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- [00:01]
Henry Blodgett
Support for solutions comes from Zoom. When work feels scattered, progress slows. Zoom brings meetings, chat docs and your AI companion together on one platform, so everything flows. Take back your workday@zoom.com podcast and Zoom ahead. This message is brought to you by Apple Card Apple Card members can earn unlimited daily cash back on everyday purchases wherever they shop. This means you could be earning daily cash on just about anything, like a slice of pizza from your local pizza place or a latte from the corner coffee shop. Apply for Apple Card in the Wallet app to see your credit limit offer in minutes. Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch terms and more@applecard.com.
- [01:01]
Nicholas Bloom
This kind of thing sends me crazy. So it's all alright for Elon Musk that has, you know, 15 chauffeured flying Teslas to take him in and out, you know, to from his one penthouse to the other. But you know, the rest of the world, we have to when we commute, we have 45 minute commutes and we don't have, you know, eight nannies per child. Etc. So one of the problems, I was going to say the third factor for these CEOs, the third reason for this five day artsy return to office pushed by CEOs, is they don't live like the rest of us. They just they're so out of touch.
- [01:33]
Henry Blodgett
For a brief moment after Covid, it seemed like work from home was here to stay. But now it's revenge of the bosses. Companies like Amazon, JP Morgan and others are returning to the old five days a week. This announcement has not been greeted with universal applause. Employees like flexibility, though many worry that being remote hurts their chances of getting promoted. Bosses, meanwhile, worry that remote work hurts culture and productivity. So what's the best policy and approach? Stanford economics professor Nicholas Bloom has been studying remote work since long before the pandemic. He believes there's a solution here, an optimal number of days best spent in office and out. But also crucially, he believes that there are management practices that have to go along with it. Today we dig into his research to better understand what makes a good, sustainable and productive work environment. Professor Bloom, great to have you. Thanks so much for joining us. So we are in a moment, it seems, where every week another big company comes out and says, we've had it with this work from home crap. We're going back to the office. There's a little bit of an outcry among employees. The media says that's it, work from home is over. And then folks like you say, it is not over, it is here to stay. And in fact, there is a solution that is the best for everybody. So what is that, Professor Bloom?
- [03:03]
Nicholas Bloom
Sure. So firstly, you know, work from home. If you look in the data. So I'm talking about big data. There's three sources. One is surveys, so we survey 10,000Americans a month. The second is swipe cards, who's swiping in and out of offices? And the third is tracking cell phones. All of those seem to show that people were returning to the office in 21, 22, 23. But for the last couple of years, that return to the office has kind of stalled out. And you know, I'm aware that the media is suggesting otherwise. It feels like dark matter. You know that astrophysics thing about where is all the mass producing, the gravity? Well, we have that. I just, you know, there's all these companies telling everyone you gotta get your asses back in the office five days a week. We just don't see it in the data. So I don't quite know how they line up.
- [03:51]
Henry Blodgett
Well, what's best? I mean, you've studied policies long before the pandemic. What is the best policy? Taking into account companies that want to do well and have a great culture and be very productive and employees that want flexibility, don't want to get screwed on promotions, that kind of thing. What does your work suggest is the best?
- [04:08]
Nicholas Bloom
I think the data, I just step back for a minute and say, look, there are three types of folks out there in the economy. There is about half of all people that can never work from home. So I set them aside. But think of food service, cleaning, transport, et cetera. There are about another 10% of people. People think of call centers, some kind of back office hr. Those folks are actually great, fully remote. We'll probably not talk about them either. So I think what we're thinking of is typical college grads, managers, professionals. Probably most of the listeners question is what's best for them. It looks like typically it's probably three days in the office and two at home. Actually have a paper in Nature, the, you know, the journal that came out last year where we did a massive randomized controlled trial. So we randomized whether people came in five days a week or three days a week in Trip.com. it's a big public listed, NASDAQ quoted company. And what you saw is there was no performance difference. So coming in three looks like it's enough. You know, it's usual to come in. You just don't need to come in all five, what you do see is if you only come in three days a week and work from home, Two, the quit rates were down a third. And the company that ran it, Trip, said, you know, every quit costs us $30,000. It's really expensive to replace people. So what's best for the company is hybrid.
- [05:22]
Henry Blodgett
And is that universal, do you think, or is there something to. When Jamie Dimon, who has been around for a long time and has taken a very strong position on this at JP Morgan, saying, no, no, no, we just want everybody back. I'm back. I want my team back. Is there. So is what you. What you found@trip.com, do you feel like that's the same for all companies?
