Natalia Emanuel: What We Lose When We Stop Working in the Same Room

Ben Zweig: Remote work made a lot of things more efficient. My guest today is researching what it takes away from us. Natalia Emanuel is a research economist at the New York Fed and author of "In Person, How Working Together Fuels Creativity, Productivity, and Growth." Here's our talk. Welcome to the Economics of Work. I'm excited to welcome Natalia Emanuel, research economist and author of the excellent book, "In Person." Got it right here. Natalia, welcome to the show.

Natalia Emanuel: Thank you so much. I'm really excited to be here.

00:27 Where the value of working together comes from

Ben Zweig: Yeah, for sure. Happy to have you. So, so the subtitle is, "How Working Together Fuels Creativity, Productivity, and Growth." Can you like give a breakdown of like, what are the value, what are the sources of value from working together? And like, how do those break down as you see it?

Natalia Emanuel: So I think it helps to start with actually the neuroscience, which is that a bunch of scholars have done experimental work where they have two people in a room having a conversation and they put on them these little hats that have electrodes in them, where they can see what's going on in the brain. And what they find is that when we're having a conversation, our brains light up like Christmas trees, but what's cool is that the two people who are having the conversation, they light up in synchrony. They light up together. They can trace out nine different paths between the two different brains that are really working together in that conversation. However, when you're having a conversation over Zoom, for example, you lose 90% of that neural synchrony. So there really is something at a neurological level that is more powerful in person. And we see this then translate into more creative ideas, where you can track it straight into patents. When people are working together, you have more patents. And then that leads to innovation and growth. And then you have this whole other segment of research studies looking at productivity, where you do find that when people are working from home, particularly more senior workers who really, they know the ropes, of course, they can do it backward, blindfolded, they check off a lot more of their to-do list when they're at home. But when you look at the quality of work, you see that going down. And you see partly because you have these junior workers who aren't as good, don't know what they're doing, and their quality goes down. But also when you have really complex tasks that do need that creativity, that need alignment, that need people coming together and agreeing on what exactly to put on the to-do list, that is where you really get the benefits of in-person. And so I think there is the piece of creativity. And then that's just creativity really and alignment do show up in so many different parts of your work.

Ben Zweig: Yeah, I mean, I love the imagery of the mental synchronicity or a synchronization, whatever it is. It kind of reminds me of-- do you know this improv game where people start saying a word that associates and then they try to-- I'm kind of butchering it. But two people say a word. They say totally different words. And then they say words that are closer to what the other person was saying. And then they try to say the same word.

Natalia Emanuel: No, I don't know this game, but I like it.

Ben Zweig: Yeah, I mean, I think it might even be called mental synchronization or something. It's a way to kind of get-- or mind meld. I think it's called mind meld.

Natalia Emanuel: Get people really aligned, right?

Ben Zweig: Yeah, yeah. Anyway, so that would be very hard to do over the phone. You're locked in and looking at the screen.

Natalia Emanuel: Well, that's actually one of the things that's interesting. Yes, you're mind melding, but it's not as though you're actually perfectly-- you lose creativity. You actually see an increase in the creative ideas that people generate when they're in person. And so, yes, you are more in sync with other people, which is better for alignment. But that actually fuels creativity and different ideas.

03:54 Ideas at the intersection

Ben Zweig: Yeah, it kind of reminds me of this quote. You know the quote, like neurons that fire together wire together? So yeah, I mean, it's like-- I think the way I've always understood that is for one person. If you're thinking in this domain, if you're thinking in that domain, and they're just firing, then you kind of think more at the intersection. And in my mind, that's like almost definitionally what innovation is. And I wonder if that's true between people also. Like if you're aligning, but you're coming from different places, then you have ideas at the intersection of those mental places where you are.

Natalia Emanuel: I think that's absolutely true. I think that's correct. That does seem that when people interact with people who are doing slightly different work or have different backgrounds, that's when you get the real aha moment. So one of my favorite studies looked at Silicon Valley before people were worried about their cell phones tracking where they are. So they're using GPS data from cell phone tracking before people turned it all off. And what they can see is that when people from different companies happen to meet up, because the go-to bar happens to be between their companies. So I work at Apple. You work at Google. And the climbing gym or the bar happens to be between us. We have a greater likelihood of connecting with one another. And when there are those hot spots where people really do connect, you actually see greater patents from each of our respective companies that are citing the research from the other company. And that indicates that these people are meeting, they're connecting, and they're having these creative ideas that are drawing on the other person's research. And that really does tell you that you could be having this different background. And that's what's sparking this innovation.

