Fed Finding WFH Here To Stay

WFH, or “Work From Home,” is now a well-known acronym. Thousands of companies and their employees were forced into WFH arrangements in the past year. Zoom went from little-known business app to household name. Microsoft Teams’ growth exploded. Google Meet, FaceTime, Skype, and GoToMeeting all got a pandemic boost.

If you ask businesses, the WFH year has had its pros and cons. If you ask employees, that’s also the case. On the pro side, both businesses and employees found they were more productive. Reasons are still being studied, but obvious guesses are that eliminating commutes and obligatory (or not) office chat gave employees much more time to devote to jobs.

On the con side, with many schools closed, those same employees may also have had double duty as parent-teachers. Or, with elderly support services gone, they may have had double-duty as adult child caregivers. These roles have fallen disproportionately on women. Many quit their jobs. Remaining employees were often left to do two jobs with employers reluctant to hire until the pandemic fog cleared. Overall employees’ mental health suffered due to stress and loneliness. Businesses don’t work better, or more profitably in the long run, with employees who are either resigning or staying and suffering. Many of the gains made in workplace diversity and quality backslid, another cost to business which will be measured for years to come.

So overall, the Federal Reserve Bank of Atlanta wondered, will businesses keep WFH or expect everyone back in the office when herd immunity arrives? The Fed branch surveyed businesses nearly a year ago, in May 2020, to see how they predicted it would pan out. Then they sent the same survey again in January 2021. The latest results show a hybrid model as the likely outcome, with more WFH than pre-pandemic, but definitely not a wholesale shift to remote work.

As a result, one of the Fed’s predictions is that city centers may see a permanent decline of 5% – 10% in spending on local restaurants and businesses. The domino effect may mean a decline in urban property values (and conversely, an uptick in suburban and rural values.) Their full conclusion from the January 2021 survey as of February 24, 2021:

“To summarize, firms have largely stuck to their early expectations about the extent of WFH in the postpandemic economy. There has, however, been a notable drop in plans for employees to work from home five days a week. Remarkably, in every major industry sector except retail and wholesale trade, firms anticipate that WFH will account for one-tenth or more of full workdays by full-time employees, far above prepandemic levels. These shifts toward more remote work are driving a reallocation of jobs across industries and locations, contributing to fewer jobs, lower sales tax revenues, and lower property values in city centers. Our results suggest that these effects are likely to persist.”

For the Fed’s complete summary and survey, click here: https://bit.ly/3sj7kJ4

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Holly Donaldson

Holly P. Donaldson, CFP® writes and consults on the psychology of money. Her fee-only, product-free financial planning practice focuses on increasing financial self-efficacy for those seeking a financial navigator to help them make good decisions. She is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch." With a fully virtual practice in Seminole, Florida, she primarily serves clients located in the Tampa, St. Petersburg, and Clearwater areas. Holly will also work with clients who are a good fit located elsewhere in the United States.

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