, COVID conditions, because trying to understand what long-term remote work looks like while we’re still so limited with COVID, it isn’t the best situation for making those sorts of decisions. So, yeah.
Hal Weitzman: But I mean, do you share this view that this is sort of what we’re going to be working like, regardless of the health situation? I mean, as you say right now, a lot of people are nervous or cautious about going into the office too much, or what they perceive to be too much. But if that—please—hopefully if that fades somewhat, will we? I mean, will we still be using this hybrid setup or—? What’s your expectation?
Melina Hale: Yeah, I think so. I hope so. There are great equity reasons to have hybrid options for people who really do better, maybe, working in a home environment or for other reasons, you know, need a short-term sort of hybrid or remote-work accommodation. And then in certain areas, although it’s great to hear from Mike, unit leaders really did say that they found, for certain types of work in certain groups, that remote work was incredibly effective in the quality of the output as well as the sort of amount of work getting done, or I guess, productivity, although I think they also think about it in a slightly different way. So based on what we’re seeing now, it seems I am optimistic that there will be some nice remote-work options coming out of this that will work well for the institution.
Hal Weitzman: OK, and just to be clear, when you say it’s going down to the unit level, it is not up to individual employees to determine their own working patterns. You’re asking managers, and in this case, the whole departments and schools to organize that.
Melina Hale: That’s right. I can tell you about our process. So we developed a fairly simple template, 19 questions that deal with issues like: How are managers supported? Because the ability of the manager is so important in successful remote-work arrangements. How is data security being handled? What does this mean for your space? Things like this. And units, so our divisions or schools or academic units or administrative offices under an officer of the university can fill out and submit these plans. They go to a, after they’re reviewed—actually by myself and someone in HR—and are iterated, they go to a panel that includes sort of experts on different aspects of this from around campus. We review it—it takes a little over a week—get back with more feedback, and finally, the plans are approved. So it’s a relatively short process. We wanted to sort of give units the ability to develop their own plans as they felt were best but also saw the need for our institutional leaders to be able to understand what was happening across campus and also for us to be able to see best practices in one place and share them with others. Maybe there are emergent values of changes that multiple units are trying at the same time that we could think about differently. So we’ve tried to balance some central engagement and involvement in the process with a lot of unit control over what they’d like to do.
Hal Weitzman: OK, I mean, it just sounds like there isn’t going to be, in the case of this one organization, a central policy. The policy will be determined lower down. Is that, is that right?
Melina Hale: Yeah, we don’t have any sense that that would work for our employees.
Hal Weitzman: And Steve Davis, to bring you back. And you talked about some roles will benefit more than others, which seems to make sense. How does an organization manage that, because they’ll be concerned about, Melina Hale, you raise equity, there’ll be concerns about equity. If one team is allowed to do what they like and another team is forced to come in, what are the challenges for organizations and then into sort of structurally thinking about equipment? And you talked about the lack of space. To what extent are organizations, do you think, responsible for not just things like technology but giving employees the space that they can work in comfortably and effectively?
Steven J. Davis: Thanks, Hal, let me speak to that, but first I just want to applaud the spirit of experimentation, learning, and sharing of best practices that Melina described. I think that’s exactly the right approach. Another thing that she hit on and which is related to your question, Hal, is, that there are big differences across people and how much they value working remotely. And just to take an obvious example but one that comes through loud and clear in our data, women with young children at home have particularly strong desires to work from home part of the week, probably because they wanna be able to be home when their kids come home. They want to be able to make them a snack, have more flexibility in their workday, so it’s very important to recognize that.