05:50 Agglomeration and the office as a public good

Ben Zweig: Yeah. It kind of reminds me of this research on agglomeration in general, like why are cities so productive? And I don't really know-- I haven't totally followed the state of the research on this. But I vaguely remember. You would know better. So correct me if I'm mistaken. Is that a lot of that agglomeration effect comes between firms. And it's not really coming from within firms as much as one might think. So the proverbial water cooler isn't necessarily to mingle with people that you work with. It can also facilitate collaboration across different firms or teams within a company.

Natalia Emanuel: I mean-- Yeah, absolutely correct. And I think that's one of the reasons why it's a little bit concerning that you see these big cities, the New York, the San Francisco's, their foot traffic has not recovered. It's still down about 25%, even years after the pandemic, relative to what it was in 2019. And when you think about all of this innovation was happening at the climbing gym, it was happening at the bars, that suggests that we have a bit of a problem. And in fact, this paper even shows that on days when people are working from home-- because again, they can track individual people. They don't leave their home based on their cell phone not leaving their home-- you have a much lower likelihood of interacting with these people from different companies.

Ben Zweig: Interesting. So that seems to imply that working from the office, return to office, is in some way like a public good. Maybe there's some benefit to the employer. And I want to go back to this productivity effect because it's so interesting. But so there's like, let's put that productivity aside. But then there's this productivity spillover when a bunch of people come into the office. Then they learn from each other and you get these agglomeration spillover effects. Is that more dominant in your mind?

Natalia Emanuel: Than within company benefits?

Ben Zweig: Than the direct effect. Yeah.

Natalia Emanuel: I think it's under-discussed. I think it really does matter. And I think it matters sort of palpably, that you go into the office and it is, of course, lonely to be in the office and take Zoom calls. But then also, if you don't want to go for after hours drinks or fries or soccer game, that also feels a little bit lonelier. And so I think people are aware of it on an intuitive level, but I don't think it's entered the discussion. And I do think from a macro perspective of how do we think about innovation within our cities and within our economy at large, remote work has a large negative impact.

08:41 What remote work costs junior and senior workers

Ben Zweig: Yeah, interesting. So I want to get to these productivity effects. So you mentioned young people are getting less mentorship. And there are these older people who know the ropes. They are also innovating less and doing a worse job at some of the more complex stuff. But at the same time, they're also producing more kind of quantity. Yeah, can you just help me break down what is the chain of events that leads to lower productivity from younger workers? And what's the chain for older workers to the extent that it's different?

Natalia Emanuel: Absolutely. So we did a study looking at software engineers, but you see this in many other places as well. And we were tracking digital feedback that they give each other on each other's code. And what you can see is that when two co-workers are working together, they give each other a baseline amount of feedback. But when they're separated from one another, they're not sitting in the same building. Even if there's only different buildings on the same campus, that written feedback goes down by about 20%. And that's just written feedback. Imagine what would happen if we were able to measure verbal conversations or the tacit knowledge that you gain just by being around other human beings and watching how they're doing things. And then we see that show up in the quality of these young workers' code that they produce. We see when they're not sitting next to one another, there are more bugs. There are more programs that they produce that aren't actually useful and get very quickly deleted. And so we really see a cost to young workers in the work that they are producing. Yet for those senior engineers who would have been doing the mentoring, there's a finite number of hours in the day. And so if they're doing less of that mentoring when they are working remotely, they are able to just produce more code of fairly average quality, like no worse per se. And so the real caveat that I want to think about when we think about those senior workers is for very complex things where you do need a lot of alignment, that's where I worry a lot about remote work. Because reaching alignment is much more efficient and much more successful when you are in person. And then especially as technology is moving forward and you need to learn new things or you're meeting new clients or what have you, then really being in person does matter for getting up to speed quickly on those things. And so the things where, yeah, you know your job, but you might not know this particular technology, this particular client, you do still need a little bit of that in person to make sure you're ramping up efficiently.

11:31 Should mentorship be unbundled?

Ben Zweig: Yeah, I mean, one thing I wonder about that makes me a little cautious about this sort of direct effect or sort of reading too much into this direct effect-- I'm curious to hear your take on it-- is that pre-pandemic, we had systems of work. You had the office and all the workers and you have a worker's mentorship and code review and all this stuff. And post great resignation, let's say, you had a lot of people kind of resorting into companies that fit their style. And also new technologies and new ways of working and whatever. And maybe there are systems that can accommodate different ways of learning. And I guess I think about Luis Garicano just wrote a book, "Messy Jobs," where he really talks about the idea that when young workers are working in a company, they're getting paid to do something. But they're also getting trained. And that is a form of compensation in a way. And I guess it's not so related to the messy jobs concept, but it happened to have been in the book. But it kind of made me think that those things are bundled, presumably for a reason. But what if they were unbundled in some organizations? What if the training part of it, the mentorship, were just more direct? Maybe you had some-- not all senior employees are good mentors. Some are really bad. And maybe the people that are the better mentors should be paid more for mentorship. I don't know. Maybe this unbundling could be nice. Yeah, what do you think?

