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Economy

How work from home has changed the economy forever

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A person is sitting outside an apartment building and looking at a laptop

 

Around three years ago, many office workers grabbed their last coffee before riding the elevator up to their office floor. They ate their lunches with their coworkers in office kitchens one last time, and said goodbye to in-person meetings and their desk neighbors — perhaps forever.

It’s been over three years since the World Health Organization declared Covid-19 a pandemic and many Americans were pushed into remote work. While some have since returned to the office, others have decided they want to still work from home. Some enjoy hybrid work too, going into the office sometimes. Their former in-person colleagues may have quit and moved on to new jobs during the Great Resignation, perhaps where they can work remotely too.

“The world of work has flipped upside down,” Scott Dobroski, a career expert at Indeed, told Insider. “And because the world of work has changed, it has implications for the US economy.”

The results aren’t all good or all bad. Remote work has given some workers flexibility in their schedules, benefitting working parents, family planning, and people with disabilities. It’s also boosted some local and leisure businesses that saw slow weekdays in the “Before Times,” at the expense of commuter-driven businesses.

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Dobroski pointed to Indeed data that shows the share of remote job openings is about three times its pre-pandemic level. He noted that’s one “strong” indicator that “remote work is here to stay.”

Adam Ozimek, chief economist at Economic Innovation Group, shared a similar sentiment.

“Remote work has been a huge and permanent change to how people work and live,” Ozimek told Insider. “I don’t think it’s going anywhere.”

Here are some of the ways remote work has changed workers and the economy.

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Downtown areas have seen a huge decline in commuters

Commuters at Grand Central Terminal



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Dobroski said “people are no longer commuting to work in droves” — impacting businesses that used to benefit from people heading to work.

“We know small businesses have really been hit hard in metropolitan areas where used to have thousands of employees go into work every day and buy lunch or buy local goods,” Dobroski said.

Ozimek said “downtown areas, especially in large expensive cities, are feeling economic adjustment costs from remote work.”

“There are different implications for economic geography depending on which kinds of remote work predominate,” Ozimek said. “When you have hybrid remote work, that allows people to live farther away from where they work, but still have to have some geographic connection. So your commuting zone might go from one hour to two or three hours, and this essentially extends the size of the labor market for that employer and for that city.”

Remote work has impacted different kinds of retail establishments, especially clothing businesses

A sign that says "We're closed"



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Remote work has also changed demand for some brick-and-mortar stores. A JPMorgan Chase Institute report used credit and debit card data of a few cities and their outlying suburbs from the fourth quarter of 2019 to the the fourth quarter of 2021 to look at changes in growth for different kinds of business establishments.

Grocery establishments and restaurants were the two kinds of businesses that were above their fourth-quarter 2019 level by the last quarter of 2021. Clothing establishments were furthest from getting back to the level in the fourth quarter of 2019 among the different kinds of businesses that were part of the report.

“Neighborhoods with more exposure to the adoption of work-from-home lost more establishments” according to that report. “The differential recovery of establishments across retail goods and services provides evidence of such a shift in demand consistent with WFH habits.”

Looking ahead, business owners and employers will have to continue to think about remote work consumers.

“The patterns of things that people are doing every day in 2023 don’t look exactly like they looked in 2019,” Chris Wheat, president for the JPMorgan Chase Institute, told Insider. “So those kinds of business models may need to shift to reflect those changes.”

Some companies have decided to close offices, and remote work has changed the purpose of an office

Three colleagues meeting together in an office



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Some companies, such as Yelp, have downsized their offices, as people can work remotely. According to an article from The Washington Post, Yelp CEO Jeremy Stoppelman said hybrid offices are “the worst of both worlds.”

Some companies, like Apple, have wanted people to work in their offices again at least part of the time. However, one report from ADP Research Institute showed that if people had to go back to the office all the time, many would think about looking for new work. One reason people may not want to go back is because they moved away, perhaps to a completely different state.

While some companies want workers back in the office, their decisions may change depending on competition.