- [05:43]
Nicholas Bloom
Well, I mean, I actually just had lunch with some folks from Google, and Google do exactly what I guess I'd suggest, which is, you know, three days a week in the office is you're mandated Tuesday, Wednesday, Thursday. And they say people kind of mostly stick to that. It works well. The office is lively, Folks are happy enough to come in. Question is, do you need to force people in for an extra, you know, the extra two days, Monday, Friday? There are kind of two or three reasons why you might want to. I'm not saying every firm should follow it. One is what I call the Amazon example. So Amazon called everyone back to the office five days a week with an announcement about a year ago, September 2024. Why did they do that? It looks like reading between the tea leaves. They did it because they wanted to reduce headcount. So if you look in the original memo that Jassy put out, he talked about we're too big, we've got too many layers of management. We need to be more nimble. And by the way, if we were to come back in the office five days a week, and if you don't like it, feel free to walk out the door. So there are a group of companies that see it as a very cheap way to downsize. Now, of course, it is cheap to downsize that way, but the problem is you don't get to choose who walks out the door. And for Amazon, that meant a lot of AI and cloud folks left.
- [06:56]
Henry Blodgett
And what about JP Morgan? Again, Jamie seems to be on a very cultural rant.
- [07:02]
Nicholas Bloom
Yeah, Jamie Dimon, I have a lot of respect for. I've seen him talk in person. He's very impressive. I think this is the second group. There is a second group, I think, who believe and may indeed be correct for their business that this is why they do it. I actually spoke to David Solomon, CEO of Goldman Sachs. And he said, look, we're a very mentorship based business. We need people in. It's hard for me to know they are the CEOs of their businesses. They've been very successful. You know, I, you know, JP Morgan's doing really well, so I don't, you know, you know, their stock price is kind of riding high. My sense, having looked at the data from thousands of companies, is I really don't think you need to be in all five days, particularly Friday. So if you look at a lot of the scientific research, there is some real benefit of being in person. So it's great for mentoring, it's great for innovation, it's great for building culture. But there's a big upside for, you know, one day a week of quiet time to think to what's called deep work and, you know, to kind of recharge so you don't have to commute each way. And also employees really like it. So if you're a business, you've got to think of two things, not just one. The first is obviously productivity and everyone's very focused on that. But the second is attrition. So if you do something that employees don't like and they start quitting on you or it's harder to recruit people, that's also a second cost. So my sense is taking everything into account, it probably does not make sense to force folks in five days a week if they can work at least one day a week at home.
- [08:32]
Henry Blodgett
And just as you say that, I basically am hearing cheering outside from everybody who works saying, yes, we want our flexibility on Friday. So thank you. So one of the things I was struck by when I started looking at your work is that you have been doing this for a very long time and that there actually was a trend in this direction long before the pandemic. So tell us about that.
- [08:54]
Nicholas Bloom
Yes, so you can very clearly see this. We actually have data, amazingly, going back to 1965 on work from home in the US. So I won't bore you all the details, but back in 65, it was half a percent of all days. So basically zero. You know, there's the odd farmer out there that's claiming they're working from home and that's about it. And what you see is it's doubling roughly every 15 years. So it doubles by, you know, 1980, it's doubled again by 95, it's doubled again by, you know, 20, 2010, et cetera. What is driving that? What's driving that is just the technology is getting better. So you go Back to the 60s, telephones were rare and expensive and you get, you know, common telephones and personal computers, then the Internet, et cetera. So the natural progression is actually for pretty fast growth of work from home. It was just at a relatively low base. So just to put figures on it, by 2019 in America, 7% of days were work from home. So that's kind of one day a month time, you know, people are doing it. So it's not that common. It is now 25%. So it's gone up just over three times and it looks like it's kind of stably there. So yes, it was growing a lot. It and you know, basically what's happened is the pandemic has given it a permanent kick up. And I think the big factor from, you know, looking at all the data is people just realized, hey, this actually works a lot better than we thought it did. It ain't perfect. So you still got to come in three days a week, you just don't need to be in all five is what we thought in 2019. A second thing that is gradually happening, and I see it living out in Silicon Valley is the technology to support work from home has also got better. So you know, we're on Riverside. That was a product I'm not sure existed actually pre pandemic. Zoom has got better cameras, videos, you know, Apple's produced its headset, there's a lot of virtual reality big screens, so it's easier to feel connected up. And so those two things together meant that work from home's jumped up and it's here to stay.
- [10:50]
Henry Blodgett
And another thing you stress is that it's, it's actually not just the policy, it's how you do it as a company and that it's actually very difficult to do it well. And maybe one of the things that's happened is some of the companies that have seemingly reverted so strongly to five days a week maybe weren't doing it well. So. So talk about that too.
