Remote Work Has Saved Us Over $90 Billion Dollars
As I wrote about on Tuesday, Americans have been saving at levels never seen before due to the COVID pandemic. Some people are saving because they’re eating out way less, others because they’re not traveling for vacation.
But the massive shift to remote work has been a huge driver of savings. A new study by Upwork found that those who shifted to remote work for 120 working days saved an average of $2,000 each, for a total collective savings of approximately $22 billion dollars.
And that’s just the direct cost savings. If you add in externality costs such as the reduction in lost lives and property damage from car crashes, the environmental cost of pollution, and congestion costs, the collective savings jumps to approximately $40 billion.
Then if you add on the time savings of not commuting with a commonly used assumption of $12.50 per hour, the total costs saved by Americans due to remote work is about $91 billion.
Here’s what that breakdown looks like.
Upwork could have spelled “pandemic” correctly in their graphic, but you get the picture…
And let’s not gloss over the “savings from loss of life” part. We’ll have to wait a while for official statistics, but no doubt thousands of lives have been saved due to reduced driving.
Remember that car crashes kill about 36,000 people per year, and an additional 7,000 pedestrians and cyclists are killed by drivers. That’s about 43,000 lives lost every year. It’s virtually impossible to put a cost on the reduction in these numbers we’ll (hopefully) see for 2020.
The Big Three
As savvy financial warriors, my readers know that the “big three” costs for most families in America are housing, transportation, and food, in that order. For most, transportation costs primarily come from car ownership and all of the negatives that come with it.
And of course most Americans also commute way too far to work (in non-pandemic times), with detrimental effects on their wallet as well as their physical and mental health.
This Upwork study shows the massive savings and benefits that come from a reduced dependency on cars. I haven’t even touched on the benefits to the environment and planet with the improved air quality and reduced CO2 emissions. So even if you were already a remote worker prior to COVID, you’re benefiting from the remote work of others.
Reality Check
Someone reading this might be getting the impression that I’m happy about the pandemic because it’s reduced traffic and improved air quality. I’ll be clear, no I’m not happy about COVID in any way shape or form and am fully aware of the tragedy and loss of life.
But every dark period has valuable lessons to teach, if and only if we’re willing to be honest and learn. If companies out there care about their employees and the environment (and some surely do), then they should allow employees to continue working from home after COVID is gone.
It’s clear that remote work during this pandemic and many of the associated benefits that come with it is a subject we’ll be studying and learning from for a long time to come.
I think this pandemic accelerated the transition to working from home.
I think companies will realize that productivity really did not drop and there can be major cost saving in future if they can eliminate office space.
Of course some businesses can not operate from home and will remain as is. But there will be a shakeup in industries that can go 100% to a stay at home work force. They will gain advantage in hiring as well as most workers would love to avoid the commute and expenses you mentioned.
It accelerated it big time but I’m still cautiously optimistic about what if any changes will stay in the long run once COVID is past us. I want to believe we can change
Dave — your holistic view of savings is great, especially since you look at externalities that too often still get left out of the equation. Sure, intangible things can be difficult to put a price on, but a lot of work has been put into doing so over the last ten-plus years and it’s increasingly easy to have a figure or a range of figures people can use to discuss such things.
One thing it would have been great to measure accurately is the mental health benefits many experience in working remotely. Unfortunately — in many ways –, the shift has happened due to a pandemic that isn’t just a physical health issue but also a mental health issue. The effects from confinement, the closure of restaurants, cultural venues, etc., worry about one’s personal safety and that of those close to them, the loss of jobs for many, and the whiplash effect of going from normal to pandemic conditions pretty much overnight have all had a psychological cost. I don’t think anyone can reliably measure the emotional toll the pandemic has taken, and that ultimately makes it impossible to gauge how much benefit remote working has brought to people on an emotional scale.
It would also be interesting to see, for people who don’t like remote working (a few people in my department really dislike it), the emotional cost the situation represents for them.
What a great comment – nuance! I joke that Twitter and social media are “nuance deserts” and our black/white/right/wrong modern society is increasingly becoming devoid of nuance. You bring up enough great points for an entirely separate post 🙂
Firstly, yes it’s impossible to measure mental health without massive subjectivity, and the increased mental health from no commute and road rage could well be canceled out by the pandemic fears, loneliness, social isolation etc. I think data has shown that suicides have increased since March and mental health is being impacted for sure. But another way to look at this is – how much is that being “buffered” or lessened by the lack of a commute for many? Maybe it could be worse.