“Just because the existing managers, business owners, executives decide that their company is not going to go remote, doesn’t mean that that’s the end of the discussion,” Ozimek said. “In the long run, whether they’re going to actually be remote is going to be determined by competition, labor markets, and seeing whether those firms who try to go remote end up succeeding or those firms who don’t go remote end up succeeding.”

Still, some companies may find the office helpful for certain types of work best done in person.

“Workspaces today are being most utilized for collaboration spaces or focus spaces,” Dobroski said.

Employment in transportation and warehousing boomed as people bought desks and other items to work from home

A worker in a warehouse looking at boxes



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While some businesses and offices have closed, shipping businesses and online stores have benefited from the work-from-home economy.

This has also meant demand for transportation and warehousing. Supply chain issues were rampant during the pandemic, in part due to soaring demand and shortages. As Insider reported toward the end of 2022, supply chain woes seem to have largely dissipated.

According to Bureau of Labor Statistics data, the employment level for transportation and warehousing had rebounded toward the end of 2020 after falling during the pandemic recession.

And employment for couriers and messengers mostly held stable in March and April 2020 while many other sectors were shedding jobs. That sector mainly saw monthly job gains throughout the pandemic, with some declines more recently. Transportation and warehousing also saw employment fall from January 2023 to February 2023.

Bleisure has helped hotels and the travel industry

A woman doing work on a laptop while at a resort



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Hotels also had to adjust to people eager to work remotely. As Insider reported in 2021, many hotels offered packages that may interest workers.

One example is Hyatt. Available in different locations around the world, people can work from a hotel room from 7 a.m. to 7 p.m. for a day.

“We’re seeing that increased work flexibility and remote work has led to longer stays and increased occupancy on traditional shoulder nights, Sunday and Thursday,” Asad Ahmed, senior vice president of Americas commercial services at Hyatt, said in a statement to Insider in 2022. “Guests are extending business trips into the weekend, extending leisure trips to work remotely in destinations, or meeting with colleagues in a hybrid environment.”

Marriott also has a package: Marriott Bonvoy Day Pass Package, which includes a room with a 6 a.m. check in and a 6 p.m. check out.

“While Marriott Bonvoy Day Pass enables guests to work from many properties, we’ve seen longer stays lengthen with the rise in blended travel,” a Marriott spokesperson said in an email in 2022. “In fact, Marriott’s third quarter day-of-the-week trends continue to suggest that travelers are combining leisure and business trips with the average length of a transient business trip up more than 15% compared to 2019.”

A few industries stand out for their number of remote workers

A recent data release from the Bureau of Labor Statistics highlights what teleworking looks like in different industries. 42.2% of establishments in the information sector had workers fully teleworking. A quarter of establishments in the professional and business services sector had their workers always teleworking.

However, construction, retail trade, as well as natural resources and mining all had the same low share of 2.1%. That could be because many jobs in these industries tend to need to be done in person.

The same data release showed that there was a higher share of establishments with workers teleworking rarely or not at all in 2022 than in 2021.

Remote work has helped job seekers with disabilities

A woman in a wheelchair is doing work on a laptop and also has a notebook



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Working from home has also helped the employment of people with disabilities. According to data from the Bureau of Labor Statistics’ Employment Situation, the non-seasonally-adjusted employment-population ratio for people with disabilities was at a new high in December 2022 and January 2023, at 22.4%. Before the pandemic, the highest ratio was back in September 2008, just a few months after the start of this series.

Arlene Kanter, a professor at Syracuse University College of Law, noted in a Harvard Law School post some of the benefits of remote work for workers with disabilities. These positives included accessibility, for instance, but also “privacy that may be needed to address medical issues that cannot be addressed in the workplace.”

Results from LeanIn.Org and McKinsey’s 2022 Women in the Workplace report also found women with disabilities that mainly work remotely are “less likely to experience certain microaggressions, such as hearing negative comments about their appearance” than those who typically work onsite. The fact sheet shared with Insider also noted that about two-thirds of women with disabilities “want to work mostly remotely.”