- [11:10]
Nicholas Bloom
Yeah, it's kind of like, you know, as a British person, I can make this joke. It's kind of like cooking. If you do it badly, you tend to order in a lot, you know, you don't like it. So I would say there are two big tips I have heard over and over and over again and I'll give them to you. There are others, I'm actually writing a book, but these are the big two. So one is make sure you have performance evaluation. So over and over again, managers have Said, look, when somebody's in the office, I can see if they're sitting in their desk and if their computer's on and they're typing away, it's not perfect management. It's kind of five out of ten. Henry, if you're managing me, you got a sense that, hey, Nick, you seem to be doing something. When I'm at home, you've no idea what I'm doing. So you need some kind of performance review evaluation system. And in fact, in reverse, if you have an employee that you've no idea what their performance is, I probably would not let them work from home till you can set that up. So first thing is, make sure you can evaluate output, can evaluate performance. Second thing is coordinate. So when you interview employees, they, you know, on average, the typical American wants to come into the office about two and a half days a month, two and a half days a week. So it's not like people want to be at home every day. They don't want to come in every day. They want to mix. When you say, look, why do you want to come in? Why would you put up with that, you know, hour and a half total commute? They say, because I like, you know, when I spend time with my colleagues, I think it's useful for my career, etc. So it's all about time with their colleagues. It's not about the free ping pong table or the pizza or the bagel or, you know, whatever it is, the massage on the roof. So second point is, it's really important to coordinate days at the team or even company level. So again, Google is saying, look, everyone comes in Tuesday, Wednesday, Thursday. Why is that? Because it means that everyone's in. So if you're in a team, all your colleagues are there and you can have a team meeting in person and a lunch and a leaving event, et cetera.
- [12:56]
Henry Blodgett
And I remember this at Business Insider, we had lots of company conversations about this. And one of the things you talk about in your work is, should this be a decision that you put to employees or should you actually structure it as a management team and say, no, it is going to be Tuesday, Wednesday, Thursday. You can't just pick your days that you're in and you're recommending. Structured is the way to go.
- [13:19]
Nicholas Bloom
Yes. Look, I'm a dual national now, so I'm an American and a Brit. And as Americans particularly, we value freedom. And, you know, there's lots of things you want choice, but choice isn't always good. For example, you wouldn't want to let People choose which side of the road they drove on because it would be a disaster. You know, there'd be accidents every day. And it's kind of like that with coming into the office. There's what's called a network effect. So if I come in, it's much more valuable if my colleagues are in and particularly if all of them are. Think of a team of eight people. Imagine now, six of the eight come in and two don't. What that means is if you have to have a meeting involving any of those other two, you've now got to get on Zoom or teams or whatever you use. And now you have people that have come in, they've like, why have I come into the office to spend three hours on zoom calls? So because of that network effect, it makes sense to coordinate, which means, you know, in a sense, remove choice. The thing that doesn't make it quite as bad is choose the days that are popular. And I can tell you, having run survey after survey after survey, everyone wants to work from home on Friday. So that's a no brainer. Second most popular day is Monday. Hence, if you're going to have three days in, I'll just say Tuesday, Wednesday, Thursday, that's likely to be what most people choose anyway and just stick to it. So it's a common thing.
- [14:28]
Henry Blodgett
And as a boss or a company paying real estate bills, I think the thing that's instinctively frustrating about Tuesday, Thursday, Tuesday, Wednesday, Thursday is, hey, we are paying a huge amount for this nice office. And now what we're effectively saying as a company is 60% of that lease is going to waste because nobody's even going to be here. And one of the things you've talked about is that there is the potential for real estate savings here for companies if they do it right. How does that work if you are structuring it, that they're basically only three days a week in the office?
- [15:02]
Nicholas Bloom
You are right. So again, I was talking to a CEO the other day and they said, look, what are you optimizing for? So if you're talking to a CEO, you know, what are you trying to maximize? You have a trade off here. So on the one hand, you are absolutely correct. If you're only coming in Tuesday, Wednesday, Thursday, you are wasting space. You could say, hey, look, why don't we break teams up into team A. Their type comes in Monday, Tuesday, Wednesday, Team B, Tuesday, Wednesday, Thursday, et cetera. In fact, let's go further. Let's have some teams come in during the day and some at night and maybe some coming on week. I mean this thing you can take it to the limit. So on that sense you're very efficiently using space. The other thing you've got to trade to that office against is how well teams work together. And it turns out being co located is really helpful for teams working together. So generally what I see is when companies, when innovation, creativity, productivity are the most important thing and teams work together, they have them coming in on the same day. There are some examples like Zoom. I spoke to Eric Yuan, CEO and founder of Zoom. He said look our engineering teams in on Monday, Wednesday sales in and Tuesday, Thursday. He said it's much more efficient on the office use and they don't tend to overlap that much. If they need to, we maybe get them in on an extra day. So if you have very distinct teams you can do that kind of thing. Obviously if you're wanting people in three days a week, it breaks down. So already once you're at three days a week you're probably going to have empty Mondays, Fridays. I don't think it's that radical. Again, if you went back to 2019, no one was working in offices at night and no one was working on the weekend. So you know it's the same thought process we had before the pandemic. You're trading things off and we care probably more about productivity, efficiency and culture of the company than we do about maximizing utilization of real estate.