Natalia Emanuel: I absolutely think that there is room for unbundling and room for making these things that are often offered out of the goodness of people's hearts because it is hard to measure mentorship, that we should work to concretize them. There's an example that I love of-- we were talking to a corporate lawyer, and she was saying, look, when my first case I was on, the senior partner was a person named Carl. And he just has such a flair for the theatrical, that sometimes he would go in all confident, a little cocky, and just sort of own the room by doing that. But at other times, he would play the bumbling fool and really just make it seem as though he had no idea what was going on. And by sort of inhabiting these different personas, was able to really get the best deal for his client. And she made this very acute observation of, in law school, they don't actually teach you theater. And I hadn't realized that was something that was really important for my job. And so I do think there's a component in which not everything that's really essential for your job is quite codifiable that way. And so it's hard to perfectly unbundle those things. That said, I do think it's very important that we do acknowledge the importance and value of the effort that people put into investing in one another, and to the extent that it is possible to really reward that. And sometimes you might have a teammate that is not particularly talented that way, as you say. And maybe they should be focusing only on their own work. And that's why you have IC positions where you're just an individual contributor.

15:18 Different needs for younger and older workers

Ben Zweig: Yeah. And I mean, I always felt like I learned a lot from peers more than my managers. Now, maybe that was sort of unique. I don't know if that was true for everyone. But I guess I wonder when we think about this channel of how people learn on the job, I wonder if it is possible to kind of rethink the mix of how much comes from more senior employees and how much comes from younger employees. And I guess the implicit concern here is that the benefits to being remote for older workers seem to be quite high. It's easier for child care. I mean, I'm just thinking, as someone with young kids, it's very hard to come to the office. There's a big cost. And so given that there's differential costs and benefits between younger and older workers, I wonder if there's some new equilibrium that should shake out that's not just sort of-- that's not full return to office, that's not-- maybe there's different systems that should emerge. What do you think?

Natalia Emanuel: And to be clear, the title of the book is In Person because I want people to focus on, are you actually connecting with individuals face to face? It's not in office. I'm not saying that you need to spend five days a week in the office. And so I do think that there are ways that you bring up parents. We both have young kids. And that parents are able to maybe get the benefit of being both in person with their kids and in person with their colleagues. And trying to find a way that you can really optimize both is, I think, the goal that you might have in mind. To be clear, I do think that one should learn from colleagues, be they peers, mentors, or even people who are nearing the sunset years of their career. And so being able to make sure that you have that flexibility is really a matter of making sure that you're coordinated. That the person who has a three-year-old, five-year-old should probably still come into the office to make sure they're in the loop, make sure that they are aligned with exactly where the team is going. But they might leave at 3 PM so that they can do pick up and have dinner with their kids. That might not be the right division of time for the person who is 23 or the person who is 63. And so I think as long as you're able to make sure that, yes, we are in the office on the same days, and up until 3 PM, we are present and are able to have those conversations and be in the same space working together, that still might capture most of the benefits for most of those people.

18:13 Fathers, childcare, and remote work

Ben Zweig: Yeah. So if we just think about shifting away from the prescriptive, what might be best, and just thinking why did this happen? Obviously, the pandemic was really big. But one other thought, and just going back to this childcare thing, relative to a generation ago, dads are spending a lot more time with their kids than in previous generations. And I guess that was more of a secular trend. And I don't know if that's due to childcare just getting worse, or different norms in society, or something. But I wonder if you think that might be playing into why remote work has persisted to the extent that it has.

Natalia Emanuel: That is an interesting theory that I have not heard before, but I really do like it. My favorite anecdote-- or not anecdote-- piece of data on time use with parents is that fathers have increased their time with kids. But if you look in the time use data, you haven't seen an according decrease in the amount of time that moms are spending. So now we just have a lot more parental face time, which I think is in some ways amazing for kids. But it does then put a strain--

Ben Zweig: Or maybe bad for kids. I don't know.

Natalia Emanuel: Depends, I guess, what the face time is. Are they cooking with you or not? But I do think that then puts a strain on more people, because you really can only be in one place at one time.

Ben Zweig: So it seems hard to solve in a way.

19:55 Hybrid vs. fully distributed

Ben Zweig: Well, OK. I have so many questions. But one is just going back to this thought of companies choosing their own style. Some companies have decided they are going to be back to the office. A lot have decided to be hybrid. And some have decided to stay fully distributed. I feel like a lot of the arguments are about this spectrum of hybrid to remote. But the fully distributed has this big benefit that you can just hire from anywhere. And I wonder what you can do if you're fully distributed. In some way, I feel like hybrid's the worst of both worlds, even though it's so popular. But then you don't get the in-office experience.

