Working from Home: A Solution to Structural Inequalities?

The typical worker before 1800 toils on a farm. By 1900, they labor in a factory. Come 2021—they work from home. The Covid-19 pandemic has fundamentally redefined the workplace. While before the coronavirus swept across the world, only 20% of Americans capable of working from home did so all or most of the time, the number today reaches 71%, according to a Pew Research poll from last December1. Moreover, over half of those able to work from home—51%—answered  they wish to do so even after the pandemic ends. Further, in February 2021, almost a year after the  tight lockdowns at the beginning of the pandemic, a Gallup poll revealed fully 56% of Americans  were “always” or “sometimes” working from home2.  

Since the rise in working from home appears to be here to stay, one might ask whether this reshaping of the nature of work will engender long-term economic impacts. More precisely, will the long-run equilibrium quantity of output in the US economy shift due to working from home?  Taking a long-run model of the American economy, the answer seems to be yes: the expansion of  working from home will lead to an increase in the long-run equilibrium quantity of output. Both  rises in the availability of resources and productivity signal such an outcome.  

A primary obstacle to long-run economic growth in the United States is the effective isolation  of a large portion of the labor force because of the economy’s structural gender and housing inequalities.Two groups in particular—mothers and young people—find themselves in a  disadvantaged position that hinders their ability to integrate into the workforce, depriving the  economy of valuable labor. 

The lack of adequate external support for child care in the US forces many mothers to choose between becoming full-time caregivers and participating in the labor force. The Center for  American Progress, a think-tank, spoke in 2019 of a “clear connection between access to  affordable, quality child care and labor force participation—especially for mothers,” illustrating  the dilemma between working and caregiving3. The expansion of opportunities for working from  home may help to mitigate the issue. Though federal child care legislation would play a large part, today’s structural change in work can help mothers balance caregiving and working. Indeed, working from home proves much more flexible than having to go to the office daily; as a result, it is unsurprising that a Gallup survey from 2016 showed that 54% of working moms preferred work from home compared to the office4. Working from home can therefore improve both labor force  participation and productivity among mothers in the US economy.  

Working from home offers benefits to young people, too. With home and rent prices rising by 61% and 73% respectively since 2000, many millennials find themselves locked out of city centers with lucrative jobs5. Around 40% of them, according to CNBC, receive help from parents for everyday expenses such as rent, demonstrating the financial strain caused by the current real-estate market5. But with working from home, young people can work from outside of town—avoiding  costly housing and lengthy commutes. Through working from home, it seems both mothers and  millennials—two groups particularly harmed by structural disadvantages in the US economy— may better integrate into the labor market, leading to an increase in the availability of labor and productivity, and thus economic output.  

To be sure, working from home is not a panacea for the US economy’s embedded gender and  housing inequalities. Though working from home can benefit mothers, other measures, such as  federal child care legislation, would be equally useful. Besides, growing housing costs across the board may make living out of town just as expensive as city life, laying a burden on young people.  And there remain doubts on whether productivity experiences a boost or weakens when working  from home. Nevertheless, it does seem that a rise in opportunities to work from home will lead to  an increase in the economy’s long-run equilibrium quantity of output by improving the integration of disadvantaged  segments of the US labor pool into the workforce, particularly young people and working mothers. In a time plagued by uncertainty, surely that merits cheer.  

References:

1. Parker, Kim; Horowitz, Juliana; Minkin, Rachel: “How the Coronavirus Outbreak Has – and Hasn’t – Changed the Way Americans Work.” Pew Research Center, December 9,  2020:  

https://www.pewresearch.org/social-trends/2020/12/09/how-the-coronavirus-outbreak has-and-hasnt-changed-the-way-americans-work/ 

2. Saad, Lydia; Hickman, Adam: “Majority of U.S. Workers Continue to Punch In  Virtually.” Gallup, February 12, 2021: 

https://news.gallup.com/poll/329501/majority-workers-continue-punch-virtually.aspx

3. Schochet, Layla: “The Child Care Crisis Is Keeping Women Out of the Workforce.” Center  for American Progress, March 28, 2019:  

https://www.americanprogress.org/issues/early

childhood/reports/2019/03/28/467488/child-care-crisis-keeping-women-workforce/ 

4. Bloom, Ester: “More than half of working moms would prefer to be at home, survey  finds.” CNBC, November 4, 2016: 

https://www.cnbc.com/2016/11/04/more-than-half-of-working-moms-would-prefer-to be-at-home-survey-finds.html 

5. Carter, Shawn: “Here’s the big reason so many young people need mom and dad to pay  their rent.” CNBC, May 24, 2018:  

https://www.cnbc.com/2018/05/24/high-housing-costs-mean-young-people-need-family help-with-rent.html

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