The Human Side of Remote Work, with Nick Bloom

25:18It's looking kind of out of date, jaded, has low ceilings, nasty tiling. I mean, it's not easy what to do with these buildings. You can either slash the rent so it's so cheap that somebody moves in and has this cavernous building, or you can punch huge holes down the centre of it to generate light, which is incredibly expensive. or in some cases, some of these things are going to remain empty for the next three years and probably eventually be demolished and then replaced. But yeah, it is very hard. I mean, another version for folks that are politically active is maybe push to change the regulations.

25:51You may think, look, if you can take some of those buildings and generate a lot of very low cost, very affordable housing, maybe there is some trade-off to say have bathrooms without windows in. Maybe every apartment has to have windows in at least two rooms, but maybe you can have some internal bedrooms. In London, I actually had an apartment that had no windows in one of the bedrooms. It wasn't great, but if you can get up and go to the living room, it's not so bad. And certainly if you say your rent will be half the amount for that, there's a lot of folks that will go for it. Yeah. Typically, the pushback tends to come from fire safety because without a window for ingress and egress, it becomes a fire hazard.

26:27Yeah, no, you're right. I mean, in California, every building, including home buildings, have to have inbuilt sprinkler system. So I think what it's going to take is a combination of market forces are going to push the rents down. So these things, you know, people, it's worth to punch holes or they get scrapped. And also we're going to have to be more flexible in regulations. But it is a big issue. I think the city where it's most problematic, the cities tend to be the ones on the West Coast. So I take San Francisco. I live 50 miles from there. I'm in the Bay Area. That's been hit by multiple things.

26:59You know, first there's work from home. Then there's the big tech slowdown. And then somewhat unfortunately, pre pandemic, if you cast your mind back to let's say 2015, 2016, there was an enormous push against tech in San Francisco. Do you remember the demonstrations against the Google buses and everything? Right. San Francisco politicians passed what at the time seemed kind of reasonable anti business laws and tax increases, etc. But that turned out just to be horrible timing. So you got this, you know, triple whammy of work from home, downturn in tech, anti-business taxes, and suddenly, you know, the city's kind of half empty.

27:36So that is ground zero. San Francisco is the hardest case of all.

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31:25What do you think are the best cities for a work-from-home setup? um well one thing is we see outside once you move outside kind of the top 25 cities by size they don't really have much of a donut effect so if you think of someone like i know columbus ohio uh or portland oregon these are more you know medium-sized cities i don't have the numbers on the top of my head but you're looking at you know places that maybe two three hundred four 100 ,000. Those places, the suburb is still pretty approachable. The donut effect tends to be in these massive places like Chicago, DC, New York. Interestingly enough, if you look at smaller towns and cities across the US, so look at, think of, I was talking something about Bengal, Maine.

32:09So, you know, that has 30 ,000 people living there. They've actually done pretty well. And the reason is a lot of people have left, say, central New York, moved out to smaller towns and cities. they have jobs that may require them in once a week or maybe for three days every three or four weeks if it's like that you can afford to live three four hours away from a big city you know you only have to come in every four weeks there's enough flexibility in some roles that you can do that so it turns out interestingly enough smaller town cities have done well the other place that's seen as a boom is kind of what i call holiday resort locations so tahoe you know the beach uh places with great national parks because there's enough people that are still fully remote that they have this you know incredible geographic flexibility and if you're going to live somewhere you want to live somewhere that's beautiful outside if you can and so we've seen that those kind of holiday resort locations also done very well do you see that continuing or shrinking as fewer people remain fully remote shrinking a little bit so to put numbers on it right at the peak of the pandemic in April, May 2020, 60 % of Americans are fully remote.

33:16I mean, that's an enormous, it's an astounding number. So the typical person, everyone listening, you know, more than half of your listeners, I'm sure, I was, you were, I mean, pretty much everyone we know is mostly was fully remote in the peak of the pandemic. That fell relatively fast as folks were called back in. It's continued to trend down. It's now about 10%. It does look like it's trending down. That does put a bit of downward pressure. You're right. Take someone like Tahoe. On the other hand, for folks that are only going in one or two days a week, they may put up with three, four hour commutes.

33:48I can imagine there are people I know, our friends who decide to have the lifestyle and live three hours away and they drive up for three hours on, they get up, they leave the house at 6 a.m. on a Tuesday. They're in work at 9 a.m. They stay overnight near work in a hotel and drive back at five on Wednesday. And, you know, they have two days of horrible commute with The quid pro quo is they get to live somewhere far away with a lot of space. Right. How do work from home arrangements intersect with isolation, loneliness, some of these emotional and psychological challenges that people face when they don't have colleagues that they interface with on a regular basis?

