Fully Remote New Hires Show 18% Drop in Productivity, Study Says

The paper adds to a growing body of research that points to productivity costs of working from home full-time.

(Bloomberg) — The heated debate over the value of remote versus in-office work has found fresh ammunition with new research revealing lower productivity when working from home.

A study by economists at the Massachusetts Institute of Technology and the University of California, Los Angeles found that workers randomly assigned to work from home full-time are 18% less productive than those in the office.

The researchers, who studied newly hired data entry workers in India who were randomly assigned to either the home or the office, said that two-thirds of the drop in productivity was evident from the first day of work. The remaining difference showed up over time as in-office workers learned more quickly than their fully remote counterparts.

Surprisingly, remote workers who preferred to work from home were even less productive than those who would rather have been in the office.

While the authors said their findings aren’t prescriptive, the paper marks the latest salvo in a debate that’s raged inside boardrooms, Slack chats and academic circles ever since the pandemic forced work-from-home into the mainstream. The warring camps can now each cite research that supports their views, whether they subscribe to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon’s view that remote work “doesn’t work,” or Airbnb Inc. CEO Brian Chesky’s pro-flexibility stance.

According to Jose Maria Barrero, an economist and co-founder of WFH Research, a group dedicated to the study of remote work arrangements, this latest paper is consistent with others that have found fully remote work is less productive than fully in-person or  hybrid work. Still, even if fully remote work is less productive, he notes it could be worth it for companies that save substantial sums on real estate.

The new research underscores the challenges inherent in productivity research. Since the workers in the trial were newly hired, their outcomes may differ from employees who switch to fully remote only after first spending significant time on-site.

“There’s obviously going to be a big difference between someone who already understands the work well and already knows the culture of the firm and how things are done, and now you’re saying ‘Ok, now you can work from home a few days a week,’” said David Atkin, an economics professor at MIT and one of the paper’s coauthors. “In terms of extrapolating, we do need to think carefully about that.”

The study doesn’t have all the answers for managers trying to navigate the messy middle of hybrid work, which remains the dominant model in the US. A recent large-scale analysis by consulting firm McKinsey & Co. of its own workforce found that about 50% of time spent on-site was the sweet spot for hybrid work. Anything more than that came at the expense of flexibility and focus time and didn’t improve performance. Other randomized control trial research has found hybrid arrangements had no significant impact on productivity, though employees were substantially happier and less likely to leave.

“Many of the articles that come out and criticize remote work and provide evidence that remote work is less productive are really talking about fully remote work, when really what matters for most of the people who can work from home is hybrid,” Barrero said.  “It’s important to keep those nuances top of mind.”

MIT’s Atkin agrees. “A lot of the discussion now is on where we go on this work-from-home spectrum,” he said. “Do we go all the way to full work- from-home, or to full work-in-the office? I think we’ll end up somewhere in between.”

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