And many at my job hate remote work, I find those folks usually fall in one of two camps. They’re strong extroverts who use work as a big part of their friendship network, or they have a less than desirable home life (unhappy marriage etc). The focus of my post was to just show the money savings from WFH from this report, but of course everything has nuance and two sides and thanks for the very thoughtful comment!
In sustainability, nuance is the name of the game since you have to use it all the time to show how preconceived notions don’t always give a full picture of why and how something should and could change. I sometimes worry that I’ll eventually forget how to not get bogged down in it. 🙂
But I’m definitely with you on the whole “my quality of life increased a ridiculous amount” since working from home was the norm. No nuance whatsoever on my end — I absolutely dread the return to an office. And if it weren’t for my position as team leader having to herd everyone toward the same goal of getting stuff done, I would never have thought that anyone would miss office work. And yet, I’ve seen how a couple of people have just withered as far their engagement goes. But you bring up really good points of why that is for some people — thanks for the (further) food for thought!
I work in tech but outside silicon valley and have been working from home for the most part for close to 15 years. Agree with all the above but what has been hard is the loss of personal connection i used to get from the occasional “offsite” mtg or conf where id meet up with colleagues I haven’t seen all year. So far this year all those events have been virtual. Just not the same. That said im sure our company is saving millions on travel hotel and conference costs….but where we save others in those industries are hurting or outright losing jobs maybe permanently.
You bring up a great point and as I replied to decoderringmtl above there’s 2 sides to everything. I’m mostly an introvert but that doesn’t mean I don’t like people and I admittedly do miss seeing a few of my colleagues. Everything in life should have balance and going 100% one way or the other with remote work isn’t a great idea.
Spot on as always. No doubt COVID has me working from home since mid-March and my savings went up by double digits. However, I noticed that the decreased spending from restaurants, professional clothing, vacations category has shifted to home maintenance/upgrades. Being at home all the time makes the little things you always dislike become a pure nuisance…i.e. old patio furniture cushions, drafty windows, ugly bathrooms, landscaping. The big learning is that I could live on a very low core budget and still have a great quality life. COVID has certainly gave me a trial run on my FIRE plans and I’m loving it.
Haha, funny you brought up patio furniture cushions. Just an hour ago I was on Amazon trying to find a new cushion to fit the wrought iron bench on my patio by my koi pond. The existing cushion has been ravaged by our east coast heat and humidity, as well as bird poop and other nasties.
I have been doing WAY more home projects than usual, and kind of enjoying it. I’ve also used this time to repair and clean my massive stash of outdoor gear – from rock climbing and mountaineering gear, to cycling stuff, to paddling gear, there’s always something with a broken latch or handle, or just plain dirty, or in need of sharpening. I like taking care of my stuff and the pandemic has given me time back to do that. Silver linings.
Hi Dave-Great post here! It’s definitely helpful to read about some of the positive changes stemming from this pandemic. So many large companies have announced that they are going full remote or expect a large percent of their employees will continue working remotely for the foreseeable future.
I believe we will see a surge in entrepreneurial and creative activity coming out of the pandemic as more and more people work from home and look for creative solutions to problems.
Yes! I agree with your last point 100%. Right now there’s a super smart kid out there so frustrated with Zoom or Skype and remote learning that he or she is coding a new version on the side, or coming up with a whole new idea about how to do it better. I know that’s happening, because that’s the story of innovation throughout history.
Companies also will save a lot in the future. They can reduce office space and let most employees work from home.
It’s a move in the positive direction. My wife used to like working at the office, but she loves working from home. It’ll be hard to get people back into the office when things are back to normal.
Great point Joe, I didn’t even discuss the savings to companies. In a competitive capitalist culture you’d think they’d be taking notice, let’s hope so.
My partner and I love working from home 100% as do most of our friends who are neither parents of young children or single. My experience is shaped by my family/household but I also have wondered if I would feel differently if work had become fully remote earlier in my career. Most of the friends I have made in adulthood are former colleagues. We created these relationships in person and they have been fairly easy to maintain at a distance. What if my network hadn’t yet been fully formed, or I wanted to build stronger relationships with my colleagues, boss, or boss’ boss? I’d be uncertain about how to proceed solely through email, Slack, and Zoom.
I also wonder what is going to happen if everyone is working remotely and it becomes time to hire new people. I’m having a hard time working out in my head, as someone who’ll eventually have to be part of the process of bringing a new person on board, how to create the right conditions for the new person to really integrate into the new team and for the existing team to create a real space for the new person.
