Skip to Main Content

Regional Matters

April 1, 2021

Remote Work and COVID-19: What Have Firms Learned?

The COVID-19 pandemic forced businesses across the country to quickly convert on-site employees to remote workers. According to a supplemental survey of the Bureau of Labor Statistics (BLS), 35 percent of workers were remote in May 2020. Some estimates of remote work were even higher, with an April Gallup Poll indicating that 70 percent of workers in the United States were remote that month. Since the early days of the pandemic, some employees have returned to on-site work: The BLS survey showed that nearly 23 percent of workers were remote in February, and a follow-up Gallup Poll sample showed that 58 percent of workers were remote in February.

As we move to a post-pandemic world, firms and employees alike are contemplating how to balance remote work with on-site work. In our March business surveys, we included questions about how our panel’s current work environment compares to their pre-pandemic environment and what they anticipate going forward. We found, not surprisingly, that of the firms that moved some portion of employees to a remote work posture last spring, few are anticipating a return to their pre-pandemic environment. Most firms are evaluating what sorts of investments they need to make in order to maintain their culture and productivity in a hybrid work environment.

Pre-COVID-19 and Post-COVID-19 Remote Work

Most of our respondents saw a marked increase in remote work during the pandemic. When asked what share of their workforce worked on-site pre-pandemic, the average firm had 92 percent of workers on-site, with 57 percent of firms reporting that all workers were on-site. Comparatively, the average firm reported 71 percent of workers on-site now, with only 24 percent of respondents reporting a fully on-site workforce. However, the vast majority of firms had at least some employees on-site: Only 3 percent of respondents reported being fully remote. There are also marked differences between manufacturing and service sector firms in our sample. On average, manufacturing firms had 83 percent of their workers currently on-site, compared with 64 percent in our service sector survey.

Although very few firms anticipated maintaining the current level of remote work, most anticipated a permanent change to their remote work stance. In the service sector, the average firm went from 90 percent of workers on-site most days pre-COVID-19 to anticipating 77 percent of workers on-site most days after the pandemic. Even manufacturers anticipated some change, with the average firm going from a 97 percent on-site workforce to an anticipated 92 percent on-site workforce. What is more, firms were also anticipating an increase in the share of employees that work a mix of on-site and remote. These findings are not unique. In their March paper, “Why Working From Home Will Stick,” Barrero, Bloom, and Davis estimated that, based on a survey of 27,500 people, 20 percent of full workdays will be remote after the pandemic, compared with 5 percent before the pandemic.

What Are the Challenges With the Hybrid Work Environment?

In a February essay, Richmond Fed President Tom Barkin laid out some of the challenges firms will have to address in a hybrid work environment, including rethinking management practices and investing in connectivity and training (costs that could be offset by savings on real estate). Many of our respondents expressed concerns about maintaining culture and continuing mentorship and training programs with more remote workers. Only around a third of firms felt they could maintain their work culture in a remote or hybrid work environment. Despite this, almost half of respondents agreed that enabling remote work would make it easier to attract workers with the skills they need. Firms also expressed concerns about maintaining worker productivity and fostering innovation. About half of firms in our monthly surveys felt that employees are as productive working remotely as in the office.

How Will Firms Adjust to Hybrid Work?

As evidenced above, although many respondents do not anticipate returning to their pre-COVID-19 share of employees working on-site, firms are concerned about maintaining the culture, innovation, training, and productivity they need with more working remotely. To address this, many of our respondents anticipated making investments: Just over a third of March survey respondents reported they plan to implement new technology, processes, or training to accommodate the new hybrid work environment. Around 70 percent of those firms anticipated investments in software to address video conferences, remote collaboration, etc., and over 50 percent talked about investments in physical space (e.g., on-site video conferencing, “smart” whiteboards) and training to manage a virtual team. The primary investments varied by industry: Among manufacturers, the most broadly anticipated investment in remote work was in new onboarding and training methods.

While remote work may require firms invest more in some areas, it could save on expenses in others, perhaps most notably rent on office space. In March, about 22 percent of survey respondents said they plan to decrease office space in the next two years. The share of service sector firms planning to decrease office space (26 percent) was twice as large as the share of manufacturers (13 percent).

Conclusion

Our March survey results tell a story that we have heard many times over the past year: Once the pandemic hit, firms sent home workers who could perform their jobs remotely. As we move into a post-pandemic world, our Fifth District firms, like many across the nation, expect some of that increase in remote work to endure. There will be challenges with the hybrid work environment, and many of our respondent firms anticipate making investments to ensure they can attract workers while maintaining their productivity and culture. As we move toward our new normal, we at the Richmond Fed will continue to monitor how firms evolve and workplaces adapt.


Have a question or comment about this article? We'd love to hear from you!

Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

phone Contact Us

Joseph Mengedoth (804) 697-2860