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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Have you had it with the whole work from home saga? Do you feel you already know enough about bosses ordering everyone back to the office because it’s better for the business, and workers saying they’d rather not because a commute-free job is nirvana?
To be honest, I thought I might have. But I have had to think again, thanks to the Bank of England.
In 2016, the Bank teamed up with economists from US and UK universities to launch the Decision Maker Panel, regular surveys of chief executives and chief financial officers in UK firms that aim to track how businesses respond to sundry uncertainties.
An analysis of recent surveys covering 2,500 firms has just come out and it shows a lot of what we think we know about working from home is wrong, starting with the idea that it’s uniformly good for workers — or at least for workers’ pay packets.
Businesses with higher levels of homeworking have had lower wage growth since 2022, the data shows. Overall, for every extra day worked remotely, the numbers suggest there is half a percentage point lower growth.
I remember economists predicting this would happen after the Covid-fuelled rush to remote working, partly because firms would have a bigger pool to hire from and partly because employees loved working in their pyjamas.
Back in 2021, UK workers told researchers working from home two days a week was a perk worth as much as a 6 per cent pay rise.
The value of a work-from-home job has become even clearer since then in places like the US. Only 39 per cent of American employees now want a fully in-person job, LinkedIn reported a couple of weeks ago. The rest want a fully remote job (29 per cent) or a hybrid mix of office and home (30 per cent).
The trouble is, the number of remote job postings on LinkedIn has plunged so much since 2022 that demand is far outstripping supply.
But lower wage growth is just one bit of good news for employers to emerge from the new Bank of England data.
There is also a link between working from home and higher productivity. The researchers say this suggests that, for every extra day an employee works outside the office, their productivity rises to the tune of about £15,000 a year.
This does not prove working from home causes higher productivity — though employees often report this. But it might help to explain why more firms than you might think are planning to stick with work from home models.
The Decision Maker Panel data shows 30 per cent of full-time UK employees are now doing hybrid work; 8 per cent are fully remote and 62 per cent are showing up in person — down from 91 per cent before the pandemic.
Tellingly, bosses expect these numbers to remain virtually unchanged for the next five years.
Remote working, by the way, is still most common in sectors such as communications, finance and insurance.
But wherever it’s happening, if working from home is linked with lower wage growth, higher productivity and happier staff, why is a chief executive like UPS’s Carole Tome ordering staff back to the office five days a week from early next month?
That’s a question I asked Stanford University’s Nick Bloom, one of the economists behind the Decision Maker Panel.
He pointed me to a recent study by two University of Pittsburgh researchers who looked at return-to-office policies in S&P 500 companies.
Many of these firms are run by bosses like JPMorgan’s Jamie Dimon and Amazon’s Andy Jassy who have made it clear they think working in the office is good for collaboration, innovation, learning and other things that boost performance.
But the Pittsburgh academics found return-to-office orders had almost no effect on profitability or market value, though they did lead to a “significant decline” in worker satisfaction.
The researchers also said their findings supported the idea that such orders were used by managers to “reassert control over employees and blame employees as a scapegoat for bad firm performance”.
That’s just one study, of course, and while financial results at UPS have been disappointing of late, that’s not the case at other firms requiring more in-office work.
Still, the upshot of all this is that, as with so much else in life, intuition is not always a match for facts.