Natalia Emanuel: You're geographically constrained.

Ben Zweig: And you don't get the talent pool. It's tough. If you're going to be remote, you should hire from anywhere and benefit from that. So that's kind of, I don't know, how I've been thinking about it. What do you make of companies that are fully distributed? Do you think that's the wrong move? Do you think that if they are, it can be mitigated? You can find time to get together or something? Yeah, what do you make of this fully distributed model?

Natalia Emanuel: So first of all, I would say that even hybrid does expand your labor pool. Because if people have to go in every single day, they actually have a smaller distance that they're willing to travel. You basically double that distance when you are only going in two or three days a week. So it does expand your labor pool, but it's still within a given metropolitan commuting area.

Ben Zweig: Double the distance from the metro center is not double the people. That's probably, I don't know how many more people, but not that much, right?

Natalia Emanuel: No, and especially if you're considering we could hire in completely different countries, completely different continents.

Ben Zweig: Then you 100x your talent pool. Versus like 20%. So, different regimes.

Natalia Emanuel: I would say that even, so there's been an excellent study showing that from a fully remote company, when they implemented one day a month coming into the office, you did see an increase in people's workplace satisfaction and a decrease in attrition. And so even when you are fully remote, there is still value to having a real connection with your colleagues. What's particularly interesting is that there's this lovely study where you can see that they were gathering, it was a fully remote company, and they were gathering for an annual offsite in Florida near Disney World. What they see is that in simply just having people network, you're not actually knitting the company together particularly effectively, because people basically socialize with either individuals they already know or individuals who look a lot like them, speak their language, are from the same general area. But what actually was quite effective in knitting disparate parts of the company together were the taxi drives. And so it was, if I'm coming from Boston and somebody else is coming from Bangalore, but we happened to both arrive at 8:15, we would share a taxi to the hotel where the whole conference was happening. And those taxi rides were short, just 15 minutes. But the natural thing to talk about is, what do you do at this company? And so having even those small human interactions meant that those two people were much more likely to have digital contact for months after. And so I do think that there is a piece where simply being in person, even for a short amount of time, does ultimately mean that your communication with your whole company is boosted. And so then you get to the question of, okay, we're gonna be doing some offsites, maybe once a month, maybe more frequently, and then you start to get into the finances, where it's not always obvious that you are able to really make the numbers work through lower wages or not having to pay rent when you are paying for all that airfare.

Ben Zweig: Right, it sounds expensive. But I mean, I love the idea of this like, taxi cab speed dating for work colleagues. I would watch that show.

24:35 How to design an offsite

Ben Zweig: So let's say you are doing this offsite. What is the, and you wanna maximize connection, creativity, et cetera, what are the moves? What should you, just based on the research you've done, what do you suspect would be an effective way to get people to learn from each other?

Natalia Emanuel: So there is simply the, you should just have contact with different people, so that way you know you can ask somebody in this other department who's the right person to talk to. So I think any sort of individual contact is helpful, but there's also a matter of if you can talk about your wins and whoopsies with other people, that is incredibly powerful for learning from one another, but it can be incredibly awkward. And so when it is a company that is telling you, hey, we are encouraging you to have these conversations where you are both sharing about what's going well, what's not, and soliciting each other's advice about how to do it better, that then you do see a really big boost in people's ability to do their jobs efficiently. So there was one company that sort of paid for lunch with colleagues and told them explicitly, discuss what went well last week, discuss what went poorly and what you should do better. And they saw a massive increase in their productivity, not just while those lunches were happening, but even in the six months following that.

Ben Zweig: Could you do that virtually? Could you facilitate little icebreaker rotation things or something? Do you think there's a benefit to doing that virtually or do you think that mental synchronization would just be too flat?

Natalia Emanuel: I do think it is much easier to have that comfort with one another, to be able to be vulnerable and actually say this is the thing that wasn't going well. When you are in person, I would worry a lot that when people are doing something uncomfortable on Zoom that the desire to simply switch to a tab that is a little less spotlight-y might be too high for people to get quite the same benefit.

Ben Zweig: Yeah, yeah.

26:49 Do managers misjudge what workers want?

Ben Zweig: So do you think, do you think who wants remote, who wants to be in the office more? The companies or the workers? In aggregate, let's say.

Natalia Emanuel: There are quite a number of studies that suggest that both managers and C-suite executives undervalue or underestimate how much workers value remote work. And so workers say, "I really want remote work. I am willing to give up a high amount of my wages for this to happen." Typically in various different studies, it's between four and 10% of their wages that they're willing to give up. And then you have managers who are sometimes 40% off in what they think remote work, how valuable they think remote work is to their employees. And so I think that disconnect is really--

Ben Zweig: They're 40% off in underestimating this effect.

