America's productivity boom may have an unlikely hero: working from home

In recent years, the United States has witnessed a remarkable surge in productivity, prompting economists to explore the underlying factors. One compelling theory, proposed by Nicholas Bloom, a Stanford University economics professor and expert in remote work research, suggests that the shift towards working from home (WFH) is a significant contributor. Bloom highlighted this perspective in a LinkedIn post, referencing an article from The Economist that analyzed the striking increase in US productivity since 2020, a period that predates the widespread implementation of AI technologies. He argued that remote work has enhanced productivity in ways that many business leaders may still underestimate. "A/B trials often show that WFH boosts productivity," Bloom stated, citing research indicating that employees tend to concentrate better at home, free from the distractions of office life and lengthy commutes. Despite a trend of companies advocating for a return to in-person work under the assumption that it fosters collaboration and performance, Bloom emphasized that broader economic trends suggest otherwise. According to data from the Bureau of Labor Statistics, US nonfarm business-sector labor productivity—a key indicator of output per hour—experienced a notable increase of 5.3% in 2020, followed by a 2% rise in 2021. Although there was a decline of 1.5% in 2022, productivity rebounded with gains of 1.8% in 2023, 3% in 2024, and 2.2% in 2025, marking a dramatic shift from the sluggish growth of the previous decade. Bloom highlighted that total factor productivity, which assesses efficiency gains from labor, capital, and innovation combined, has also seen an annual growth rate of 1% from 2019 to 2025, surpassing the 0.6% rate recorded from 2007 to 2019. He posited that remote work has played a pivotal role in enhancing productivity by enabling employees to focus better, reducing commuting times, and fostering entrepreneurial opportunities by lowering barriers to starting new businesses. As discussions around productivity increasingly revolve around AI, Bloom reminded business leaders that remote work's impact should not be overlooked. His observations arrive at a time when many large companies, including Amazon, JPMorgan, and Goldman Sachs, are tightening their return-to-office policies, believing that in-person work promotes better collaboration and corporate culture. Contrasting views exist, however. Some executives, like JPMorgan CEO Jamie Dimon, argue that remote work hampers younger employees' learning experiences, while others, such as Skims cofounder Emma Grede, suggest that working from home could be detrimental to career advancement. The ongoing debate highlights that the productivity rebound may also stem from a more stable labor market and increased investments in business, coupled with workers gaining experience after the disruptions caused by the pandemic. Despite differing opinions, Bloom remains confident in his assertion that WFH is linked to higher productivity growth, urging leaders to consider the data before dismissing remote work as a productivity hindrance.