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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 percent of workers in the private business sector primarily worked from home. By 2021, the percentage had surged, reshaping industries and raising questions about productivity in this new work environment.
A study by the U.S. Bureau of Labor Statistics 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, even after accounting for pre-pandemic trends. This report confirms the findings of a comprehensive May 2025 report from the nonpartisan Government Accountability Office titled “Telework: Private Sector Stakeholder and Expert Views,” which also presents compelling evidence that today’s return-to-office mandates may be misguided.
The findings make recent efforts to reverse remote work and get all staff back into the office — whether by corporate giants such as Amazon or the Trump administration — especially concerning, as they would thus undermine American competitiveness.
The ALS American Community Survey 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 more than 20 points, from less than 17 percent in 2019 to more than 39 percent in 2021. By 2022, even after the lifting of social distancing measures, remote work participation in these industries remained above 33 percent.
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 percent and 62.5 percent of workers were remote in 2021, compared to just 15–20 percent in 2019. Over 40 percent 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 more than 46 percent of their workforce continuing to work from home. Across all 61 industries studied, 44 had more than 10 percent of their workforce working remotely in 2021, underscoring the widespread nature of this shift.
One of the key measures in the study by the Bureau of Labor Statistics is total factor productivity, which evaluates how efficiently labor, capital and other inputs are used to produce output. From 2019 to 2021, a 1 percent increase in remote work participation was associated with a 0.08 percent rise in total factor productivity growth. This relationship strengthened slightly in the 2019–2022 period, with a 0.09 percent increase observed.
While the overall trend points to productivity gains, the impact varied significantly across industries. Funds management and other financial services saw a 10 percent increase in total factor productivity during the pandemic, for example, 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 percent, contributing to a 1.1 percent rise in total factor productivity.
For industries such as 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.
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 such as broadcasting and telecommunications, where businesses cut unit office building costs by more than 20 percent. Across the board, a 1 percent increase in remote work participation corresponded to a 0.4 percent 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 percent, with the strongest impact seen in industries with substantial remote work adoption.
Remote work has proven to be a game-changer for productivity. 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.
Gleb Tsipursky, Ph.D., serves as the CEO of the hybrid work consultancy Disaster Avoidance Experts and authored the best-seller “Returning to the Office and Leading Hybrid and Remote Teams.”