Natalia Emanuel: So-- Yeah, when they're suggesting, when they're trying to guess how important is this to my workers, that they're just 40% off from what workers actually say themselves.

Ben Zweig: So they think it's not important?

Natalia Emanuel: They think it's important. They just don't think it's as important as workers themselves say.

Ben Zweig: Got it. So just to go back to this four and 10% effect. So they would estimate it would be between two and 4% of the wages?

Natalia Emanuel: Exactly, yeah.

Ben Zweig: Got it, got it. Okay, so employees care a lot and managers think they don't care as much. So managers have been, managers and leadership have preferred, has over-preferred to be in the office? Is that right?

Natalia Emanuel: Well, it just means that they're not perfectly aligned with workers, that yeah, they tend to shift more toward wanting more time in the office, yeah.

28:49 What's the best move for a company?

Ben Zweig: Okay, okay, got it. So then does that ultimately help them? So they're preferring to be in the office. Does that help them because they get these productivity effects? Or does that hurt them because they're not, matching the workers' needs? I mean, how do these things shake out? What is the best move for a company?

Natalia Emanuel: It matters tremendously how people communicate about it and how they really accommodate the needs of their workers. So I think one of the big risks is when this is happening, simply because you're not sure that your workers are doing the work that they are supposed to be doing. So if it is coming from a place of lack of trust, that is really going to degrade people's excitement about working there and feelings of autonomy. And that's, I think, a problem.

Ben Zweig: Like tracking badge swipes and stuff like that. Like that you think is too toxic, or do you think that's fair game?

Natalia Emanuel: So I think if it's done from a place of not, that we're sort of trying to be big brother, but this is just sort of the culture where we have, it can be okay. But I think the real issue is that you need to be thinking about are you structuring this in a way that is going to be productive for people, right? Are you making sure that people are coming in at the same time, that they have the space and the time to have interactions with one another, that when they go in, they are not simply sitting on Zoom calls with teammates who weren't there, and that you're able to be responsive to, okay, this is the need that I have, right? I need to take my mom to her dialysis appointment. Can we make sure that's something that's accommodated? And sort of being able to try to get the best of both worlds, I think is going to be your recipe for success.

Ben Zweig: It sounds very difficult because like what you said, if one person on the team is like somewhere else or remote, then you basically have to do it virtually and that's like terrible. Then people are just in the office, like getting little rooms and being virtual. And that's like, yeah.

Natalia Emanuel: One of the best versions that we've seen is, actually, this was a company, a startup that was founded long before the pandemic, and they were mostly senior workers who knew the industry particularly well, but they were scattered all across the eastern seaboard. And so what they decided was that they were gonna come in only one day a week. The founder was three hours away from their main location, but on that day, they were really focused on deciding what they were going to be executing on when they all went remote from each other. Hanging out as friends, getting to know each other, updating on how little Tommy was doing or what have you. But it was really that visioning, that aligning, that building trust that was prioritized when you were in there. And notice it was one day a week, right? It's not the whole time that was there, but it means that when you are there, it's really focused on the things that are important and well done in person.

Ben Zweig: Yeah, I mean, do you think there's, it sounds like an interesting model. And like, I've actually been kind of surprised that there aren't more coworking spaces that offer like days of the week as like an option. Like you pretty much have to get X number of seats, which seems so inefficient. But anyway--

Natalia Emanuel: We have found a couple of companies that did that.

Ben Zweig: Oh, they do, okay.

Natalia Emanuel: For example, Industrious does.

Ben Zweig: We use Industrious and they don't let us do that. I'm gonna take it up with management, but send them the book.

32:33 Can companies change course?

Ben Zweig: Yeah, interesting. So it sounds like I mean Nick Bloom had made this point, previous guest on the pod, that it's very hard for a company to sort of once it sort of picked a lane, it's very hard to deviate because employees have selected into a certain style and the whole like everything sort of gets disrupted, gets is in disarray. So I just wanna talk through like a potential like path for a transition from either being in person to remote or remote to in person or some mix of hybrids or whatever. Like can this be transitioned well? And, or is that like too late? Do you think it's like once the genie's out of the bottle, everyone's gonna start like living a life of kind of freewheeling hybridness where they just like schedule doctor's appointments on any day or whatever. Like, is this yeah, can companies like be successful in like getting toward a different model?