- [16:49]
Henry Blodgett
Support for solutions comes from Zoom. The way we work is changing and Zoom is leading the way, bringing together meetings, chat docs, your AI companion and more, all on one powerful platform. With everything connected, teams can stay focused, share ideas faster and actually enjoy getting things done. From smart AI features to tools built for real collaboration, Zoom helps make your workday work for you. Ready to join? Visit zoom.compodcast to learn more and Zoom ahead.
- [17:29]
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- [19:11]
Henry Blodgett
Another fascinating and funny slide that I saw in one of your presentations is the amount of time that we spend commuting and then the amount of time if we save the commute, we then plow back into work or other things. Again. From the boss's perspective, the fear is if people are at home, not only they're not going to use that commute time for the company, they're going to use it for themselves and by the way going to be doing other things for themselves all day long anyway. They'll never be working. And you have solved that problem by saying we've got to measure output, which is great, but tell us about what people actually do with the 70 minutes that they save. Commuting.
- [19:49]
Nicholas Bloom
Yeah. So there's two ways to look at we ask them what do you do with the time? I what you see on about 40% of that time. So if you save 70 minutes, you're looking about 30 minutes. They actually work more on their main job serving employer. That's a win. You know, if you save 70 minutes a day, 30 of that you get back the other 40 that the employees keep that what do they spend that on? You see, it's a kind of mix between more sleep, more time with the kids, housework, leisure, a lot of, you know, watching tv, playing computer games, et cetera. The other time use thing that's more amusing is we also survey people on the amount of time they spend each day brushing their teeth, you know, Washington, putting on deodorant, shaving and not so makeup. Actually some of these things is very gender dependent, but you see quite large savings in time, you know.
- [20:39]
Henry Blodgett
Yeah, the re the reuse of clothes was the one that jumped out for me where it's 94% or whatever. If you're going to the office, it's clean clothes and only 73% if you're on camera. So yeah, that seems like a good.
- [20:51]
Nicholas Bloom
I don't know this is in favor of going to the office or not, because none of those figures for like cleaning, shaving, wearing clean clothes is 100% even in the office. So I'd have people say, well, that's probably why Alan from accounts always has the egg stain on his T shirt because, you know, he doesn't. He wears the same T shirt three days in a row.
- [21:08]
Henry Blodgett
And so, so now that you've had a bunch of years to look at productivity where I think you're coming out now, it looked like right after the pandemic you were saying that there might actually be an increase in productivity for working from home. Now it seems to be saying, you seem to be saying that it's the same productivity. Is that, is that your conclusion?
- [21:27]
Nicholas Bloom
Yes, if you look at aggregate data. So look at, for the whole US Economy or look at individual companies on average, it looks like, well, A, I mentioned work from homes up just over three times, B, productivity or on trends for before in the pandemic, we don't see any net productivity effect. So what's that telling you? It's telling you on average, if you let people work from home a couple of days a week, which is what's become the norm for management professionals, and it doesn't on net seem to reduce productivity. And what's really happening is there's a trade off. There is a bit less mentoring, is probably a little bit less kind of innovative time spent together. But then there's more deep work, more concentration, longer hours and roughly they're netting off. And in the long run for firms, it turns out to be profitable because of course they care not only about productivity, also care about costs. And costs are down because turnover is down and space needed, you know, down a little bit. So it's turned out to be very profitable. The figure I like the most is, is if you look at the Fortune 500, which are, you know, the 500 biggest in some ways most successful companies in the world, 69% of them have hybrid. For managers and professionals, I think it's something like another 8% are fully remote and the rest are fully in person. So hybrid has become kind of the default. There's many flavors, like ice cream, even vanilla. There's many flavors of vanilla. But you know, hybrid typically is like the Google plan in Tuesday, Wednesday, Thursday at home, Monday, Friday, and is one.
- [22:53]
Henry Blodgett
Of the remaining fears that bosses have do you think that's due to the productivity of fully remote? Which it does sound like that seems to be. There seems to be a net loss of productivity if somebody's just completely remote.