Now, on that same thing, and getting directly to your question, Hal, about how to manage this, there are some real challenges, because people will make different choices, insofar as you let them make choices. Also, we need to recognize the jobs people do differ greatly in their capacity to work from home. Sometimes the company, the university, or whatever organization we’re talking about can equalize those differences by buying people a nice computer or laptop computer to work at home, and we see evidence of that. But in other cases, their jobs typically tend to be jobs at the lower end of the earning spectrum that have little capacity to work from home. So one of the big challenges that I expect to emerge in coming years is we’re going to see well-educated, highly paid professionals, I mean, lots of opportunities to work remotely. People who earn a lot less, compelled by their employers or the nature of their job to come into work five days a week. And that may not sit very well when you’re already earning less than some of your coworkers and now you don’t have the same kind of flexibility. So there’s a lot of potential to manage this in a way that smooths out those kinds of potential sources of resentment. Or if you’re oblivious to them, they might, they may come back and hit you hard.
Hal Weitzman: I mean, what would be—. Sorry, I was, just to press you on that point. So you’re talking about, for example, like, paying people kind of danger money, effectively, to come into the office. I mean, what would be the, sort of the ways to smooth out some of those exacerbating inequalities?
Steven J. Davis: One way is to say to the people who have the capacity to work from home, to have a frank conversation with them and say, look, every day you work from home, you save an hour of commuting time. So think of that as part of your raise for the next year. You’re just having to spend a lot less time with us because you don’t have to spend that time commuting. Whereas the folks who don’t have that option, maybe you wanna think about the only way you have to compensate them is to give them more money, or benefits, or whatever. So I think just taking that into account is an aspect of compensation. That really wasn’t very broadly construed. It wasn’t very relevant in the past, but it’s highly relevant going forward. And in our surveys, people make very clear, and not everybody, most people would be willing. They place substantial value by their own expressed willingness to pay for the opportunity to work from home two or three days a week. So it means something to people, and that ought to be considered into the compensation package.
Hal Weitzman: So they’re telling you now, they would be, just to be clear, they’ll be willing to take a pay cut, or they will be willing to forgo a pay increase in order to?
Steven J. Davis: Yes, they tell us on average, and again there’s a lot of differences across people. On average, they’d be willing to forgo a pay increase of 8 percent for the option to work from home two or three days a week—their choice of days, by the way, I should make that clear. And that’s consistent with some kind of experimental studies done before the pandemic and on a much narrower population, much narrower sample, but did have the advantage of actually being an experiment as opposed to observational data that we’re using.
Hal Weitzman: Mike Gibbs, I wanna bring you in again and ask you about the challenges for organizations, which some roles, while remote, some, as Steve Davis said, some employees are happier coming in than others. Some presumably have less commuting time. Speaking as someone who lives next door to my office, that’s not a benefit particularly that I’ve enjoyed. How does that affect an organization that is suddenly dealing with a very complex work situation that it really hasn’t had? Because we have, most people were in person then most people were remote? And now there’s this very complicated setup. What are your thoughts about how organizations can navigate that, Mike Gibbs?
Michael Gibbs: I guess I think there’s two sides to this. I’m an economist. It’s supply and demand. On the demand side, certainly almost all employees would value the option of more flexibility, more ability to work from home, and so forth. But on the supply side, I’m sorry, the demand side, we think about the impact on the organization. And there are some jobs for which working from home can be very costly, at least significant working from home. So I would also be thinking not just about this as a benefit but for which types of jobs it’s most appropriate, for which types of jobs it’s inappropriate. And that’s got to be part of the calculation. It’s got to be part of the setting of expectations for employees and so forth.
So for example, jobs which involve significant interpersonal interactions in various ways, those are the ones that I suspect are most problematic. I’m a teacher. I’m going to teach in person next week for the first time—well, I did this summer. But all this past year I’ve been teaching on Zoom. And, let’s be honest, it’s not a perfect substitute for being in the classroom. And what we also find in our research is that in a study I did with the Asian IT services company, those whose jobs involve more communication outside the organization, inside the organization, more teamwork, their productivity tended to suffer more.
