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by Kevin Phelps, Research Specialist, and Steven Koczak, PhD, Research Specialist
The concept of working remotely predates COVID-19. The idea wasn’t even new when Thomas Jefferson invented a portable desk, let alone when the first examples of modern telecommuting appeared in the 1970s.
The COVID-19 pandemic, however, forced the issue. For public health purposes, more people than ever needed to work out of the office or not work at all. The technologies that broadened who could work from home, new and rare in the 1970s and 1980s, were everywhere by 2020. Thus, the rare phenomenon called “telecommuting” became a common phenomenon called “working from home” (WFH).
Where We Were and Are Now
Analysts use different metrics to measure the rate of WFH — typically variations on by counting employees who WFH or by measuring how many WFH hours are used— so specific numbers can vary considerably. No matter the specifics, the results are the same or very similar. WFH went from rare, to commonplace, to neither common nor going away. An article published by Goldman-Sachs in July 2023 combined several sources and used share of U.S. workers “performing at least some work from home” as the metric. Here are their summary findings:
- Pre-pandemic average: 2.6%
- Pandemic peak: 47%
- July 2023: 24% (16% hybrid, 8% fully remote)
Studies have noted large differences in WFH between various industries and occupations, regardless of the specific metric used, so these averages tend to be mixed from extremes. The most common WFH arrangement is hybrid – in office part of the time, WFH part of the time.
The Productivity Question
Simple to ask but complex to answer: What is the effect of WFH on employee productivity, if any? Labor productivity — calculated by dividing worker output by the total number of hours worked — is a key economic variable since it leads to higher wages and better working conditions over the longer term.
At present, two studies have been making the rounds. One, published by the National Bureau of Economic Research (NBER), used a sample from data entry workers in India. The other, published by the Federal Reserve Bank of New York, used a sample from call center workers in the U.S. In both studies, the analysts tried to measure productivity “objectively” instead of relying on reporting by employers or employees. Both studies found that WFH reduced productivity in most workers, most of the time, with considerable nuance and variation. (The specific results can be difficult to parse out because the writers tried to come to detailed and nuanced conclusions.)
By contrast, the Goldman-Sachs article mentioned above pointed to a 3% overall productivity gain related to the pandemic. The article also cited a variety of results from other studies, ranging from a decrease of 19% to a gain of 13%. The writers indicated that this lack of consensus was most likely due to differences in how productivity was measured as well as the industries or occupations studied. The writers further suggested that some of the more narrowly focused studies were likely missing economy-wide productivity gains (by way of, for example, reducing office expenses and spurring technological change).
There is more to learn about the relationship between WFH and productivity, but it’s undeniable that, during the pandemic, most work that could get done under WFH conditions still got done. However, it is important to note the impacts of WFH go far beyond productivity.
Other Impacts
Working from home is extremely popular with workers. According to data from a 2021 NBER-published study, nearly 82% of survey respondents desired to WFH at least once a week. One likely reason is that WFH is a time saver for workers. Another NBER paper, published in 2023, found that workers saved an average of 72 minutes each day they were able to skip their daily commute by teleworking. Unsurprisingly, there is some evidence that, in a tight labor market, employers are using WFH arrangements to recruit talent.
WFH has taken a toll on city centers and the commercial real estate (CRE) market. A study published by the NBER in 2022 used the term “office real estate apocalypse.” A team of economists from NYU and Columbia University found that CRE vacancy rates were at 30-year highs in many cities across the U.S. in 2022. In the third quarter of 2023, New York City’s overall office vacancy rate was 22.1% — almost twice as high as the long-term average of 12.4% — according to an analysis from commercial real estate brokers Cushman & Wakefield. Other studies, using various metrics, found similar results – a general slowdown in the demand for CRE.
Emptier urban cores pose a unique set of challenges for governments, communities and various stakeholder groups. Fewer commuters translate to less revenue for businesses that rely on the office crowd, such as restaurants, coffee shops, commercial cleaners, etc. In addition, vacant buildings can contribute to urban decay. Perhaps the biggest challenge could be what the NYU-Columbia research team described as a “doom loop,” which is a negative economic spiral that follows this sequence:
- Employees work from home
- Vacancy rates increase and property values fall
- Reduced property values result in less property tax revenue
- Municipalities are forced to raise taxes in other ways to make up for the revenue shortfall
- Increased taxes make the city a less attractive place to live, resulting in more employees WFH
This “doom loop” is far from an inevitable outcome, though. An article recently published by the Federal Reserve Bank of Richmond (FRB-R), while voicing similar concerns as other studies, pointed out that the warning signs for commercial real estate are not as great as in previous years when commercial real estate issues heralded general problems in the economy. Furthermore, other options exist. For example, CRE owners are starting to experiment with methods to rearrange office space to meet the needs of hybrid work arrangements or to retool CRE as residential space (though this process is difficult and uncertain). The FRB-R article also pointed out that CRE faced similar challenges before, and various policies alleviated the situation.