- [23:07]
Nicholas Bloom
Yeah, fully remote is a very different animal. So there's kind of two flavors of it. One would be like call centers. So in call centers, I know if anyone's visited, if you're listening, if you ever visited a call center, they're pretty amazing places. So they measure absolutely everything. And they have 1%. They randomly, of course, they do listen into an audit, et cetera. So you're not really managing anyone by watching them in a call center. Turns out in study after study after study, I've seen like four or five of these now in different countries, remote call centers actually more productive per minute than in call centers in person. Why is that? Because it's so noisy in those massive cavernous call centers, so people can hear better. So there's jobs like that that are just, you know, there's not many of these things left. They're almost all disappearing into remote and at some point disappear into AI, actually. And then there's a second type of job, which I'll give you an anecdote, a story to explain it. So I was speaking an event in Las Vegas. There's a couple of thousand people there. I spoke just after the CEO of, of Domino's, and he was saying, you know, it was all franchise food service restaurants, folks like that in the audience. And after he went and I spoke about work from home. Afterwards I finished speaking, somebody came up afterwards and said, you know, I really love working from home. He said, I run a chain of taco restaurants down in Southern California, and it was great. And I was kind of puzzled, like, where's this going? It doesn't seem obvious, the connection. He said, you know what? Everyone that cooks, cleans or serves food has to come into the restaurant every day. There's no working from home for those folks. He said, look, my back office, they have gone fully remote. He said, they're probably about 80% as efficient as they were fully in person, but they're about 50% the cost. And he said because of that, it's hugely profitable for the business to do it. And that's the other motivation for fully remote. It often ends up being so much less expensive that even if you say, have a 5, 10% productivity hit, it's still a really good deal for the business. So whenever I talk to managers, I say, look, they always obsess about productivity. I'm like, yes, that's a key metric. Yes, I agree. But there's more to life than productivity. You want to care about profit and growth and kind of step back and look at the bigger picture.
- [25:16]
Henry Blodgett
And why is it 50%? That seems like a huge difference.
- [25:20]
Nicholas Bloom
Oh, there are two things going on. So if you have a fully remote back office, a, you don't have to spend on an office and office costs are typically you're looking at 10, 15% of payroll. So you've got to pay for a building and you know, equipment and you know, services and security guard on the front desk, et cetera. And then the other part of it is it's just if you're in Southern California, that's quite an expensive place to live and you have to pay local market rates. Whereas if you have these folks working remotely, you can maybe hire them. Mississippi, Alabama, more rural areas and their wage rate is going to be lower. So you're going to get a lot better person. You know, if you go to LA and you pay someone $16 an hour, it's pretty hard to get say someone any accounting qualification. Whereas if you go to say, Mississippi and you let them work from home, you probably get someone some reasonable qualifications. So the second factor is you're just getting a better person for your dollar.
- [26:10]
Henry Blodgett
And does that factor into the hybrid, like managing hybrid? Well, you've also noted that employees, it sounds like, equate the flexibility in hybrid to an 8% pay increase or at least some portion of their salary. I remember one of the things we ran into at Business Insider was you want to treat everybody the same and very fair. And yet, yes, living in New York City versus living in almost anywhere else, very big difference in pay rates and living costs and so forth. And so we very quickly ran into fairness issues or at least feelings of fair unfairness. So in managing it well, how much does that factor into it?
- [26:51]
Nicholas Bloom
Yeah. So I'll give you two ways of looking at the same point. One is like the survey point you highlighted. When you survey people and you ask them how much would you value hybrid, as in working two, three days a week in terms of a pay increase, the numbers you're getting on average are about 7 or 8%. And for some people that doesn't sound much. For others it sounds a lot. Turns out if you think of the average American takes an hour and a half to commute and you think of saving two and a half days of commuting a week on a 50 hour week, that's about 7% of time. So I mean, it's a wash. So firstly, if someone is hybrid, you just don't need to pay them as much to recruit and retain the same person. The other way to look at it, I'll give you an example from Stanford. So my own employer, we're in, we're south of San Francisco. We sit between two big cities. San Francisco about an hour north and San Jose about an hour south of us. And pre pandemic, if people had to come in every day, we would never hire anyone north of San Francisco or south of San Jose out either side of them because that was just too far. You know, no one was going to come and work for us to commute for an hour and a half or two hours every day, five days a week. So we just couldn't hire people living, living that far away now because they're coming in two days a week. There'll be people we can hire that will put up with a long commute because I've only got to do it twice. So for us, it's increased the pool of labor we can hire by two to three fold. As a result, we can just hire better people, particularly in shortage areas. So I, you know, there's folks I work with in university that live 45 minutes south of San Jose and that they have a two hour commute, it's punishing, but they'll come in two days a week and work from home for three.