And then the last thing I’ll throw in there, which we weren’t able to measure yet, although we hope to do in a follow-up, is I suspect innovation is going to suffer as well because innovation comes from interpersonal interactions, many of which are unplanned, spontaneous interactions. People you’ve never met before you bump up against. You have these watercooler conversations, so to speak. And it’s very difficult to organize spontaneous interactions with people you don’t know on Zoom. Urban economists often talk about agglomeration effects. There are benefits to having people located together in the same city. And one of the things that they emphasize is you see more patent activity, not just within companies, but because of people interacting with each other across companies. And that’s an example of something that’s gonna be much harder to do when people don’t meet in person more often.
Hal Weitzman: Yeah, I mean it’s as I was saying about innovation, because you’ve done a lot of research in the past on how to spur innovation. So I take the point that people need to interact. On the other hand, if people already know each other, if teams are already familiar with each other on an interpersonal basis, could—and I’ll bring Steve Davis in—could technology solve that? Because we have tremendously powerful tools to collaborate online in real time with large numbers of people that we didn’t have before, right? So I wonder, could you see a point where innovation, where technology solves that innovation, interpersonal brainstorming–type problem?
Steven J. Davis: Yeah, so thanks for that question, Hal. It’s a good one. So look, this question about agglomeration innovation is more subtle than it appears on the surface. There’s no doubt that we have there a lot of benefits that come from agglomeration from cities, from people bumping into each other and interacting. But let me just give you an example of my day today. I was on a seminar. [American Enterprise Institute’s] Charles Murray was speaking. This seminar originated at Stanford. Then I was on a call with the Booth Private Equity Counsel, with 50 or so private-equity folks from all over the country—maybe all over the world, as far as I know. Now I’m talking to you guys. I could have talked, we could have had this on campus all of us together.
The point I’m making is, by not being, everybody, physically on site, we do lose something. I can’t read everybody’s body language as well, for example. On the other hand, the scope for interaction virtually across space and across different people is vastly improved by these technologies, including the one we’re using now. As I said before, they’re getting better and better. So that’s why I think that the impact, the connection between moving to remote interactivity and innovation is much more subtle than just the idea we can’t have watercooler conversations anymore. Because the geographic reach of whom we can talk to whom we can learn from is just tremendously expanded. And I think that expansion is going to continue as we go forward, as these technologies continue to improve, as they try to substitute—imperfectly, no doubt—but they try to substitute more effectively for the watercooler-type interactions.
Hal Weitzman: Yeah, Mike Gibbs, one last question for you about innovation because, in an international setting, it’s much easier nowadays to bring one person in from Africa, one person from Middle East and Latin America, whatever, to sit in a meeting that they might never otherwise have had the opportunity to do or we would have had to fly them somewhere or everyone else would have had to fly in. And it was just tremendous logistical operational costs, not to mention environmental. So I mean, could all of that offset some of the lack of watercooler conversation that Steve Davis mentioned?
Michael Gibbs: Absolutely. I think that’s an important insight. I agree with Steve completely on that. It’s not gonna solve everything now. It’s been very easy for me to collaborate with researchers that I already know during the pandemic. It’s been trivial. I can focus at home—probably more productive, to be honest. But I’m not meeting new people. When you go to conferences and in person, you meet people. You have a drink with them. You have dinner. You’d sit next to them at one of Steve’s talks and you’d sort of chat. And those kinds of interactions are the ones that have led to my collaborators throughout my career.
I also think we should think about in certain kinds of innovation there’s a physical part to it. I think about the kinds of jobs that economists do. It’s mostly statistical analysis. But if you wanted to do a field experiment, that means someone is not gonna be working from home. There’s visiting. They’re doing interviews in the field, whatever it’s gonna be. And then I think about in an IT-services company such as the one we studied, there’s software but there’s hardware. The hardware guys had a much bigger problem. because they need lab equipment. I mean they need equipment and they need the space for a lab. And that brings me to Melina. My brother happens to be a biology professor. And he spent all of COVID going into his lab all the time with a mask on, even though the university was shut down.
Melina Hale: I did too, actually, every day.
