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The post-COVID productivity boom is going to let us dump the unproductive parts of virtual working and keep the good parts

Summary List PlacementThere's been a lot of writing lately about a surprisingly good thing to come out of this terrible year-plus we've all been living through: increased productivity. As businesses have been forced by the COVID pandemic to find new ways to do business remotely and adopt new technologies, we've...

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Summary List Placement

There’s been a lot of writing lately about a surprisingly good thing to come out of this terrible year-plus we’ve all been living through: increased productivity. As businesses have been forced by the COVID pandemic to find new ways to do business remotely and adopt new technologies, we’ve adopted practices that will remain useful long after the pandemic is over.

But I don’t even think this is the half of it.

At the same time we’ve learned more productive ways of doing things, we’ve also been forced to do less productive things. In many cases we’ve moved to remote operation when that is a worse imitation of the old, in-person model. You see this especially in schools, but I’m sure it’s happening throughout businesses and other organizations. We’re getting by over Zoom when we’d really do more efficient, higher-quality work if we could gather in one place.

This means that the arrival of the post-pandemic normal isn’t just an opportunity to keep the good new things we’ve learned, it’s a chance to throw out the bad new things we’ve been forced to do. Productive business travel will come back while useless business travel can go away forever. Workers who do better work at home will stay home while those who do their best work in the office will return to the office. Maybe even meetings that could be emails will stay emails, while meetings that really ought to be meetings will be meetings again.

Obviously, we won’t be perfect. Best practices are never universally adopted. But when we get to toss the bathwater while keeping the baby, we’ll have even more clarity on the benefits of forced experimentation.

Workers spending more time at home could actually increase the productivity of office buildings

Beyond simple things like moving certain meetings to calls, the pandemic could also produce increased productivity — economic output per hour worked — in ways that are not as easy to anticipate.

For instance, people talk about the possibility that changes in the way we work will decrease demand for office space in Manhattan and other central business districts. I think it’s also worth considering the possibility that less-congested commuting to the city, softer office rents, and the ability to use fewer square feet of office space per worker will combine to actually increase the number of jobs these districts can support, though with fewer in-office employee hours per job.

Obviously the effects of that shift will be different on different parts of the economy. Restaurants and shops that cater to office workers care about the number of workers in offices on an average day, not the total number of workers associated with those offices. Governments will have more intense disputes about exactly where and how a more-distributed company’s profits will be taxed.

But the broad upshot should be positive for the productivity: workers and firms using offices to the extent that helps them be their most productive, instead of being tied to them five days a week. Relatedly, the increase in home office use makes residential real estate more productive, with living space that used to sit vacant during the day now also serving as workspace. Achieving a better and more intensive overall utilization of buildings should be positive for productivity.

Productivity changes will change our infrastructure needs

To handle this newfound productivity, what workers and businesses need from the government will also change. expanded flexible work arrangements are already going to improve productivity in the form of reduced commuting — with workers either increasing work time or free time. But the possibility of more remote work — if many more workers start coming into the office three days a week instead of five — also provides opportunities to better use the transportation infrastructure we already have.

The possibility of fewer commutes per week is part of why I’m a skeptic about the transportation part of the infrastructure package Biden is proposing: Why is now the time to expand our investment in airports and transit systems when we don’t know how much of the recent decline in air travel and transit ridership will be permanent?

If fewer workers travel to existing Manhattan offices each day, expanding the capacity of systems like New Jersey Transit becomes less urgent. If there is a persistent decline in business travel, airport expansions are less necessary. This would also make the already-challenging logistics and economics of intercity passenger rail in the US even more challenging.

But it’s worth noting that spare transit capacity doesn’t mean all infrastructure spending is unwise, it also makes certain new projects more feasible. If subway lines into Manhattan are less jammed, that strengthens the argument for permitting the construction of more apartments near subway trains in Queens and Brooklyn. If the average worker commutes on fewer days, then there is capacity to support more commuting residents than before.

I’m all for construction, but all told if we don’t need to see each other in person as much, that probably means we should be building more buildings and fewer transportation facilities at the margin.

Now is a good time to build the right infrastructure

Interest rates are low and there is political support in Washington for increased capital investments by the government. I think that’s great — so long as the capital investments are cost-effective and aimed at the parts of the economy where they will do the most good.

Oddly, that makes me more bullish on the less-traditional parts of President Biden’s infrastructure proposal than the core transportation parts. The last year has shown the importance of broadband infrastructure. The rise of electric cars is going to require significant investment in both charging infrastructure and green electricity generation. Strengthening our power grid and de-leading water systems will both improve quality of life.

These are all good places to spend money, and some of them should even stand to enhance the productivity gains that we’re getting from learning how to adapt to a temporary need for increased physical distance. But we should make sure our infrastructure investments for the future are based on what our needs will be in the future, not what they were in the past.

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