Labor Markets Briefs

Teleworking continues to rapidly expand

March 11, 2019

Every year since 2005, the share of full-time employees primarily working from home[1] has increased. Our analysis of the latest data from the American Community Survey (ACS) suggests that the teleworking trend is not slowing down (Chart 1). Although several large companies including Yahoo, Bank of America, Aetna, and IBM have reduced or eliminated teleworking by their employees in recent years,[2] these actions have failed to halt the continued growth in teleworking by American workers.

Employers are facing a prolonged tight labor market for the first time in an era when advanced remote working technologies are available. To address talent shortages, companies can use teleworking to broaden the pool of potential workers. Teleworking is especially playing an important role in addressing talent shortages in white-collar occupations, but less so among blue-collar and low-paid service occupations.

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Chart 1: Full-time employees primarily working from home as a percent of total full-time employment, 2001 to 2017.

Source: American Community Survey; IPUMS-USA, University of Minnesota.

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A 3.3 percent share of full-time employees working primarily from home (Chart 1) may not sound like much but this number understates the importance of this trend:

1. The count does not include part-timers or self-employed workers, who typically include a higher share of teleworkers.
2. It counts exclusively those who work primarily from home. There are many more who primarily work elsewhere, but still work at home sometimes. Data from the American Time Use Survey shows that among those aged 25 and over, 46 percent of workers with education beyond a high school degree performed some work from home.[3]
3. The share of teleworking jobs among jobs added to the economy since the end of the Great Recession is much higher than the share in the overall economy. Between 2010 and 2017, 16 percent of all white-collar jobs added to the economy were filled by workers primarily working from home.

The share of teleworkers differs widely across occupations (Chart 2). Most of the acceleration occurred in high skilled white-collar occupations, which helps reduce shortages in these occupations. The fastest growth is in computer related occupations, rising from about 2.5 percent in the early 2000s to about 9 percent in 2017. Business, financial, legal, and management occupations also experienced a rapid growth in teleworking, going from below 2 percent in the early 2000s to about 5.5 percent in 2017. The share of full-time teleworkers is especially high for management specialists, claims adjusters, appraisers, and examiners, of which around 13 percent work from home, up from 5-6 percent since the early 2000s.[4] Among healthcare practitioners and education professionals the share of teleworkers is still quite small, though growing.

Hiring teleworkers can reduce labor shortages through two main channels:

1. Expanding employment by raising the labor force participation of those who cannot or do not want to work away from home.
2. Employers operating in very tight labor markets can hire teleworkers from areas that have more labor availability.

As expected, blue-collar and low-pay services workers experience the lowest share of teleworking. These occupations suffer disproportionally from labor shortages and the inability of employers to use teleworking to reduce labor shortages limits the set of solutions.

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Chart 2: Full-time teleworkers as a percent of total full-time employment by occupation group, 2001 to 2017.

Source: American Community Survey; IPUMS-USA, University of Minnesota.

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Decisions to allow for teleworking will differ among firms, but generally the following determinants seem to increase the probability of teleworking: the ability to accurately monitor the employee, the frequency of travelling (more days on the road means fewer days at the office), the comfort of the typical employee with advanced remote working technology, the need for a quiet working space, the independence of the task, and the reduced importance of sitting with colleagues in the same physical space.

In many white-collar occupations, the growth in teleworking is becoming one of the most important work-related trends. We expect the legions of white-collar teleworkers to continue expanding while blue-collar workers still face physical limits on their ability to work from home. The greater flexibility of white-collar workers in choosing work locations is a key reason why shortages of blue-collar and low paid service workers are presently more acute.