The ability to work remotely also presents opportunities. For example, workers are afforded greater geographic mobility. Fully remote employees can take advantage of incentives that some communities offer in an effort to grow their economies. As noted above, however, most WFH arrangements are hybrid, so some in-office work is the norm. This can limit geographic mobility to some extent. A report, published by the NBER in 2021, found that households and businesses were primarily migrating from city centers to nearby suburbs and exurbs (a “donut effect”), and that there was not a significant amount of cross-city migration. This change in migration patterns has been a boon to municipalities outside of the densely populated city centers.
What Happens Now?
Though diminished from its COVID induced peak, work from home in some form is likely to stay around. COVID-19 has not gone away and will not be the last infectious disease we face. Public health research has found that WFH played a role in slowing down the spread of COVID-19. Additionally, workers seem to like it and the job market is still tight.
While data on WFH-related productivity are mixed, work still got done when WFH was the norm for a while. Thanks in large part to WFH, the impact of COVID-19 on the global economy was more muted than we had any reasonable right to expect. The infrastructure for WFH is in place and is used daily, for other purposes, by millions of people.
The world has changed under our feet. How much, and in what manner, is yet to be determined.
For more details on WFH at the height of the pandemic, see the article in our September 2020 issue. For more information on the current state of WFH, see https://wfhresearch.com/, which is a website run by researchers from several universities and contains many articles and studies on the subject.
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by Karen Knapik-Scalzo, Labor Market Analyst, Central New York Region
“Central New York’s computer and electronic product manufacturing sector is poised for tremendous growth during this decade and beyond.”
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Central New York’s labor market has been hitting all of the right notes as of late. For the 12-month period ending August 2023, the region added 7,200 total nonfarm jobs. Moreover, Central New York’s unemployment rate was 3.5% that month, the lowest August level ever on records dating back to 1990.
The computer and electronic product manufacturing (CEPM) sector is a key contributor to Central New York’s current strong economy and is a significant employer in the region. CEPM sector employment in Central New York is projected to grow by 3,090, or 59%, in 2020-30. CEPM is also a very high-paying sector with average annual pay of over $98,300 in 2022, more than 50% above the region’s overall average.
CEPM is a billion-dollar sector locally. In fact, data from the U.S. Bureau of Economic Analysis show that the industry’s Gross Regional Product reached $2.1 billion in 2022. The sector is a key segment of the regional economy as it makes purchases from a wide variety of local business types such as legal services, electronic parts and equipment wholesalers, and warehouses and storage facilities.
Our growing utilization of semiconductors in a wide range of high-tech products, such as cars, smartphones, wearables devices, dishwashers, and military defense systems, has been a principal driver of the increased demand for CEPM sector output. In addition, the federal CHIPS and Science Act is also providing $52.7 billion “for American semiconductor research, development, manufacturing, and workforce development.”
STEM Occupations in Demand
A diverse range of skilled occupations comprise the CEPM sector’s workforce, including many that are related to STEM (science, technology, engineering and math). Some typical occupations include: electrical, electronic, and electromechanical assemblers; industrial engineers; electrical engineers; electrical and electronic engineering technicians; software developers; sales representatives, wholesale and manufacturing, technical; inspectors, testers, sorters, samplers, and weighers; and semiconductor processors.
Education and training requirements for workers in the CEPM sector range from apprenticeship programs and moderate-term on-the-job training to individuals with an associate degree, bachelor’s degree or higher. According to Lightcast, a data analytics firm, the CEPM sector still employs significantly more men than women and most (70%) local workers are male. Successful job candidates in this sector typically possess strong communications and problem-solving skills and are detail-oriented.
Business Expansions
Growing local high-tech employers, such as defense contractors and semiconductor manufacturers, have contributed to the CEPM sector’s increased presence in Central New York. Local businesses are winning lucrative U.S. military contracts, especially related to radar research and development and manufacturing. Examples of local companies growing in this sector include Lockheed Martin, Saab and Micron Technology.
Lockheed Martin’s plant in Salina (Onondaga County) is hiring 300 additional workers in 2023. The firm’s hiring is centered in engineering and manufacturing positions to support new and existing defense contracts. Specific engineering job titles being filled include system, software, hardware, power, radio frequency, and mechanical engineers. The new positions will bring employment at the local plant up to 2,300, according to published sources.
Sweden-based Saab Inc. has also been recently filling jobs in the Syracuse area, especially in the fields of engineering, software systems and mechanical manufacturing. The defense contractor manufactures and tests radar systems for branches of the U.S. military.
