Government Research Reveals the Remote Work Productivity Revolution
The COVID-19 pandemic acted as a catalyst for one of the most dramatic workplace transformations in modern history. Remote work, once a privilege limited to a small segment of the workforce, became a necessity for businesses to survive. In 2019, only 6.5% of workers in the private business sector primarily worked from home. By 2021, the percentage had surged, reshaping industries and raising questions about productivity’s fate in this new work environment.
A recent study by the U.S. Bureau of Labor Statistics (BLS) sheds light on the relationship between remote work and productivity. Analyzing 61 industries across the private sector, the study found a positive correlation between the rise in remote work and Total Factor Productivity (TFP), even after accounting for pre-pandemic trends. This report joins a comprehensive May 2025 report from the nonpartisan Government Accountability Office (GAO), titled “Telework: Private Sector Stakeholder and Expert Views,” which also presents compelling evidence that these return-to-office (RTO) mandates may be misguided. These findings make the recent efforts to reverse remote work and get all staff back into the office, whether by corporate giants like Amazon or the Trump administration, especially concerning, since they would thus undermine American competitiveness.
A Surge in Remote Work Across Industries
The ALS American Community Survey (ACS) shows that remote work participation grew across every major industry between 2019 and 2021. This trend was particularly striking in four sectors: professional, scientific, and technical services; information; finance and insurance; and management of companies and enterprises. In these industries, the percentage of remote workers increased by over 30 points, from less than 17% in 2019 to more than 39% in 2021. By 2022, even after the lifting of social distancing measures, remote work participation in these industries remained above 33%.
At a granular level, some industries saw even more dramatic changes. In sectors such as computer systems design, data processing, and publishing, between 50.2% and 62.5% of workers were remote in 2021, compared to just 15–20% in 2019. Over 40% of workers in securities, funds management, and scientific services also transitioned to remote work.
By 2022, the top industries retained high remote work participation, with over 46% of their workforce continuing to work from home. Across all 61 industries studied, 44 had more than 10% of their workforce working remotely in 2021, underscoring the widespread nature of this shift.
Remote Work Productivity and Total Factor Productivity Growth
One of the key measures in the BLS study is Total Factor Productivity (TFP), which evaluates how efficiently labor, capital, and other inputs are used to produce output. From 2019 to 2021, a 1% increase in remote work participation was associated with a 0.08% rise in TFP growth. This relationship strengthened slightly in the 2019–2022 period, with a 0.09% increase observed.
While the overall trend points to productivity gains, the impact varied significantly across industries. For example, funds management and other financial services saw a 10% increase in TFP during the pandemic, compared to a slight decline pre-pandemic. Conversely, some industries with lower remote work participation did not experience the same benefits.
The study also found that industries with the largest increases in remote work tended to outperform others in terms of productivity growth. From 2019 to 2022, the average industry-level increase in remote work participation was 11.8%, contributing to a 1.1% rise in TFP.
For industries like computer systems design and data processing, output increased significantly faster than labor input, showcasing efficiency improvements. In other sectors, such as broadcasting and telecommunications, output rose while labor input either stagnated or declined. This trend illustrates how remote work allowed industries to do more with less, further driving productivity gains.
The reasons for this positive association include cost savings and operational efficiencies. Businesses with more remote workers reduced their reliance on physical office spaces, leading to lower expenses on rent, utilities, and maintenance. Additionally, reduced turnover due to higher employee satisfaction contributed to productivity gains.
Remote work allowed businesses to cut costs in several areas. Many businesses downsized their office footprints, reducing overhead expenses. Reduced on-site workforce meant lower energy and maintenance costs for facilities. Lower turnover due to higher job satisfaction reduced the need for frequent hiring, saving firms additional costs. A notable example comes from industries like broadcasting and telecommunications, where businesses cut unit office building costs by more than 20%. Across the board, a 1% increase in remote work participation corresponded to a 0.4% decline in unit office building costs.
Despite the productivity gains associated with remote work, these benefits were not reflected in higher hourly compensation for employees. The BLS study found no statistically significant relationship between increased remote work and real hourly pay. This disconnect suggests that businesses reaped most of the financial rewards from enhanced productivity. However, workers experienced indirect benefits, such as avoiding lengthy commutes, saving both time and money.
The rise in remote work also influenced nonlabor costs across industries. The study observed a significant decline in unit capital, energy, material, and service costs as remote work participation increased. These reductions ranged from -0.2 to -0.4%, with the strongest impact seen in industries with substantial remote work adoption.
Conclusion
Remote work has proven to be a game-changer for productivity, with the BLS study highlighting a clear and positive relationship between telework and TFP growth. By enabling cost savings and operational efficiencies, remote work contributed significantly to the resilience of businesses during the pandemic. As industries continue to adapt to this new normal, the role of remote work in shaping productivity, cost structures, and employee satisfaction will remain a critical area of focus. The question now is not whether remote work is here to stay, but how organizations can optimize its benefits for both businesses and employees.
Image credit: Kindel Media/unsplash
Key Take-Away
Remote work productivity surged during the pandemic, with studies showing a strong link between increased telework and industry-wide efficiency, cost savings, and TFP growth—challenging the push for full return-to-office mandates. Share on XDr. Gleb Tsipursky was named “Office Whisperer” by The New York Times for helping leaders overcome frustrations with hybrid work and Generative AI. He serves as the CEO of the future-of-work consultancy Disaster Avoidance Experts. Dr. Gleb wrote seven best-selling books, and his two most recent ones are Returning to the Office and Leading Hybrid and Remote Teams and ChatGPT for Thought Leaders and Content Creators: Unlocking the Potential of Generative AI for Innovative and Effective Content Creation. His cutting-edge thought leadership was featured in over 650 articles and 550 interviews in Harvard Business Review, Inc. Magazine, USA Today, CBS News, Fox News, Time, Business Insider, Fortune, The New York Times, and elsewhere. His writing was translated into Chinese, Spanish, Russian, Polish, Korean, French, Vietnamese, German, and other languages. His expertise comes from over 20 years of consulting, coaching, and speaking and training for Fortune 500 companies from Aflac to Xerox. It also comes from over 15 years in academia as a behavioral scientist, with 8 years as a lecturer at UNC-Chapel Hill and 7 years as a professor at Ohio State. A proud Ukrainian American, Dr. Gleb lives in Columbus, Ohio.