Natalia Emanuel: There's absolutely a path dependence where it's much harder if you hired someone in Denver when your main company is in Buffalo, that's quite hard, right? You're asking a person to move their family. And so you have to sort of think about these transitions in phases, right? Is it that you're trying to get the person who is an hour away to commute in? Or are you trying to say, okay, basically when that person from Denver retires or leaves to another company, we are only gonna hire someone locally, or we're going to make sure that we're investing in off-site so that we don't care if you are in Denver when we're in Buffalo. And so those are sort of your two paths of like, you take this in stages and you either fire a bunch of people or do a slower transition as people naturally have some attrition or you're gonna be investing in those miles until you're able to find some way of connecting. That's not sort of everybody at a conference center.

Ben Zweig: Yeah, I mean, just a personal story. So Revelio was founded in 2018. And then when a pandemic hit, we had a bunch of people go scatter around as people did. They went to go live with their in-laws or whatever they did. And we were growing and hiring and no one knew how long this thing was gonna last. So we felt like, okay, do we hire in New York? Do we hire wherever? And because of that uncertainty, we thought might as well hire wherever because we don't even know if our, if the people that were based in New York would like ever come back or if they were just gonna like live out in God knows where.

Natalia Emanuel: Appleton, Wisconsin, yep.

Ben Zweig: Yeah, so at that point, we just got more distributed.

Natalia Emanuel: Yes.

Ben Zweig: And then it never felt like a choice. I was like, okay, we're a distributed company now and like can't put that back.

Natalia Emanuel: And I would say that's one of the big problems, honestly, with return to the office mandates, where they're saying, come to our local office, right? So particularly really large companies, right? Think Fortune 500 companies, that where they say, we have an office in San Francisco, so I know you moved across the country and your old team is back in New York, but come to the San Francisco office, we need five days a week or we need three days a week, whatever, and yet when you're coming in, the rest of your team's back in New York and so you're just zooming with different backgrounds, like that is the worst of all worlds, right? I agree with you. It is hard to put the toothpaste back in the tube, but I think that means that when you do have a situation where your organization has sprawled, then the sort of five day RTO does not make sense at all.

36:28 Natalia's ideal working model

Ben Zweig: Yeah, so let's say you're starting a company from scratch, what's your favorite model? Like how would you design a sort of working model?

Natalia Emanuel: So my favorite model would almost certainly be around one city center and that you are, yes, you are constraining yourself and your talent, but you're able to be in person regularly. And so it doesn't necessarily mean five days a week. In fact, I would determine that based on five different factors of whatever my company and my team are, and those factors are that number one of how important is connection, right? Is my company about connecting and collaborating with clients or with my teammates? If so, more time in the office. Then it's also about creativity, right? If it's a ton of iteration, we're really trying to be on the bleeding edge of innovation and we're really going back and forth then more time in the office. High are the stakes is number three, right? If one mistake means that the company goes kapoof, then we should be really in person because it's much easier to ask those questions, have a gut check when you are in person. Number three is how experienced, or sorry, this is I guess number four, how experienced are my workers, right? If people really know what they're doing, it's much safer for them to be doing that from home. If we really do need that mentorship, much more in-person time should matter. And then the fifth one is just how hot is the labor market, right? If I do need to go very far away in order to get the talent because it's a very specific thing, then of course we're going to be more remote. And so that is going to determine how in person I'd like to be. But yes, in my ideal world, it would be regular in person time, but that doesn't necessarily mean that it's five days. Or that it's necessarily all of those five days, right? It was possible that it would be nine to two or something.

Ben Zweig: Yeah, that totally tracks. I mean, those sound like, the interesting one is how hot is the labor market? I mean, I think that is like, it's such a, it's interesting. I mean, you would think that like, like it makes sense that if you have like really scarce talent needs, you're desperate, so you can't constrain yourself. You have to be unconstrained. But to the extent that people like feel productive, like their job, maybe it's easier to recruit in person. But I guess this just goes to the point that like employees in aggregate like to be remote.

Natalia Emanuel: Right, and it matters a little bit on, that's a perk, right? As part of your compensation, the additional flexibility that could come with some version of remote work.

Ben Zweig: Yeah, yeah.

39:18 Why young people want the office

Ben Zweig: Okay, so, and is that true for young people and older people or like, I kind of get the sense that young people don't enjoy remote, like they would prefer a job that is fully in the office, is that right?

Natalia Emanuel: So you are one of the very few people I've spoken to who have the correct intuition here, so amazing. I think people in their mind are like, oh, all these young people are off zooming in from Bali, but that's not what you see in the data, right? You see that they are much more in office than say, your 30 and 40 year olds who are dealing with a kid who has the flu and can't go to school. And so they're working while they're sleeping it off in the other room, right? So it is the young people who are more and more in the office.

Ben Zweig: I mean, I'm kind of cheating. It's not really just intuition. I teach the future of work at NYU and every semester, when we do the remote work topic, I ask like, how many of you wanna work remotely? And like, no hands, they just don't wanna work remotely. And I think part of it is like, I don't know if this is part of it, but I think they're at the age where they feel sort of traumatized by like COVID school.