Site preparation work has also begun on Micron Technology’s large computer memory chip manufacturing campus that will be built at the White Pine Commerce Park in Clay (Onondaga County). The facility will create 9,000 direct jobs and an additional 40,000 spin-off jobs. The company will invest $100 billion over 20 years to build four chip fabrication facilities with major construction starting in 2024. Substantial hiring is expected to begin in 2025 with initial production starting in 2026. Common job titles at the campus will include electricians, HVAC workers, engineers, technicians, maintenance and repair workers, and assemblers and fabricators.
Looking Ahead
Central New York’s computer and electronic product manufacturing sector is poised for tremendous growth during this decade and beyond. This growth is creating many highly skilled, technical jobs that pay good wages. The sector’s expansion will create many job opportunities for the region’s workforce.
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In August 2023, New York State’s seasonally adjusted private sector job count increased over the month by 4,900, or 0.1%, to 8,252,700. In addition, the state’s seasonally adjusted unemployment rate held steady at 3.9% in August, while New York’s seasonally adjusted labor force participation rate rose from 61.4% to 61.5%.
Capital
Over the past year, the private sector job count in the Capital Region rose by 9,500, or 2.2%, to 448,300 in August 2023. Job gains occurred in education and health services (+7,200), leisure and hospitality (+3,400), other services (+600), professional and business services (+600) and financial activities (+200). Losses occurred in trade, transportation and utilities (-1,300), manufacturing (-700) and natural resources, mining and construction (-500).
Central NY
The number of private sector jobs in the Syracuse metro area increased over the past year by 5,400, or 2.1%, to 262,500 in August 2023. Employment gains were greatest in professional and business services (+2,800), leisure and hospitality (+2,500), financial activities (+200), natural resources, mining and construction (+200), other services (+200) and trade, transportation and utilities (+200). Job losses occurred in manufacturing (-500) and information (-200).
Finger Lakes
From August 2022 to August 2023, the private sector job count in the Rochester metro area rose by 4,700, or 1.0%, to 452,800. Gains occurred in education and health services (+6,400), other services (+800), trade, transportation and utilities (+800) and manufacturing (+500). Job losses were largest in professional and business services (-2,300), information (-500), natural resources, mining and construction (-500) and leisure and hospitality (-300).
Hudson Valley
Over the past year, the Hudson Valley’s private sector job count grew by 11,600, or 1.4%, to 815,800 in August 2023. Job gains occurred in education and health services (+11,500), leisure and hospitality (+6,400) and other services (+1,600). Losses were greatest in professional and business services (-4,600), trade, transportation and utilities (-1,000), financial activities (-700), information (-700) and manufacturing (-600).
Long Island
For the year ending August 2023, private sector jobs on Long Island decreased by 3,200, or 0.3%, to 1,154,300. Gains occurred in professional and business services (+3,500), education and health services (+3,300), leisure and hospitality (+2,500), other services (+1,800) and manufacturing (+600). Employment declines were greatest in trade, transportation and utilities (-8,400), natural resources, mining and construction (-5,200), and financial activities (-700).
Mohawk Valley
For the 12-month period ending August 2023, the number of private sector jobs in the Mohawk Valley decreased by 300, or 0.2%, to 142,200. Over-the-year employment gains were greatest in in education and health services (+500) and leisure and hospitality (+400). Job losses were greatest in trade, transportation and utilities (-500), professional and business services (-400) and manufacturing (-300).
New York City
The private sector job count in New York City rose over the past year by 114,200, or 2.9%, to 4,086,100 in August 2023. Job gains occurred in education and health services (+107,300), leisure and hospitality (+32,800), natural resources, mining and construction (+11,000), other services (+6,500) and financial activities (+4,300). Employment losses were largest in information (-27,300), trade, transportation and utilities (-12,900), and professional and business services (-7,000).
North Country
For the 12-month period ending August 2023, the private sector job count in the North Country increased by 300, or 0.3%, to 110,900. Over-the-year job gains occurred in natural resources, mining and construction (+400), leisure and hospitality (+300) and education and health services (+200). Employment losses were centered in trade, transportation and utilities (-400).
Southern Tier
For the year ending August 2023, the number of private sector jobs in the Southern Tier grew by 2,600, or 1.2%, to 218,700. The largest gains were in education and health services (+2,900) and leisure and hospitality (+900). Job losses occurred in natural resources, mining and construction (-400), professional and business services (-300), financial activities (-200), manufacturing (-200) and trade, transportation and utilities (-200).
Western NY
Over the past year, private sector jobs in the Buffalo-Niagara Falls metro area rose by 7,900, or 1.7%, to 467,700 in August 2023. Gains occurred in leisure and hospitality (+5,000), education and health services (+2,800), professional and business services (+2,200), manufacturing (+1,300) and other services (+1,300). Losses were greatest in trade, transportation and utilities (-2,800), financial activities (-800) and natural resources, mining and construction (-800).
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