You’re right — those social interactions are hard to reproduce in adulthood.
Yet another great point about bringing new people on board during this crazy time. My agency is still hiring, and I really feel for the new folks who are going to have a harder time meeting people/mentors to get their career started.
I have hired and trained interns and employees who only worked remotely (for some inconsistent reason, I was still required to report to an office) and I imagine it would really hard to build a cohesive team without any in-person interaction. I have become friends with some colleagues who work remotely, but I can trace it to a turning point like interactions at an in-person meeting or conference that provided a foundation for that to occur. If others have experience with building teams exclusively through remote means, I’d be eager to read about them!
Man, another awesome comment to chew on! I’ve never thought about it from that angle – what if I never met some of the great friends I have from work because I worked remotely? It’s of course possible to still become friends with someone over Zoom or Slack or whatever, but those virtual means might not foster connections based on the same traits or commonalities as would happen in person. Thanks for giving me another angle to ponder!
i can say i’ve been happy with no school busses the past 6 months on my 13 minute commute which is now down to 12. right now i like going into the lab for work but might try and find something remote in retirement. it would be good not to have to live near manufacturing.
dude you brought up a huge one for me – the lack of excessively loud and polluting school busses belching their toxic smoke up and down my street in the mornings and afternoons has been BLISS! Half of the kids on the bus live close enough to the school to walk anyway, and those things are carbon-belching planet killers that also damage your hearing.
There is going to be an absolutely enormous trove of data to wade through once the pandemic receeds into the background and time has passed. We’ve got one helluva experiment running in terms of the environmental and health impacts from commute reductions and working from home more generally. There will be insightful findings as it relates to productivity, relationship health, innovation, and consumer demand.
I have no doubt data scientists are practically salivating at the idea of what can be gleaned from such a massive and sudden experiment. It’s a tradgedy that it’ll come at such a cost.
$90B is nothing to sneeze at, but boy it pales in comparison to the economic cost of the pandemic more largely — I think that Q2 GDP decline equated to just about $2T or about 22x more. Still, we may find some significant economic efficiency gains that we can carry forward without reducing economic production in the long term.
Yep, we’ll be seeing studies from this for along time to come. And thanks for putting the $90 billion in context with the economy as a whole. If anything I hope the study’s results and the $90 billion number can show people how much car transportation really costs them – not just in gas/tires/maintenance, but with all the other factors added in as well.
I am optimistic that we’ll end up on the positive side of things post pandemic. I think a lot of companies will realize that they don’t need 100% of the employees to come to work to be effective. If people can work remotely 50-80% of the time, that will cut down a lot of commute time for employees. This will reduce a lot of CO2 emissions. Furthermore, companies don’t need as big offices and these spaces can perhaps convert to residential spaces.
Yep, and we’ve all heard about the new facility that REI had built, only to sell it to Facebook for $368 million before ever moving in. They’re looking to the future, so it’s already starting.
I’m optimistic as well that this situation will have produced tangible evidence to employers that many folks can work from home and be equally, if not more productive. In addition, they will realize the economic benefit of reduced overhead expenses for offices, etc. I believe there will be some contraction once things normalize, but, like you say, this has and will be a great test case to prove that the wheels won’t necessarily fall off the wagon if everyone isn’t all at the office.
I love your optimism, and some contraction is obviously going to happen, probably quite a bit. But even if we can get 30-40% of folks (who can) working from home on any given day the savings to them and to pollution and car deaths would be huge and benefit everyone.
There certainly have been a few changes around here of late… $90 billion is a very big number!
I’ve heard about data from a few fortune 500 that say productivity has roughly stayed the same, and other big companies hinting that productivity has declined. It’ll be interesting to see if they’ll ever publish that data to the public.
Personally I hope companies transition to a “mixed model” once the pandemic wanes… like 3 days onsite, 2 days offsite… or 3 days offsite and 2 days onsite. I’m sure it’ll depend upon the business of course, but it’ll be interesting to see how the world changes from here.
I agree, the mixed model is optimal, it gives employees enough face time and social stimulus but equalizes it with quality of life and savings.
Being a nurse, I wish I could experience all the benefits mentioned here. My commute, etc. hasn’t changed; instead, just the risks of going to my job have increased. Anyway, I made my choices, but this serves as great motivation to start looking to leave bedside nursing as soon as possible.
You have a tough job – thanks for what you do and good luck if you decide to change careers!