34:27Hybrid looks like it actually improves mental health. At least getting to work from home one or two days a week is better than going in five days. finished a large randomized control trial with a company called trip.com they're a big global travel agency they're quoted on nasdaq they have about 40 000 employees and there we took 1 600 people in two divisions and we randomized so if you had an odd birthday so if you're born on the first third fifth seventh of the month you got to work from home on wednesday and friday and you have an even birthday you had to keep coming in five days a week and we saw folks that work from home saw a 35 % reduction in quit right.

35:05But importantly, we had these surveys on work-life balance, happiness, stress, all of these improved a lot. And the stories you hear is starting from five days in the office, if I go down to four and three, that is typically seen as positive. It's less commuting, it's less stress. In fact, the surveys going back, I remember I was at the London School of Economics 25 years ago, and someone there called Richard Layard was working with Danny Camerman, the Nobel Prize winner, and they had all these surveys and happiness. And it turns out if you ask people hour by hour, whether they're feeling happy or unhappy, the second most unhappy activity in people's days is work.

35:42But the most unhappy is commuting. People hate commuting even more than they hate work. So if you let people work from home at least two days a week, it looks like that clearly improves kind of mental well-being and work-life balance. It's less obvious once you start to go four or five days a week because you get this offsetting effect of more isolation. In fact, in another randomized control trial I did, we had people that were randomized into working from home four days a week. We ran the trial. They're all volunteers. We ran the trial for nine months. At the end of it, about half of them opted to go back, and they said they found it very isolating and lonely.

36:15So what we see is, I think, in the data, if you'll say 38, you have three kids and active social life, you may easily feel that, look, I've got a lot of connectivity at home. I don't really feel like I need to go into the office. I'm fine. If on the other hand, you're maybe 24, you're single, you're living in a small apartment, you may really feel very lonely and isolated being at home, particularly if you have to work in your bedroom because you don't really have any other room. And so it depends a lot on demographics as to how people find fully remote. But in the survey data, we find that 30 % of Americans want to be fully remote, the other 70 % want to come in at least one day a week.

36:53In the survey data, the attitudes between workers and managers differ. Why is that? Yes. So managers in advance are much more negative on work from home than non-managers. In fact, in the randomized control trial we did in China, in advance of the randomized control trial, we surveyed everyone and said, what do you think the impact of work from home will be on productivity? And managers gave us a number, where it's about minus 3 % of allowing folks to work from home two days a week. And non-managers gave us about plus 2%. So it's not an enormous difference, but that's quite a big gap. We ran the experiment.

37:31At the end of it, we re-polled them, and managers are basically gone from negative to positive. So managers, I think, are very nervous in advance of losing control, losing visibility, losing mentoring. I think if you can manage the process well with good performance management. And so, you know, well, if you were like my manager, would you be assessing me and giving me feedback, evaluating how I was doing? If you can set these kind of things up, it makes sense to allow me to work from home for, you know, a couple of days a week. If on the other hand, you're pretty disorganized and chaotic and you use what I call management by walking around, you tend to manage me by walking past my desk, seeing am I there typing is the screen on?

38:12Does it look like Excel or Word or something sensible? Then it's harder to let me work from home. And so managers early on tend to be skeptical. What we've seen over time is their views have tended to align more and more. They've had experience of it. You know, it's like you're worried about something. You try it out. We've tried it out now for three years and it isn't as bad as people feared. But both managers and workers generally is tending towards moderation. So typically on both sides of managers, non-managers, they tend to head towards something like two, three days a week. On average, they want to come in and the other half, they want to work from home.

38:45Interesting. The big buzzwords right now are both AI and AR. We've got ChatGPT on one side, which simplifies a lot of work on one side. And then we've got Apple Vision Pro, which as of the time that we're recording this, they made the big announcement yesterday. Yeah. And that's almost, as a user experience, the opposite of ChatGPT. One is ChatGPT is simple and minimalist. Apple Vision Pro is immersive. And so it's been kind of fascinating to watch these two trends develop simultaneously. They're both widely talked about. And I think everyone has a sense that both are going to change everything in ways that we're not quite sure how.

39:27How will either or both impact the future of remote work? So super interesting question. AI, I think, is going to make it harder to be fully remote for a bunch of fully remote workers. So AI, let's break down into like hardware and software. So software is pretty impressive. So chat GPT-4 and, you know, eventually 5 and 6 looks really incredible. These things are starting to pass the Turing test. You don't know if you're typing in commands whether this is a human or not. The hardware is not that good. We're, I don't know, 10, 20 years at least from having Terminator land whereby someone walks in, you can't tell they're human and robot.

