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Earn It at Home, Spend It From Home

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Working from home once meant cutting yourself off from almost all the resources of the office. As a result, people with office jobs seldom did it. The rise of home computers and e-mail began to change that in the 1990s. As of 1995, a Gallup poll found that 9 percent of Americans had ever telecommuted ("that is, worked from home using a computer to communicate for your job"). When they asked again in 2006 that had jumped to 32 percent; in 2015 it was 37 percent.

Most of those people reported working from home only a few days a month, which is what I do. But the percentage of American workers toiling primarily from home has been rising too (if far less less rapidly), according to the Census Bureau:

Staying Home to Work
Share of employed persons working primarily at home
 
Source: U.S. Census Bureau

Shopping from home has a much longer history: Americans were buying clothing, guns, bugles and other essentials (even houses!) out of mail-order catalogs long before there were malls to go to. But the rise of online retailing has occasioned a big shift in retail sales toward what the government calls "nonstore retailers," which is mostly e-commerce:

Staying Home to Shop
Nonstore retail sales as a share of total retail sales
 
Source: U.S. Census Bureau

As you can see in the chart, nonstore retailing's growth has actually accelerated recently. And this doesn't even capture the full extent of at-home consumption, with virtual purchases such as Netflix subscriptions and game downloads not showing up in the retail data.  

This evidence of a shift toward working and consuming at home probably does not surprise you. It was widely predicted back in the 1990s that something like this would happen as the internet made it easier to connect to the world remotely. In fact, it was probably overpredicted (remember "cocooning"?). People apparently still do feel the need to physically interact with others in-person, at work and in other endeavors. Many employers have encouraged telecommuting, but from time to time some have dramatically backtracked. And far from withering away as the "death of distance" made location less relevant, big cities have actually become bigger and more economically important.

It could be that this is yet another example of novelist William Gibson's famous saying that "the future is already here -- it's just not evenly distributed." The ability to work from home definitely isn't evenly distributed: The 2015 Gallup poll I cite at the beginning of this column found that 55 percent of college-educated respondents had telecommuted, and only 26 percent of non-college-graduates. But as economists predict that hands-on service jobs will prove harder to outsource overseas or replace with robots than even skilled white-collar work, it may be that we're already nearing the limits of how much work can be done from home by people of all education levels.

Then again, while I'm trotting out overused digital-age aphorisms, this could also be one of those cases where we "overestimate the effect of a technology in the short run and underestimate the effect in the long run." In terms of consumption, I think we're still in the early stages of the digital reordering of how we shop and what we buy. I got started on this topic because data released Monday showed that vehicle miles driven, while up a lot during the past couple of years of low gas prices and strong job growth, is still below its 2005 peak in per capita terms. Per-capita public transit ridership is down, too. The rise in working and shopping from home is surely a cause of this decline in getting out and about. Don't be surprised if it brings other big changes, too.

  1. And yes, I wrote this column, and made all the charts, at home. I had actually been planning to go into the office this morning, but given the column topic it seemed only right that I should do it remotely.

  2. The 2000 and 2005 numbers are from a 2012 Census Bureau report on home-based work. The more recent data is from the bureau's American FactFinder site. Another compilation of census data by the consulting firm Global Workplace Analytics finds that the rise in home-based work has been entirely among employees; there are actually fewer self-employed workers working at home than there were a decade ago.

  3. The category includes door-to-door sales, vending machines and products sold through TV infomercials, but other, less-frequent retail sales data indicate that it's about 70 percent e-commerce. 

  4. It's generally counted as spending on services instead.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Stacey Shick at sshick@bloomberg.net