- [28:27]
Henry Blodgett
So that's an interesting. That was gonna be. One of my questions is whether employees are willing to do that if it's fewer times a week. And it sounds like they are, which is terrific effectively.
- [28:35]
Nicholas Bloom
There's one guy I work with quite a lot and I was talking to him about, he has three kids and he said, look, my total commute, it's about constant. I'm still commuting versus my old job for about four hours a week all in. But I only come to Stanford twice a week and it's an hour each way and two hours each day. There's a long commute. So I wouldn't do it five days a week, but I will do it for, for two. And the upside for me is I can get this job. It's better than what I had before. And he lives somewhere that's a bit further out. So the cost of, you know, housing is low and he's in a good school district. So that's kind of exactly. You get, you get a higher quality employee for your money.
- [29:10]
Henry Blodgett
All right, so we've talked about JP Morgan, Jamie Dimon and Amazon and Instagram. Recently, these are great companies that rule their industries. And I imagine that J.P. morgan and Goldman Sachs, part of the thinking is, look, it's hard to get a job here. People will do anything to work here. We have the ability to do it, we're going to do it, it's better for us. You say that currently We've stabilized at 25% of workdays are now work from home, and yet you are very optimistic that that will either stay where it is or continue to increase in the future. Why won't the bosses win? Why won't very charismatic people like Jamie Dimon persuade everybody that this was a brief blip and we now have to all go back into the office five days a week?
- [29:58]
Nicholas Bloom
Well, I mean, in a sense, if you like work from home, you like hybrid, you should be a fan of capitalism. Why is that? Well, Jamie Dimon operates in the labor market like anyone else. So is he has some fantastic banker and he wants to keep him around. If he tells them to come in five days a week, he's probably going to pay them 7 or 8% more. Why? Because otherwise they go depart maybe for lazards, which lets you work from home two days a week, or Goldman Sachs or they just maybe say, hey, look, Jamie, I've been working at JP Morgan for 20 years, I've earned all this cash. I want to enjoy a bit of time off, you know, thanks, but no thanks. And so in fact, the great example is Amazon. So I don't know if you saw Amazon cancels work from home September 2024, almost exactly a year later it stumbles into some nasty massive cloud outages, AI issues. And back when it made the announcement, you know, the one prediction is yes, it will reduce headcount, but you're going to lose some of your top talent because you know, Microsoft is letting people work from home. Now are they related? It's hard to know. But I remember at the time there are lots of predictions is, yes, it, you know, you can reduce headcount, but you will lose some of your most skilled employees and then a year later versus technical problems sprout up.
- [31:10]
Henry Blodgett
So you've taken the usual shot at the media and blamed us for overhyping JP Morgan and Amazon and so forth. And you just mentioned Microsoft. Are there also super charismatic great CEOs who are fully committed to hybrid and say this is the way.
- [31:28]
Nicholas Bloom
Oh, I wasn't taking a shot at the media, by the way. I don't know where that came from. I. Oh, you, I was blaming the.
- [31:33]
Henry Blodgett
Media for exaggerating the cases without looking at the big picture. You had a great note in one of your.
- [31:38]
Nicholas Bloom
No, no, that's true. So I, you know, I often, I endlessly say, why is it it seems like work from home is over from the media versus the data? The reason is, yes, it's like shark attacks. People read articles that have shock and horror. And having talked to a lot of journalists, they'll say, not, you know, I'm an economist, I believe in incentives. And journalists will say, look, we have to write stories that people click on, read and share. And they're much more like to click on a story saying, goliath national bank cancels work from home than one that says it. Stick around. Where is the future going on this. I think the future is. I mean, sometimes the future is going to be a mix. There will be some companies that will be five days in, like J.P. morgan. There are some that are hybrid, some that are fully remote. In terms of fully remote, firms like Zillow, you know, Rich Barton is the CEO of Zillow. I've talked to a bunch. Instacart, Dropbox, Upwork. There are a bunch. They are the. If you look at the Fortune 500, there are 7% of them, so they're about 20% fully in person. The big majority are hybrid. So remote first tends to be rarer. Rich Barton was very interesting and I asked him why he had fully remote at Zillow. He said, look, it's really helpful for innovation. He said, the reason is if you want to change stuff fast, it's a lot easier if teams aren't pinned down by geography. So, for example, take AI. I may think, you know, these are the best people who work in an AI, a new AI team. If one's in Chicago, one's in Boston, one's in Atlanta, and one's in Detroit, I can't really combine them together, whereas if they're remote, I can combine them together. It's also a lot easier to hire and fire. So it does have some advantages with flexibility as well as retention, recruitment. So I think, you know, every Ridgeway is here to stay. And, I mean, I think that's a good outcome.