40:06Currently, robots are like incredibly clunky, expensive, you know, massive. So if you go into an office, you're not going to replace. We're nowhere near replacing, you know, Gary at the front desk or Susan is doing catering, for example, with a robot. I mean, they're far from being able to do that. Some tasks you can automate, but a lot of stuff needs in-person people. So hybrid and fully in-person jobs are mostly safe. Where AI is threatening, I think, is for relatively repetitive, relatively low level, fully remote jobs. So think of payroll, HR, call centers, IT support benefits, a bunch of these jobs, which are the majority of the current 10 % of remote jobs.

40:46They are under threat from AI. They're actually under threat from offshoring as well. So I talked to so many companies that are saying, these are things we're going to offshore to Mexico or Colombia, Argentina or the Philippines, et cetera, because the folks there are doing basically about as good job as we can get someone in the US and they cost 40 % the rate. So I think AI is the thing. The most threatened by AI is fully remote jobs. It's not so much accounting professionals, for example. It's more people that are fully remote doing more repetitive things. The Apple Vision is very different.

41:19And Apple Vision, I think, supports kind of hybrid because I think it makes my prediction is it will make what we might think of a Zoom calls now much more appealing. So it's funny. Everything you see in Star Wars comes to pass. And that Jedi Council, you can imagine, you know, you have one of these headsets on. It could look like your other seven co-workers are there in space. And look, it's not as good as being there in person, maybe, but it's getting closer to it. It's getting better and better. And so a remote Zoom call is 60 percent as good as in person. An Apple Vision meeting, maybe 80 % is good.

41:50And there'll be a bunch of things you decide, look, rather than coming in three days, we probably need to come in two days. So I see actually Apple Vision supporting hybrid work, making it more appealing and probably cutting at the margin a number of days we need to come in. Interestingly, I think it also supports multinationals. A lot of what I heard from the pandemic is a lot of big companies said it was amazing. The pandemic brought the offices, different offices closer together because they're all on a level playing field. I remember one person saying, pre-pandemic, he was the only person in London.

42:19And he said he always felt left out because there'd be these in-person meetings in the US, in the Cleveland office, Chicago office, it was remote. Now everyone's on the same Zoom screen and he feels completely on a level playing field with all the others. So I think Apple Vision, to the extent it makes us more remote, will also bring people together and kind of globalize us in a sense. Well, those are all of my questions. Is there anything that I haven't asked about that you'd like to emphasize? um they were great you you did a huge amount of background reading and research or you were incredibly informed i couldn't do you know some combination of both i suspect but you totally knew your stuff and i was very impressed actually uh thank you thank you so much for spending this time with us where can people find you if they'd like to look for you on the internet i have a linkedin page i post new facts new data about every other day so you just look you know nick Bloom, Stanford, it will come up on LinkedIn.

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46:04Thank you to Dr. Nick Bloom. What are the three key takeaways that we got from this conversation? Number one, ideas and attitudes towards remote work may still take time to evolve. We carry with us historical legacy. And even when our technology, when our capabilities allow us to break free of that legacy thinking, the legacy thinking often still permeates the culture. In other words, technology often moves faster than our attitudes. The key technology is personal computers. So once you have your own computer at home, you're not shuffling pieces of paper. Then you have email and the internet. Really, the last jigsaw pieces for what we're using now came in about 2010, 2011, 2012, which was cloud and things like Dropbox, so we can share files.

47:02Paul, if you and I are working on the same file, I don't need to be emailing it back and forth. They sync automatically. And the other big thing was video calls. So Zoom in particular, but Skype, Teams, et cetera. Zoom, for example, was founded in 2012. So if we look back about a decade ago, by 2013, we could have been doing this. Why we didn't adopt it in such numbers until 2020, I think was kind of slow to react as a bit of a mistake. You know, there are other things. I always think I have kids in school and they have these massive summer holidays, like three months off. And we have these huge summer holidays because kids used to, 150 years ago, be let out of school to harvest the fields, right?

47:41So no children are doing that anymore, but we still have these three-month summer holidays. And it's kind of a legacy. And I think going into the office five days a week for everyone was basically a legacy as well. And that legacy could have been abandoned 10 years ago. And it took the pandemic to shake it up. Understanding this can help manage expectations around remote work. And this has been in the news quite a bit lately. There are headlines that say that X percent of people, X percent of employees say that they would quit if their bosses wanted them to work fully back at the office five days a week.

48:16There are a lot of headlines right now around differing expectations, battles between management and employees. And in the context of that, understanding that we still, like he said, summer break at school, the whole concept of a summer, a three-month summer holiday, you know, that's a legacy as well. So once these things get baked in, it can be quite hard to change them. And recognizing that is the first of three key takeaways. Key takeaway number two, there are many unexpected reasons and benefits that drive hybrid work arrangements in which a workplace, a company, an organization can often get the best of both worlds.