Overall, remote work has been helpful for many different people who want to be part of the labor force, according to Ozimek.

“I think it allows a lot of people who might otherwise not have worked to work,” Ozimek said. “Caregivers, disabled individuals, mothers, fathers — it makes it easier to connect with the labor market and be employed, gives you more flexibility around your day, around your time use, gets rid of the time-consuming commute.”

Teleheath opened up opportunities for healthcare professionals

A doctor is talking to a patient on a virtual call and is holding a X-ray image



Luis Alvarez/Getty Images

Hospital workers have been on the frontlines of the pandemic. There’s also been a shortage of workers, burnout, and physicians considering joining the Great Resignation.

But there are also some remote opportunities in healthcare, which may help the labor shortage. Wendy Deibert of Caregility, a virtual care platform, recently did an interview about virtual nursing that was published in a Healthcare IT News story.

“Virtual nursing is a new model that health systems are implementing to help address workforce issues,” Deibert said. “Supported by video-enabled telehealth engagement at the patient’s bedside, virtual nursing or telenursing programs use experienced nurses in remote roles to guide and support patient care from a centralized hub.”

Dobroski pointed out that three of the top 25 jobs that made Indeed’s list of “best jobs” were in healthcare and that they had some possibility of being remote and hybrid based on job posting data. That includes licensed professional counselors.

“We expect to see even more jobs with virtual and flexible options in the healthcare and telehealth field,” Dobroski said. “It’s only the beginning of that industry.”

Remote work helped working parents and can also increase the fertility rate

Pregnant woman with a laptop is working from home with her child sitting next to her on a couch



Ridofranz/Getty Images

An analysis published by the Economic Innovation Group looked at how remote work may relate to family formation plans, although Ozimek noted to Insider that this is still early research.

“What we found was that after controlling for detailed demographic and economic controls, we, in general, find that remote work is associated with more family formation and plans to have more children,” Ozimek, who was one of the co-authors of this analysis, said. “In particular, we saw these effects strongest for somewhat older women and those who already have some children.”

Additionally, the research finds that among women whose finances have improved, those working remotely were more likely to try to have a baby or already be pregnant than those working in person.

“Women whose household finances have gotten ‘much better’ in the past year are more than 10 percentage points more likely to report being pregnant or trying to be so if they are remote, whereas for women with stable or deteriorating financial situations, there’s no difference between remote and non-remote,” the analysis on Economic Innovation Group stated.

Moving forward, employers still have to think about offering remote work, as “a lot of people won’t even apply to jobs” without it

College graduates tossing their caps



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Dobroski noted that some surveys show “overwhelmingly employees are loving flexibility and are now used to it and now not only expect flexibility, but demand it.”

“So a lot of people won’t even apply to jobs now if there is not a remote work or flexible option to work,” he added.

This may include the next college graduates.

“We know that the next generation because of how they have been working in universities, colleges and outside in over the past three years, they’re now used to and accustomed to seeing remote work and flexibility,” Dobroski said.

Looking beyond just the new class of workers, job seekers not having to live near an office to work in person could help address hiring woes.

“If someone is in need of a worker in a job that can be remote, they can hire someone wherever they are and they’re not limited to their local labor market,” Ozimek said. “So long run, I do expect that to be positive for productivity growth, but also for unemployment and the ability of people to find jobs and the workers and firms to find workers.”

 

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China’s economy is raising red flags across markets as rebound disappoints

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Financial markets have been raising red flags recently about China’s economy, but analysts said Wall Street is missing the big picture.

Growth in the world’s second largest economy accelerated to 4.5% in the first quarter from 2.9% in the fourth quarter following the relaxation of COVID restrictions late last year.

But more recent data have pointed to slowing growth in retail sales as well as drops in home sales, industrial production and fixed-asset investment.

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That disappointed investors hoping for a bigger post-COVID rebound and led Wall Street to trim its growth estimates for the full year. Worries about China’s economy have rippled through markets.

