Labor Productivity: From the Bottom Up and Top Down

While our work from home skyrocketed during the pandemic, by 2023, 59 percent of all full-time employees returned to the office every day.

You can see that at home numbers touched a high of 61.5 percent:

Now, 12 percent of us work remotely and 29 percent are hybrid. The hybrid group typically goes to the office midweek, during Tuesday, Wednesday, and Thursday, when their bosses schedule meetings. At home, their tasks tend to be more individual.

Where are we going? To labor productivity.

Bottom Up

Whereas managers define productivity as output per paid time unit, employees add commuting time. So, unrecognized by her boss, a worker would be quick to point out that she is commuting 68 minutes less per week. As a result, described in the Survey of Working Arrangements and Attitudes, if her output remained constant, dividing by fewer hours, she would say she was more productive. And 43 percent of at-home workers did say that they are more productive. (14 percent say less and the rest say the same).

However, a Stanford survey suggests that full time at home work is less productive. Concerns about working from home included less mentoring time, less inspirational sharing, and less self-control. By contrast, studies of hybrid schedules reveal productivity gains and happier employees.

From existing data, we can conclude that productivity at home depends on the industry, the occupation, and the people.

Our Bottom Line: Top Down

Here, let’s move from a bottom up perspective to the top down. You can see that, with varying rates, aggregate labor productivity continued to grow:

Meanwhile, we can also look at total factor productivity (land, labor, and capital) in selected industries:

Still, according to economist Ed Yardeni, fueled by labor, “productivity is roaring back.” Quarterly gains last year included Q2 at 3.5 percent, Q3, 4.9 percent, and Q4, 3.2 percent. Since 1947, the average rate has been 2.1 percent.

But also according to Dr. Yardeni, work at home makes accurate data ever more difficult to gather.

So, where are we? Feeling somewhat confused, I suspect we can agree with Dr. Yardeni’s productivity optimism and look forward to a buoyant economy.

My sources and more: For the productivity basics, the BLS is ideal. Then, for the work at home stats and externalities, this summary of Stanford research had some interesting details. Alternatively, for at-home work, this paper had it all. Meanwhile, for the entire economy, this Timothy Taylor blog post was a good place to start. Also, a 2019 econlife post saw the upside of Nike Vaporflys and, contrasting with current optimism, the downside of productivity growth. And finally, I don’t want to ignore the importance of at home work for women.