49:06Some of these are obvious. On the days that you don't go into work, you save the commute. But some of these are less obvious. The collaboration, for example. Collaboration and innovation, there's a lot of data that backs the idea that collaboration and innovation works best face-to-face. That's why people go to conferences. That's why writers who are collaborating on a script or on a song, writers will sit together around a writing table. Because that kind of brainstorming, that creativity and brainstorming and mentoring does work better in person. On the flip side, when people don't have to commute to get to that writer's room, they often work more.

49:54And so there are pros and cons to both arrangements. And that's much of the impetus behind the hybrid model. The hybrid model recognizes that there are pros and cons to both. The reason people want to come into work and why firms want their employees in is for collaboration creativity. So the big three of coming in, when you talk to managers, they say, look, we want mentoring. It turns out to be better in person. We want collaboration, building culture, innovation. And there's a bunch of evidence and papers and studies and stuff. It looks like all of that is better face to face. On the other hand, there are some real benefits of work from home.

50:35And the big two there are you save on commute and the average American European saves something like 70, 80 minutes a day, of which almost half of them they spend working more. So if you're an employer and you let your employee work from home, they're probably working about 30 minutes more that day because, you know, a lot of their commute they're using for, you know, leisure, childcare and stuff, but they're working more. And then the other thing is it's on average quieter at home. Not for everyone, but typically people say home is quieter than the office. And that's really important for concentration.

51:09What's called deep work. You know, a very standard week might be Monday, Friday, I'm at home doing more reading, writing, kind of heavy thinking work, preparing presentations, you know, pondering stuff, maybe Zoom calls, one on ones with other offices, Tuesday, Wednesday, Thursday. I mean, every day it's kind of frenetic. It's high frequency meetings, presentations, you know, training sessions, lunches, very social. I feel like I don't have a minute to think, but I'm bonding. I'm mentoring people. I'm creating ideas. And it looks like that maybe is the best of both worlds. And so that is the second key takeaway.

51:43Finally, key takeaway number three, your work environment has a massive impact on your sense of well-being and your sense of happiness. Professor Bloom talks about randomized control trials that look at the overall efficacy of a work-life arrangement and found that the impacts are very different depending on your demographics, your age, your relationship status, the number of people in your household. these characteristics create a wide dispersion in how work from home impacts people. We saw folks that work from home saw a 35 % reduction in quit rate. But importantly, we had these surveys on work-life balance, happiness, stress, all of these improved a lot.

52:40And the stories you hear is starting from five days in the office, if I go down to four and three, that is typically seen as positive. It's less commuting, it's less stress. In fact, the surveys going back, I remember I was at the London School of Economics 25 years ago, and someone there called Richard Layard was working with Danny Cameraman, the Nobel Prize winner, and they had all these surveys on happiness. And it turns out, if you ask people hour by hour, whether they're feeling happy or unhappy, the second most unhappy activity in people's days is work. But the most unhappy is commuting.

53:13People hate commuting even more than they hate work. So if you let people work from home at least two days a week, it looks like that clearly improves kind of mental well-being and work-life balance. It's less obvious once you start to go four or five days a week because you get this offsetting effect of more isolation. In fact, in another randomized control trial I did, we had people that were randomized into working from home four days a week. We ran the trial. They're all volunteers. We ran the trial for nine months. At the end of it, about half of them opted to go back and they said they found it very isolating and lonely.

53:44So what we see is, I think, in the data, if you'll say 38, you have three kids, an active social life, you may easily feel that, look, I've got a lot of connectivity at home. I don't really feel like I need to go into the office. I'm fine. If on the other hand, you're maybe 24, you're single, you're living in a small apartment, you may really feel very lonely and isolated being at home, particularly if you have to work in your bedroom because you don't really have any other room. And so it depends a lot on demographics. Those are three key takeaways from this conversation with Dr. Nick Bloom, an economist from Stanford who has been studying remote work since before 9-11.

54:25Thank you so much for tuning in. I hope you enjoyed today's episode. I hope it gave you insight, context, things to think about, food for conversation. If you enjoyed the episode, please share it with a friend, a family member, a colleague, your boss. The easiest way to share any episode is by forwarding our show notes along. You can subscribe to our show notes for free at affordanything.com slash show notes. That's affordanything.com slash show notes. Open up your favorite podcast playing app, leave us a review. And while you're there, make sure that you hit the follow button so you don't miss any of our amazing upcoming episodes.

55:03Thank you so much for tuning in. You can find me on Instagram at Paula Pant, P-A-U-L-A, P-A-N-T. And I will catch you in the next episode. Thank you.