Natalia Emanuel: And another component is also this is where you make friends, right? It's the number one place where American adults make friends is the workplace. And so, when you're just leaving school and you're trying to find your tribe, going to the office is an excellent way to do that, right? It takes, my favorite statistic is that it takes 160 hours to make a friend. When you're spending the majority of your day in the office, those 160 hours, you reach them a lot faster.

Ben Zweig: 160 hours to make a friend, that is a fascinating statistic. Where's that from? How do we know that? Like, what is that? Yeah, is that like a social psychology thing or is that like?

Natalia Emanuel: There are a number of studies that have done that, but one of them was actually looking at people in the Navy. And when you go from virtual strangers to, band of brothers and sort of, they were sociologists tracking how that happened. And they were finding that, it starts with revealing a little bit about yourself that's relatively safe. And then eventually you get to sort of share your hopes and dreams and like progresses from there. And one of their key things is that, you can't really rush that because if you reveal too much, too personal, too quickly, it's really quite cringy. And so, that's why it does take quite a bit of time to make these friends. And so, I think that also contributes to young people wanting to be in the office.

Ben Zweig: Yeah, that's so funny. Yeah, I mean, I'm like of two minds. And this, on the one hand, I'm like so excited about this stat about how people form social connections. Just like, I love to nerd out about it, but at the same time, thinking about the Navy doing experiments on what you need to reveal to these friends.

Natalia Emanuel: This was in the 60s. Does that make it more comfortable?

Ben Zweig: Yeah, kind of, kind of. It's like such a weird, cringy idea of like, oh, you're really reducing friendship to some like, Taylorist model.

Natalia Emanuel: Okay, that's interesting. I thought what you were gonna be uncomfortable with is the idea that this happens in the office and that maybe we should make friends with our neighbors, which I think is a lot of other people's concern.

42:31 Is work getting more like leisure?

Ben Zweig: No, I love it. I mean, I feel like one theme that we kind of, that I've just been thinking about a lot more with AI and everything is I think about like the Keynes essay, Economic Possibilities for our Grandchildren and like how we're just gonna like work shorter work weeks. The prediction was, in 100 years from 1930, we're gonna like work shorter work weeks and like live a life of leisure. And it hasn't happened. And I think part of the way that I think about that is like work and leisure are blended now. Like we are doing more leisure. We're just like doing it at work and work is like fun in ways that it wasn't.

Natalia Emanuel: Well, I think the other piece is that work gives you a sense of meaning, a sense of purpose, a sense of being needed. There's an excellent study that was done in a refugee camp where they gave some people what I think was a parallel of universal basic income and other people they gave a job. And then at the end of the study, they could see that the people that they gave a job to continued volunteering. They went to their job, even though they were no longer being paid, right? There is something important about being needed. And many, some leisure activities do that, right? Maybe your soccer team, you're the only person who can play that position.

Ben Zweig: Yeah.

Natalia Emanuel: Sure. But many types of leisure do not actually give that sense of purpose and being needed. And so I think there's something there about work being valuable for that reason.

Ben Zweig: Yeah, yeah. I mean, it totally, totally tracks. And like it's nice, yeah, and for that reason, like it's nice if we get if we make friends, find leisure, find fulfillment, like in our, in work. And totally makes sense that we would get that in person. We like to spend leisure time with our friends in person. Like that's not controversial.

44:24 Remote work and youth unemployment

Ben Zweig: But yeah, I wanna just circle back to young people and like they're in a very tight spot. And like youth unemployment's really high. You have this wonderful paper, which kind of documents that like, that is partly attributable to remote work. Can you like help us make sense of that relationship and that like, mechanism from remote work to like, youth unemployment?

Natalia Emanuel: So what we saw was that companies were less willing to hire young workers onto distributed teams. And I think this totally makes sense if you sort of think, I'm not gonna be able to train this person up to do work of the caliber that I need in order for them to be valuable to me. And then the second component of that is like, say I do invest in them. Those people who are, have trained in person are more likely to be poached by other companies. And so it's very costly then to be really investing and hiring young workers. And so because of that sort of remote piece, you don't see, and that's partly that your remote workers, like your mentors are remote, right? That you need both your mentors and your young people in the same place. And so because of that, you saw companies not hiring as many young workers and that you see really spiking around the pandemic of sort of shying away. And so when we talked about that sort of organizational sprawl that now half your team is in Chattanooga and you're in Chicago, so even if you all went into the office, you're not actually together, that is problematic for hiring young workers.

Ben Zweig: So why would it be the case that you have more of a kind of free rider problem on training if that training's done remotely versus in the office? Yeah, what, why is that?

