People’s relationships with their jobs are complicated.
COVID-19 has likely “permanently changed” attitudes toward work, with people seeking out a change of hours, career and benefits, a new paper concludes. “Some individuals may have become accustomed to a greater degree of work flexibility, including working from home, while others may now prefer a greater degree of work-life balance,” the research says.
The pandemic was a catalyst, according to the paper distributed Monday by the National Bureau of Economic Research, a Cambridge, Mass., nonprofit research organization.
“Workers with ‘high social proximity’ — the degree of interpersonal contact and ability to work from home — show a willingness to work fewer hours. ”
Workers with “high social proximity” show a willingness to work fewer hours, echoing previous research and highlighting the gap between people who are able to work from home without occupational exposure to COVID-19 and those who can’t. Social proximity, for these purposes, is defined by the degree of interpersonal contact and the ability to work from home for a person’s current or most recent job.
The occupations with the highest “effective social proximity” include healthcare professionals, food-preparation workers, and people working in production, construction, transportation and personal-care services, the NBER-distributed report said. The jobs with the lowest effective social proximity include managers, technical professionals and legal professionals.
The paper was written by economist R. Jason Faberman at the Federal Reserve Bank of Chicago, and Ayşegül Şahin and Andreas I. Mueller, both from the Department of Economics at the University of Texas at Austin.
A recent report by management consulting company McKinsey on the future of work also found that the pandemic “most severely disturbed arenas with the highest overall physical proximity scores: medical care, personal care, on-site customer service, and leisure and travel.” Looking ahead, those areas are also likely to be more unsettled, as workplaces continue to adapt to this new normal, the report added.
“Considering only remote work that can be done without a loss of productivity, we find that about 20% to 25% of the workforces in advanced economies could work from home between three and five days a week,” McKinsey said. “This represents four to five times more remote work than before the pandemic and could prompt a large change in the geography of work.”
But remote work isn’t always good for companies. “We found that some work that technically can be done remotely is best done in person,” McKinsey added. “Negotiations, critical business decisions, brainstorming sessions, providing sensitive feedback, and onboarding new employees are examples of activities that may lose some effectiveness when done remotely.”
Rapid tightening of the labor market
The U.S. labor-force participation rate held steady at 62.2% in January, and the employment-population ratio was little changed at 59.7%, according to the latest data from the Bureau of Labor Statistics. Both of those measures were up over the past year, but remained below their February 2020 levels (63.4% and 61.2%, respectively).
But pressures have intensified in recent months for people to work more hours and/or for better wages with inflation now at a 40-year high, the winding down of pandemic-related stimulus programs, credit-card debt and interest rates on the rise, and the toll that two years of an uncertain and unsteady work environment has taken on people’s savings.
“Pressures have intensified in recent months for people to work more hours and/or for better wages with inflation, especially with inflation reaching a 40-year high.”
Bottom line: The COVID-19 pandemic has increased people’s desire to work in a healthy environment — whether they spend their time with members of the public or with other co-workers — and also achieve a better work-life balance.
That, in turn, has impacted the number of hours that people wished to work, Faberman, Şahin and Mueller added in their NBER report. “The labor market is tighter than suggested by the unemployment rate and the adverse labor supply effect of the pandemic is more pronounced than implied by the labor force participation rate,” they said.
Child-care needs play only one part, the study suggested. “Our evidence does not support the notion that the contraction in labor supply is driven mostly by women responding to child-care demands,” the researchers added. “Instead, the drop in desired hours is pervasive across most demographic groups, with somewhat larger declines among those with less than a college degree.”
“The decline is also concentrated among what we refer to as the intensive margin of labor force participation. This margin represents individuals who prefer to work infrequently, and when they do, they generally prefer part-time work hours,” they wrote. “This decline contributed to the rapid tightening of the labor market following the onset of the pandemic.”