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How is the remote work impacting the global economy?

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Since the coronavirus has entered our lives, not only has our day-to-day life at home changed but it has also dramatically affected and altered the workplace too. Many companies have been forced to go remote just to protect the lives of their employees. The work is still the same, however, the workplace is home instead of the office. The meetings take place on zoom instead of the conference room. Whatsapp and Convo have replaced the usual workplace pop-ups. Moreover, many companies have decided to permanently go remote. While some are thinking of adopting the hybrid work system which will include going to the office two to three days a week while the rest of the week it will be remote work.

Each company has its own idea and plans of work however experts say these developments could have profound implications for the economy, inequality, and the future of big cities.

How has the pandemic changed how Americans work?

Since last year’s march, there has been an immense change in the number of Americans working remotely. By the time it was April more than half of the American workers were working from home full-time. This accounts for more than two-thirds of all U.S. economic activity. In the US only about twenty-six percent of workers go to their job premises to work.

Moreover, only a limited number of those working from home are reported to wanting to go to their job premises, voluntarily. However, the rest would rather work from home for the rest of their lives. In the end, everyone has their own preferences.

What about other countries?

Researchers at the Massachusetts Institute of Technology (MIT) compared the ease of transitioning to remote work in thirty countries, including the United States. Bigger countries with good internet connections faced the transition with a happy face. These include Belgium, Canada, and Sweden. The united states have an average internet penetration, ranked eleventh. 

Developing and middle-income countries such as Brazil, China, and Nigeria face the most obstacles. The reason behind this was not only the slow internet connection but the contributing factor to remote work being a problem in these countries is also the large number of family members living under the same roof.

What’s the economic impact of remote work?

Remote work has increased the productivity levels in workers. It has also proven to be a contributing factor to the increased level of stress. The high level of stress is due to zero human interaction. There are also concerns that the lack of serendipitous encounters with coworkers could stifle creativity and reduce team cohesion. Moreover, for the parents, it is difficult to work at home because their kids are having online classes. Kids and work both at home mean extra anxiety and stress. It’s hard to manage both at the same time. Because let’s face it, kids can be a handful.

What could be the effect on cities?

According to experts, the pandemic may become the reason for the decline of the big cities. Since there is no need for big office spaces, many people are moving to the countryside or even other countries. The shift to remote work in the tech industry in particular could see an exodus from high-cost regions such as the San Francisco Bay Area. This could add further strain to city budgets, some of which rely heavily on tax revenue from commuters and commercial real estate.

According to some reports, the death/decline of the cities is exaggerated. According to CFR senior fellow Edward Alden, “This may be a way to spread the benefits of the new economy more widely on a geographical basis”.


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