Hal Weitzman: Yeah, so certainly I mean in science, biological sciences, Melina Hale, your area, you cannot bring the lab home. So you have to go and although, who knows, maybe think, maybe technology will enable us to do more remote work. I want to, before we finish, I wanna get to the big question of equity, which you, well, everyone touched on, but we didn’t quite dig into. So you, Melina Hale, you talked about you were trying, you were very aware of equity. Steve and Mike Gibbs talked about the effects on women, on the one hand that women who have children at home want to typically enjoy the option of remote work. But. Mike Gibbs talking about the effect on women has been more damaging in terms of productivity. How do you as a large organization think about equity in all its forms in this new environment?
Melina Hale: Well, first, can I go back to Mike’s definition of productivity as related to women with children. So I have three children. And I’ve worked full time through their childhoods. And there are definitely times when I leveraged my ability as a faculty member to have a more flexible work schedule and work from home in order to, it wasn’t always just having fun with them, but taking them to doctors or various things like that. And I made up the time in different ways. And maybe each hour was less productive, but that doesn’t mean the amount of work overall that was accomplished was less, and perhaps I valued what I had to do in the middle more than I valued that extra couple hours that I would need to spend on the weekend. So I think different people, maybe particularly women with children, but I’m not sure, are the equations are slightly different. And they have different ways of getting the work done. That may be a win in both sides. It might take them longer to be productive, but they get the work done and are happier and are able to do more with their families. And I know a number of men who are in the same situation, actually, too. So to go back to your original question. Yeah, about equity in general, can you repeat that?
Hal Weitzman: Yeah, so just I mean, how do you as a large organization think about equity when you’re putting in place these policies, and how are you measuring it? What, how does it loom in terms of policy decisions that you have to make?
Melina Hale: Yeah, again, it’s, I think it’s so complicated, and we don’t fully have our hands around it. But it’s something that we need to keep in front of mind. So as I mentioned, in some ways being able to work from home, not just in the women with children example but more broadly, can be incredibly beneficial to some people.
On the other hand, if you’re accosted with, if you’re having to bear the expense of your internet service and maybe having an apartment where you have a space that’s larger, so you have a space that you can just use as an office, that’s an equity issue on the other side, where people with less resources will be pressed to accommodate remote work potentially. So it’s I just say it’s complicated and something that we’re working on and thinking about quite a bit. I would love to see experiments from Steve and Mike on this topic.
Hal Weitzman: OK, and that leads me to something I wanted to ask you, Steve Davis, about the general effect on the economy and the labor market of remote and hybrid work, because it could be bigger houses. It could be more growth in the suburbs or the death of the inner cities has been predicted probably many, many times. What about the effects on the economy longer term, and what are your predictions for how it’s going to shape the labor market?
Steven J. Davis: Thanks, Hal, well, I mean, that’s a big question. So I’m just going to pick up on some of it. But I want to start with a piece of that question that connects to your prior question and discussion of equity. So there’re big equity challenges from work from home. But there are also some unusual opportunities. And let me play that out. There are—. We live in urban environments, OK, where there’s a thick labor market, where, unless you have some, if you live in Chicago, unless you have some extraordinary, specialized skill, there’s probably some jobs that are a reasonably good fit for the skills that you have to offer.
That’s not true for many people. There are many people who don’t live in dense urban areas in the United States and around the world. By reasons of that’s where their spouse has a job. That’s where their family lives. That’s where they grew up, whatever reason. Lots of people out there who don’t have great opportunities to fully exercise their labor-market skills because there’s no job around where they live that gives them that opportunity. If they can work remotely most of the time and maybe go into the big city once every month or two, that opens up a much wider range of opportunities. So one aspect of equity, it’s also kind of pro-growth, is allowing people who have skills that they could not otherwise exercise effectively in the labor market to do so by virtue of remote work.
