Universal access to high-speed internet will make home-based work more productive, study

More people will work from home in the future – and if high-quality internet access is available to all Americans, that could lead to a sustained boost in worker productivity which could increase economic output by $160 billion a year.

That’s the main conclusion of a new study released Wednesday by the Aspen Economic Strategy Group.

Before the pandemic, about 5% of full workdays were done from home. That spiked during the pandemic as Americans hunkered down to avoid infection and, while it will decline, is expected to settle at about 20% of full workdays going forward, said Steven J. Davis, an economist at the University of Chicago who did the study with Nicholas Bloom of Stanford University and Jose Maria Barrero of the Instituto Tecnologico Autonomo de Mexico.

“If you suddenly shift a lot of people to a different location, it becomes more important that this new location is a productive one,” and the quality of internet access is key to increasing productivity, said Davis.

According to his calculations – based on an ongoing survey of workers and employers on work-from-home issues – providing high-quality internet access would raise earnings-weighted labor productivity by an estimated 1.1%. The calculations are adjusted for earnings because a disproportionately large share of workers who will work from home in the future are higher skilled, well-paid workers. As demonstrated during the pandemic, many lower-skilled jobs don’t lend themselves to remote work.

The researchers also concluded that better home internet access could increase the propensity to work from home in the future. If that were to happen, it would “slightly” raise their estimate for the productivity gains, according to the paper. Better internet access would also help make the economy more resilient during future disasters that curbed travel and reduced interpersonal activities.