May 31, 2022

Remote Work Has Pushed Up House Prices

Slack, Citizens Bank, Penguin Random House, Verizon, 3M, Twitter – the list is long and growing of companies that have allowed employees to continue working remotely even though the pandemic seems to be easing.

The COVID-19 upheaval in lifestyles – the moving around to larger homes, to the countryside or to an affordable city – is pushing up house prices.

John Mondragon at the Federal Reserve Bank of San Francisco and Johannes Wieland at the University of California, San Diego, estimate that remote work fueled a 15 percent rise in house prices over the two-year period that ended in November 2021. That’s more than half of the total price increase for that period, which was a record, the researchers said.

A few different types of lifestyle changes drove the price hikes. But the bottom line is that remote work caused a frenzy of buying activity that wouldn’t have happened otherwise. The increase in demand sparked competitive bidding for properties – and prices shot up. And the parts of the country where remote work was more common had significantly larger price increases.

The price increases “reflected a change in fundamentals rather than a speculative bubble,” the researchers concluded.

Soon after the pandemic began, workers who were changing their living arrangements made the news. Renters left behind expensive apartments in New York or San Francisco to escape COVID’s dangers. Now working remotely, they used their newfound freedom to become first-time homeowners in an appealing suburb nearby or a rural area halfway across the country where they could afford to buy a house.

The need for larger homes also heated up market activity. Having more space was suddenly more valued by workers who required an additional bedroom to set up a home office or now had to accommodate both spouses working from home – and, early in the pandemic, children attending classes on Zoom.

The researchers stress that they measured only the price increases resulting from an increase in aggregate housing demand nationwide. In other words, people didn’t add to total demand if they simply moved from Chicago, where they sold a condominium, to Des Moines, Iowa, where they purchased a house of similar value. …Learn More

May 27, 2021

Working from Home: the Next Inequity

An impressive consensus has emerged around the benefits of working from home.

More employers have come to accept the practice after being pleasantly surprised at how productive their employees are. If remote workers were once viewed as insufficiently committed to the company, they no longer feel as marginalized. And people seem to like it – with the notable exception of the mothers juggling Zoom meetings and childcare.

An NBER study out this month estimates that about 20 percent of the workdays in this country, post-pandemic, will be carried out at home. That’s less than half the at-home time that was clocked last year as the pandemic raged but is multiples of the very low levels prior to COVID-19.

There is “little doubt that the stigma associated with [working from home] diminished during the pandemic,” concluded the study, based on a series of surveys last year. This seismic shift in workplace conventions “will stick long after the pandemic ends.”

But a second theme running through this research is just as important: the benefits of telecommuting flow mainly to the more educated, higher-paid labor force.

More than 50 percent of U.S. workers earning more than $100,000 a year have been allowed to work at home, rather than in the office, giving them more protection from layoffs during the economic shutdowns and from COVID-19. On the other end of the spectrum are lower-paid and minority workers, who have been much more likely to lose their jobs and be exposed to the disease. Just 25 percent of employees earning under $50,000 work at home – and only 10 percent of the lowest-paid workers who didn’t complete high school work.

Yet the desire to work at home is pervasive. Regardless of their income, years of education, or family situation, workers view it as a perk – so much so that most people said they would accept a pay cut if they could work remotely two or three days a week.

Another potential impact on equity in the study is the effect of remote work on commerce in the urban centers. …Learn More

January 30, 2020

A Cost in Retirement of No-Benefit Jobs

Only about one in four older Americans consistently work in a traditional employment arrangement throughout their 50s and early 60s. For the rest, their late careers are punctuated by jobs – freelancer, independent contractor, and even waitress – that do not have any health or retirement benefits.

Some older people are forced into these nontraditional jobs, while others choose them for the flexibility to set their own hours or telecommute. Whatever their reasons, they will eventually pay a price.

The Center for Retirement Research estimates their future retirement income will be as much as 26 percent lower, depending on how much time they have spent in a nontraditional job. During these stints, the issues are that they were not saving for retirement or accruing a pension and may have had to pay for health care out of their own pockets.

The researchers estimated the losses in retirement income to these workers by comparing them with people who have continuously been in traditional jobs with benefits. The workers in their analysis were between the ages of 50 and 62 and were grouped based on how their careers had progressed. The groups included people whose careers were primarily traditional but were interrupted by periods of nontraditional, no-benefit work, and people who spent most of their time in nontraditional jobs.

This last group lost the most: they had accrued 26 percent less retirement income by age 62 than the people who consistently held a traditional job. Who are these workers? They are a diverse mix that includes people who dropped out of high school and are marginally employed and people who are married to someone who is also employed and has benefits. …Learn More