And that’s an even more important issue globally, when you start to think about: many people in the world live in areas where the road system isn’t very good. Some women live in areas where it’s socially suspect to mingle with men in the workplace, or where it’s not safe to go outside after dark. There are a lot of people out there whose labor-market opportunities are constrained by the traditional work-mode model where you go to, you have to go to work five days a week. So I think it’s worth keeping that in mind on the equity side.
I’ll just mention one other aspect of your question. You alluded to it. There’s real challenges for inner cities. The reason’s pretty obvious. Commuting is down. Mass transit commuting is down. That means fewer workers coming into certain parts of downtown, like the financial district in downtown Chicago. I don’t live too far away from there. And that means all those shops, personal service, restaurants, bars that were serving these workers, taking their spending dollars, before work, after work, at lunchtime, on Friday nights to celebrate, and so on. There’s much less of that activity. I walked on Michigan Avenue yesterday less than a mile from my home, right across from Millennium Park. Prime real estate. Within a block, there are two fast-food places and one coffee shop, which used to be my favorite coffee shop, that are closed this far into the pandemic.
So what does that all mean? That means for cities, they need to expeditiously repurpose their space so that they don’t lose the vitality they had before. That may be more mixed-use residential businesses. That may mean making yourself a destination for entertainment activities because there won’t be as many office workers. For the workers who used to have those jobs. That’s a big deal, because the spending dollars as they move out to the suburbs, the suburbs might not be so easy to get to for those people who used to take a short train ride into downtown Chicago. So it has implications for how we organize our transport system and for who can get which types of jobs. So there’s a whole set of profound challenges there. And I just scratched the surface with my remarks.
Hal Weitzman: OK, Mike Gibbs, I just wanna come to you, then, quickly before we close about your thoughts about the long-term economic effects of remote and hybrid work.
Michael Gibbs: Thanks, Hal. I’ll just focus on the organizational part of that. I think that the mass experiment, forced experiment that we’ve gone through, the enormous learning, the investment in new tools and technology, the cultural changes—cultural outside organizations, within organizations—these are all fantastic opportunities for organizations to evolve in ways that give us more flexibility in how we perform our work—when and where and how but also give greater flexibility to people and how they organize their lives and work together. So you know, in the spirit of Ronald Coase from the University of Chicago, the Coasian bargain opportunities between organizations and their people are very exciting to me. Once we work out the challenges I think this will be very positive.
Steven J. Davis: One underappreciated benefit of this kind of pandemic-induced shift to remote work is we’ve learned how to do it, and you know, Mike talked earlier about teaching on Zoom. So here’s my own experience: I once taught remotely with two weeks notice, utter disaster from my end, from the university’s end, and so on. This summer I taught in a hybrid mode, not as good as teaching in person but way better than my initial experience. That’s because I’ve learned, the university has learned, and so on. Now, widen that point out to the macro perspective. What it means for our society as a whole is we are much more resilient economically and probably socially in the face of the next pandemic-like disaster that might hit us, on the chance that one hits us. And as I understand from epidemiologists, we could get another pandemic or maybe even a variant of COVID, maybe something else, or it could be some other kind of disaster that inhibits people from traveling and from in-person communication. We are much better prepared as a society to respond to that productively now because of this very hard experience that we’ve been through. And I think that’s an important point and worth keeping in mind as we go forward. There’s some subtle benefits of this, this in some ways horrendous experience as well as the, you know, kind of more obvious ones we’ve been chatting about.
Hal Weitzman: OK, well, thank you, Steve, for dragging us down but then finding the silver lining. On that note, our time is up. My thanks to our panel, Melina Hale, Steve Davis, and Mike Gibbs. For more research, analysis, and commentary, visit us online at Review.ChicagoBooth.edu and join us again next time for another The Big Question. Goodbye.
What can capitalism do for society, what can’t it do, and what should it do?What Are the Limits of Capitalism?
Big companies make up an increasingly large share of the economy.Rising Corporate Concentration Continues a 100-Year Trend
It isn’t just the quantity of goods that consumers buy but the quality that matters.Why ‘Trading Down’ May Bias Our Picture of Inflation
We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.