Earlier this month, the yuan fell past a psychologically important level of 7 per dollar for the first time this year. The price of copper, once expected to see sizable gains due to high demand from Chinese factories, hit a four-month low in mid-May.

Meanwhile, shares of luxury brands that are reliant on China’s consumer base, have started tumbling on stagnant activity.

Chinese equity markets were not immune to slowing performance, as the CSI 300 index continued to slip this week. At the end of April, declining hopes for added stimulus brought the Shenzhen and Shanghai indices down by $519 billion in one week alone.

The stalling performance prompted Rockefeller International’s Ruchir Sharma to call the rebound narrative a “charade.”

But for one analyst, the growing pessimism around China’s economy could stem more from unrealistically high expectations and Wall Street’s tendency to prioritize immediate metrics over long-term outlooks.

“I feel sorry for these people in some ways, because every time the Chinese release some data, they have to say something about it,” Nicholas Lardy of the Peterson Institute for International Economics told Insider.

Heightened anticipations may be due to China’s response to the 2008 financial crisis, when Beijing infused the economy with massive stimulus and achieved double-digit growth, Pantheon Macroeconomics’ Duncan Wrigley said.

However, it also led to a huge debt hangover that China has worked to resolve for much of the last decade. So while demand is slowing, limiting debt growth is equally prioritized by party leaders, he said.

The country set a more conservative 5% growth target in March, which both analysts see as achievable. Although the country will avoid full-scale stimulus to reach the goal, it has a number of tools to ensure growth keeps ticking upwards.

Despite its aim to limit debt, China could increase the availability of cheap loans to sectors in need, as well as lift the lending quota for the three main policy banks, while allowing them to invest in local projects, Wrigley said.

If this isn’t enough, he noted that the People’s Bank of China could ease financial conditions later in the year, such as decreasing the reserve requirement ratio for banks.

But youth unemployment remains high, while heightened geopolitical risk may deny China’s access to foreign technology.

And private investment, a major source of growth in China, has nearly collapsed in the past 15 months, Lardy said.

This may have to do with stringent regulation of Chinese business, as President Xi Jinping expands the role of the state in the market, dissuading business owners from investing in their firms, he said.

“That’s the one big negative factor that I worry about more than all the other things that we have talked about. Why is private investment so weak?” he said.

 

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Quebec proposes making French mandatory for all economic immigration programs

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Quebec is proposing that speaking French become mandatory criteria for provincial applicants.

Quebec Premier Francois Legault has proposed major changes to Quebec’s economic immigration criteria.

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Speaking on May 25 with the Minister of Immigration, Francisation and Integration, Christine Frechette and the Minister of the French Language, Jean-François Roberge, Legault says the changes will ensure that nearly 100% of new economic immigrants to Quebec will know French before they arrive in the province by 2026. This is meant to promote Francophone economic immigration in Quebec.

“As we have seen for several years, French is in decline in Quebec,” said Legault. “Since 2018, our government has acted to protect our language, more than other successive governments since the adoption of Bill 101 under the Lévesque government. But if we want to reverse the trend, we must go further. By 2026, our goal is to have almost entirely Francophone economic immigration. We all have a duty, as Quebecers, to speak French, to transmit our culture on a daily basis, and to be proud of it.”

Discover if You Are Eligible for Canadian Immigration

Knowledge of oral French will be required for adults. This is meant to ensure that those who wish to settle in Quebec will be able to communicate in French throughout day-to-day interactions at work and in their communities.

The changes are part of a new permanent immigration program for skilled workers in Quebec. The province says the Skilled Worker Selection Program will “take into account the diverse needs of Quebec.”

Candidates in the program will be evaluated in four categories that have not yet been made clear, but the province says that three of the categories will require that the principal applicant and their accompanying spouse have knowledge of French.

There will also be revisions to existing programs. For example, the work experience requirement will be removed from the Quebec Experience Program for graduate students from a French-language study program.

