Newer companies have higher work-from-home rates, study shows

When it comes to working from home, age matters. That is, the age of the company. It turns out, working from home is more common at younger firms than it is at older, more established firms, according to a study out this week from the National Bureau of Economic Research.

Firms founded since 2015 had employees working from home nearly twice as often as firms founded before 1990.

“You know, there’s a saying: ‘Old dogs, new tricks,’” said Nick Bloom, a professor of economics at Stanford University who co-authored the study. “I think older firms kind of get stuck in their ways. If you look at a company, say, founded in 2000, 2005, they've had 20 years of basically coming in five days a week, and it's hard to change.”

Many of them switched to work-from-home at the height of the pandemic, but then called employees back into the office once they could. And workers didn’t love that, said Princeton’s Pablo Zarate, another co-author.

“Workers really, really value the option to work from home,” he said.

Even if it’s not five days a week, Zarate said employees want some flexibility. “People are willing to take a wage cut — like somewhere between 5%, maybe 10% to 15%, for the option to work from home.”

And that could give newer firms a hiring advantage over their older, set-in-their-office-ways counterparts, according to Claudia Macaluso, an economist with the Richmond Federal Reserve.

“Firms who are younger, who have less of an established track record with employees, will try to tap whatever helps them to attract talent,” she said.

Still, Macaluso said it’s important not to over-interpret the results of the study. Even the youngest firms had employees working from home just 1.5 days a week, on average.

“This is consistent with a lot of other things that see work-from-home become an important reality, but not the majority of work,” she said.

And that’s one reason Stanford’s Nick Bloom said the trend probably doesn’t herald the end of corporate office space. But it could impact another piece of the real estate market.

“The biggest effect — what we see in the data — is actually city-center housing. If I have to come in five days a week, I wanna live in downtown,” he said.

But three days a week? “ I might live out in the suburb, get a bit of space, get an extra bedroom for my kid,” Bloom said. And perhaps even a home office.