- [33:22]
Henry Blodgett
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- [35:48]
Henry Blodgett
Another aspect of your work that I found fascinating is you've looked at the ramifications of this. Assuming that the 25% is here to stay or maybe even increases over time. Talk about different things like office design. Is there this is another thing. At Business Insider, we debated and didn't know what to do. Do we pull desks? Do we create more meeting space? What is the what's the best hybrid office design and how is it different from the old days?
- [36:14]
Nicholas Bloom
Oh sure. So an office design. The thing that is out. This is reminding me of like Top of the Pops when I was a kid. You know, songs that are in and songs that are out. So tell you the thing that the big thing that's out is Dilbert style. Those cubicle lamp. Why is that? Because work. When you go into the office, you're not going in there to treat it like a library, just to quietly sit in a cubicle and work on your own. If you want to do that, you might as well do it at home in a coffee shop. When you go in now, the aim is, look, you're in here, you're in, Henry, you're in, say for three days a week. When you're in, you're supposed to be primarily meeting with people coming back to the three days in, two out. On those three days in, you want to crush in all of your meetings, events, training sessions, leaving dues, et cetera. So the idea is those are kind of intensely social. So on the days that you're in, what you need is much more office space, kind of open areas to meet, a bit more kind of micro kitchens, et cetera. So there's a lot more meeting rooms, importantly of different sizes. One of the classic mistakes is have all your meeting rooms in the same size because you need some, you know, I think there's a ratio 1, 2, 4 from kind of large, medium, small, some zoom booths. If people want to take calls, which they will and inevitably do, make sure they do it in somewhere that's soundproof so they don't, you know, despoil the entire open area. There is some still open place, open plan, seating, more kind of leisure areas. That's what you see tend to be going into offices. So I've walked around a lot of HQs, and what you generally tend to see now is that cubicle land is empty. And also people touring to me are like, apologizing, like, I'm really sorry, this is really empty. I know there's nobody here, but we're getting rid of it. So that's the big trend. Cubicles out, meeting rooms, small, medium, larger in.
- [37:54]
Henry Blodgett
And then what about cities? You talk a lot about the impact on cities, which is now looking like it's permanent.
- [38:00]
Nicholas Bloom
Yes. So the advice for cities, there's a. I have this thing called the Remote Work Conference. We meet once a year, and there's a fascinating paper there about the last one is about four weeks ago, and I talked to a lot of cities, a lot of city economics, you know, that New York's sf, Washington, et cetera. And the advice is really there is less of a focus on city centers being entirely about offices and work, and a little more of a focus on consumption. So what that means on the ground is you increasingly want to make city centers as nice places to go and spend time in, because what you see in the data is a lot of hybrid and fully remote. Folks don't go in in the day, but actually go in in the evening to eat out and maybe go on the weekends to shop. You know, you've been at home all day and you're like, I want to go out. I want to have a break. And so that means, you know, combating crime effectively. So it means, you know, good policing levels. It means, you know, making sure there's good amenities, restaurants, parks, spaces, events. So the city center, I guess, in the words of economists, is more about, you know, consumption and leisure and a little bit less about works. It's not that offices will go, they'll still be there, but we're seeing some conversions into restaurants, some conversions into apartments. And so I think the future of the city is a little bit more mixed. It's not that kind of 1980s. There's the Central business district where people with bowler hats and briefcases and then they all live out in the suburbs. Now we're more intermingled and. And even in the city center, we need, you know, good facilities and probably things like elementary schools as well.
- [39:25]
Henry Blodgett
And talk about some of the economic impacts. You had some incredibly startling statistics to me about how even hybrid, the average office worker in New York is now spending $7,000 less than they were when they were five days a week. And presumably that gets now spent where they live in the suburbs or whatever their. Whatever their neighborhood happens to be. So talk about some of the economic impacts that are now looking like they'll be permanent.