Natalia Emanuel: Sorry, maybe I was not clear about that. It means that when you have a good worker because you've trained them in the office, many other companies are trying to buy talent rather than build talent themselves because say they're remote and so they aren't going to be building it. So they just want people who are coming in at a slightly higher level. And so you've trained them in person, but this other company that's mostly remote is now willing to poach them from you. And so that makes it sort of less appealing to invest in them because you're, might not reap what you sow.

Ben Zweig: Oh, got it, okay. So there's lower demand for younger workers in remote teams, but even in-person teams, there's lower demand because the remote teams will just like, try to poach them away. So they'll be like, even in person, they'll be like an attrition risk. Ah, okay, okay. So once you have this like these two effects where it's like, there's like some, lower demand for younger workers in remote teams and lower demand for workers on like in-person teams, then you like figure out that causes lower demand for younger workers in general. Why is this resulting in like unemployment and not just like lower wages?

Natalia Emanuel: I think this is because there are huge fixed costs to hiring workers. And so it's just easier to try, at this point to just try to buy talent rather than build it yourself TBD on what that happens when sort of down the line, it's harder to have, you don't have as much of that wealth of talent that's already been built up.

Ben Zweig: Yeah, yeah, interesting. So do you expect this to be persistent or do you think this will kind of like work itself out? And at some point the market will sort of clear for this young worker type?

Natalia Emanuel: I'm not totally convinced on it clearing. I'm a little bit worried that this will be persistent because I think companies right now are a little bit inured to the pain of not having young workers, partly because now AI agents are being able to sort of take their spots and not sort of thinking about, okay, who are gonna be the higher level people who we are not training up partly because of remote work, partly because they're not being trained because of AI. So I'm a little bit worried for this particular cohort of young workers.

49:00 AI agents and junior workers

Ben Zweig: Yeah, so do you think the AI potential displacement of younger workers effect and the remote work displacement of younger workers effect are like reinforcing?

Natalia Emanuel: Yeah, unfortunately, yeah. And specifically AI agents, right? We don't see early models of ChatGPT, we don't see that as like causing the increase in youth unemployment, particularly among college educated workers, but I think that's likely to shift with AI agents.

Ben Zweig: Interesting, I would have suspected maybe the opposite where when AI was a chatbot, it was like able to just like, summarize something, do some PowerPoint, deck or whatever, but like the agent based systems are like kind of technically complicated in a way that I would think would be like biased toward like the digitally native. I don't know.

Natalia Emanuel: They're a little bit better or not better. I do think that sort of you're able to train more senior workers to be able to manage them as you would have managed a bunch of junior workers. And so I think what remote does is it separates you from your mentors and then AI separates you from the tasks that you were learning on. I think that we've seen in a number of cases that more senior workers who already know what's going on, who used to give instructions to junior workers are now giving instructions to agents.

50:30 What Natalia hopes the book changes

Ben Zweig: Yeah, okay, so dark times for younger workers, dark times ahead. And so, but like you wrote this book and like, what is the hope? Let's say everyone reads this, all these CEOs read this, like how does the world change? Like, well, what is the change you're hoping for from this book?

Natalia Emanuel: So many companies have dashboards of, how many people badged in? And that is essentially just counting how many butts did we get into their office chairs, into their cubicles? And I just want to sort of throw that metric in the garbage. And instead I want people to be focusing on when we went into the office, how many meaningful conversations did we have? Whether it's talking about work, whether it's a creative idea of something we should be doing, whether it's, hey, I had a sticky situation and how could I have done this better? Or it's chatting about your weekend. It's how many meaningful conversations are you having when you do commute? And then sort of shifting your commute to think of sort of as an investment in yourself, your happiness and your career. That would be my dream.

Ben Zweig: Okay, that's a good dream. So one final question for you. What is next for you in your research?

Natalia Emanuel: I've been so grateful to this book. I feel as though it has really showed us so many places where we wanted to do research. And so the thing that I was working on before we hopped on the call was documenting exactly that organizational sprawl of sort of how much are people going into the office just to work remotely? And sort of being able to sort of close all of the loops that this book has opened for us because we saw that the literature just hadn't answered those questions, that would be the dream.

Ben Zweig: Okay, amazing. I mean, thank you so much for being part of this and I encourage everyone to check out this book in person. Really fantastic read. Thank you so much.

Natalia Emanuel: Thank you, I appreciate it.

Ben Zweig: The Economics of Work is brought to you by Revelio Labs, workforce data for research and benchmarking. If you enjoyed, please remember to rate, review and subscribe. It'll help us reach other curious listeners. I'm your host, Ben Zweig. Our producer is Cole Wagner. Thanks for listening.