Research Reveals Financial Benefits of Remote Work
In the pre-industrial era, people often lived and worked in the same building. This removed the need to travel to work.
The separation of home and work occurred much later, during the Industrial Revolution . Factories and offices were grouped in designated areas and residential zoning was invented.
Even then, people typically spent about 60 to 90 minutes travelling each day, no matter how technology or urban layouts changed. This is known as Marchetti’s constant .
The rise of the internet in the 1990s – and more recently, the COVID-19 pandemic – sparked a rethink of commuting. As we head towards the polls in Australia’s largest federal election , working from home has become a hot-button issue.
Labor and the Coalition have been polarised for and against working from home, citing research and even anecdotes backing their positions.
That was until this week. Opposition Leader Peter Dutton swung from insisting all public servants would have to return to the office five days a week under the Coalition to saying current arrangements would remain unchanged .
But beyond political squabbles, what does the latest research – including our own on workers in Brisbane – show?
Working from home impacts multiple areas including transport, housing, business and health. A systematic literature review on working from home – covering international studies between 2000 and 2022 – shows it:
These are short-term effects, which may eventually disappear as society adjusts. The long-term effects are harder to predict because government and workplace policies change, as do economic conditions.
While working from home reduces the need for daily commuting, people may reallocate this saved time to off-peak trips for shopping or recreation.
As households move from urban cores, urban sprawl increases, resulting in less frequent but longer trips. This may lead to increased overall travel, offsetting environmental benefits. Marchetti’s constant may no longer hold.
The redistribution of activity zones may create new economic dynamics. Suburbs and regional centres may gain from more local spending, while areas with fewer shops may rely more on online shopping. Traditional CBDs could decline, needing new uses for office spaces.
Our new research – to be published in a forthcoming book in Elsevier’s series “Advances in Transport Policy and Planning” – assesses the short-term costs and benefits of working from home for individuals, the private and the public sectors in Brisbane.
Here, a big shift to working from home occurred during the pandemic. We’ve used secondary and proxy data from 2020-2021 when working from home peaked. During that time, Brisbane was in and out of lockdowns.
We’ve created an accounting tool that lists the costs and benefits of working from home. The net impact is calculated by subtracting total costs from total benefits, allowing us to measure tangible and, when possible, intangible effects.
We found individuals and the private sector gained the most, while the public sector has felt the greatest losses. Employees have enjoyed more benefits from working from home than expected, while employers have cut spending in CBDs and seen increased revenues in suburbs.
In Brisbane the total annual working from home (for individuals, the private and public sector) costs amounted to A$557.5 million, while the total benefits reached $4.1 billion. These benefits outweigh costs by a factor of seven.
However, this is a preliminary look, rather than a comprehensive account. It is important to remember the cost-benefit balance may evolve over time, depending on technological advances, corporate culture and generational preferences.
Based on our findings and assuming other state capitals perform like Brisbane, we recommend keeping work from home arrangements. But what about public sector losses?
While public transport revenues have been lower due to working from home, it doesn’t seem to be a major issue for South East Queensland. Here, 50 cent fares were introduced before the last state election and have since become permanent .
However, the budgets of public transport operators in other states might be different. In those cases, more proactive measures might be needed. This might involve shifting from peak-hour services to frequent all-day routes and adjusting fares for vulnerable customers.
Some agencies might offer demand-responsive services, like ride-sharing. If all public transport becomes financially unsustainable, community-based cooperatives could step in.
These shifts in transport patterns may prompt land-use changes. For instance, businesses relying on daily commuters, like restaurants and shops in city centres, may move to the suburbs or pivot to delivery, take-out or meal-prep kits.
In any case, not all jobs can be done remotely. Certain sectors, such as manufacturing, healthcare, justice and hospitality will continue to require employees to be physically present.
Dorina Pojani has received funding from the Australian Research Council, the Australian Urban Research Infrastructure Network (AURIN), the Queensland Department of Transport and Main Roads (TMR), and iMOVE Australia Cooperative Research Centre.
Neil G Sipe has received funding from the Australian Research Foundation.
Ying Lu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.