- [39:51]
Nicholas Bloom
Yeah, I mean, I'll give you a quick hit for three on these. So first is on leisure activities. I actually got into this because the number of people that complained it was so hard to get a golf. A game of golf in. So we used GPS data to track vehicles, and we defined a game of golf is that if we see a vehicle at a golf course for between two to six hours. So two hours, you know, that's like two hours is too long for lunch, and six is, you know, you don't live next to the golf course. So what we see is an explosion of playing golf, particularly during the working week. So it turns out that, you know, when people are working from home, they are doing leisure during the working week. Now, this comes back to my earlier point about why you want performance evaluations. Because, Henry, if I work for you, you're like, fine. Nick, if you go and play golf for an hour and a half in the day, but importantly, you've got to get your job done. So things like golf, yoga studios, tennis, pickleball, gyms, malls, these things are actually. They've had a bit of a revival in the week. And they're quietening on the weekend. In fact, I spoke to Sainsbury, which is the UK's biggest supermarket chain, and they said it was Saturday as our busiest day of shopping. Pre pandemic, it's now Friday. So one is leisure. There's been a kind of boom in leisure. A second is weirdly crime has moved location. So burglars have now figured out that break ins in the suburbs in the working week are no longer such a good idea because even if the house is empty, the Perkins across the road, they're at home working and they twitch their curtains and see somebody breaking in and call the police. So crime kind of dissipated out of the suburbs. And then the third thing I'm working on right now is actually in some ways the most important long run is the impact on fertility. So we see for people that work hybrid, for both an individual and their spouse, for each one of them that works hybrid, you see on average they're having about 0.2 more children. Total fertility, which is enormous. That's just an enormous effect. So it means, for example, in the US there's uncle currently 1.7 kids per couple. If you went from both fully five days in the office to both hybrid, that will go up to 2.1, which is a really large difference. That takes you from kind of us to Mexican fertility rates and give us some cause there.
- [42:06]
Henry Blodgett
What's going on?
- [42:08]
Nicholas Bloom
Well, you know, there's the. I was actually talking to my dad last week about this. There's like the obvious example which is you can guess, you know, it's easier to conceive if people are home. A friend of mine joked and said, look, you can't get pregnant by email, but I think the people who are looking at tend to be graduates in their 30s. And these are planned pregnancies mostly, so maybe that. But the primary factor looks like it's just a lot easier to look after kids if you and your spouse are working from home one, two days a week. I have kids and things like going to pick them up early from school. My daughter wheeling my youngest isn't talking in some assembly on Friday. You know, she's one of three kids saying something. And so I can go in because I'm working from home, I can do that. So it's that kind of thing. It just makes it a bit easier. And it's not going to lead to a population explosion. But if you make it easier for parents to have kids, they're going to have more kids.
- [43:02]
Henry Blodgett
Well, that'll be interesting data to take to Elon Musk, who I believe is crusading for all, all, all work, all the time in the office and also creating for higher fertility.
- [43:12]
Nicholas Bloom
So yeah, this kind of thing sends me crazy. So, so it's all alright for Elon Musk that has, you know, 15 chauffeured flying Teslas to take him in and out, you know, from his one penthouse to the other to lecture other people. But you know, the rest of the world, we have to, when we commute, we have 45 minute commutes and we don't have, you know, eight nannies per child, et cetera. So one of the problems, I was going to say the third factor for these CEOs, the third reason for this five day art return to office pushed by CEOs is they don't live like the rest of us. They just, they're so out of touch. These are people that, you know, are paid 10, 50, 100 million. In fact, for Musk, it's billion, forget millions a year. And for them, you know, it's 20 years since they had to look after a kid. And so they just don't really know what's going on anymore. So yes, it's good for their company's bottom line, but it's typically, well, in that, I mean, maybe their perspective is actually an economist. I'm not even sure that's the case, but certainly they're coming from a very different place, put it that way, from their employees.
- [44:09]
Henry Blodgett
And you also have a marvelous anecdote at the beginning of one of your articles, I think in the MIT Review where you say that it's always the CEO who's just been in a CEO conference who comes back all charged up to say, like, enough of this work from home stuff, we're all coming back. And yet, as you point out, life is quite different when you're going to CEO conferences. Well, Professor Bloom, this is terrific. I think you have in your work, among other things, have armed all of us who work with some data to give back to the folks who are urging us to do away with work from home and flexibility. So thank you for that and a huge pleasure to talk to you. Thank you so much for your time.
- [44:48]
Nicholas Bloom
Henry, it's fantastic to catch up. Thanks very much. In particular, we're doing this remotely, so I guess everyone can guess.
- [44:53]
Henry Blodgett
But yeah, absolutely. Solutions is produced by Megan Cunane. Jim Mackle is our video editor. Our theme music is by Trackademics. Nishat Kurwa is Vox Media's executive producer of podcasts. Thanks for listening to Solutions from the Vox Media Podcast Network. I'm your host, Henry Blodgett. We'll see you soon. Support for Solutions comes from Zoom. Your work tool shouldn't slow you down. Zoom brings meetings, chat docs, and your AI companion together on one platform to help you work better. Visit zoom.compodcast to learn more and Zoom ahead.