Family reunification measures include making it mandatory for the guarantor to submit a plan for reception and integration that will support the learning of French for the person they are hosting.

Immigration is a shared responsibility between the federal and provincial governments. Quebec’s agreement is unique from other provinces in that it can select all its economic immigrants. Quebec does not have the authority to select family class sponsorship applicants or those who arrive in Canada as refugees or other humanitarian classes.

For 2023, Quebec has targeted that 65% of newcomers admitted to the province will be economic class.

Increasing immigration numbers in Quebec

The province is also considering raising the number of permanent selection admissions from 50,000 to 60,000 per year by 2027. This is in stark contrast to Legault’s recent comments that there was “no question” of Quebec accepting any rise in the number of newcomers and publicly rejecting the federal Immigration Levels Plan, which has a target of 500,000 permanent residents admitted to Canada each year by the end of 2025.

These changes also follow Quebec’s Immigration Levels Plan for 2023, where it was announced that the province would move away from plans that forecast only the coming year and begin introducing multi-year plans for immigration by 2024.

Why the changes?

Quebec is unique in Canada as it is the only province where French is the official language. The province is fiercely protective of its language, saying it is vital to protecting Quebec’s unique culture and status.

Legault is the leader of the Coalition Avenir Québec (CAQ) and is currently in his second term as Quebec’s premier, having been reelected last October. One of the main pillars of the CAQ party is to protect the French language in Quebec.

Immigration was one of the key issues in the recent election. Throughout his campaign, Legault said that Quebec would allow only 50,000 immigrants per year into the province as it would be difficult to accommodate and integrate more than that into Quebec society. He said that accepting more than that would be “a bit suicidal.”

Regardless, Quebec, like the rest of Canada, is experiencing a labour shortage as the population ages and the birth rate remains low. A report released last March by the Canadian Federation of Independent Business shows that the province could face an annual shortfall of up to nearly 18,000 immigrants, who would be able to fill Quebec’s labour needs.

 

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Lira hits record low, but stocks rise after Erdogan win in Turkey

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The Turkish leader won the presidency for a third time after a run-off vote on Sunday.

The Turkish lira has plunged to record lows after the re-election of President Recep Tayyip Erdogan, a sign that currency markets are not confident in the country’s economic future after the longtime leader’s re-election.

The Turkish currency weakened to 20.01 to the dollar on Monday after the high-stakes run-off a day earlier.

But Turkish stocks, on the other hand, rose as Erdogan entered a third decade in power with the benchmark BIST-100 index up 3.5 percent and the banking index rising more than 1 percent.

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The lira fell to a record low as the country battles a cost of living crisis and depleted foreign reserves.

On the campaign trail, Erdogan pledged to slash inflation to single digits and boost economic growth, a message he reiterated in his victory speech late on Sunday. But analysts said his economic policies are unorthodox and predicted they will lead to more pain for Turks.

“In our view, Erdogan’s biggest challenge is Turkey’s economy,” Roger Mark, an analyst at the Ninety One investment management firm told the Reuters news agency. “His victory comes against a backdrop of perilous economic imbalances with his heterodox economic model proving increasingly unsustainable”.

Hasnain Malik, head of equity research at Tellimer, an emerging markets research firm, told the agency: “An Erdogan win offers no comfort for any foreign investor.”

“Only the most optimistic would hope that Erdogan now feels sufficiently secure politically to revert to orthodox economic policy,” he said.

Interest rate cuts sought by Erdogan sparked a devaluation of the Turkish lira in late 2021 and sent inflation to a 24-year peak of 85.5 percent last year. The president had argued that higher interest rates cause inflation while central banks around the world were raising rates to reduce price rises.

Turkey’s struggling economy, also reeling after the country’s devastating double earthquakes in February, was a major thorn in Erdogan’s prospect for re-election.

The leader has defended his economic policies, reassuring Turks that investment, production, exports and an eventual current account surplus will drive up Turkey’s gross domestic product.

 

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