• BlackRock CEO Larry Fink recently claimed that employees must return to the office to create “rising productivity that will offset some of the inflationary pressures.”  
  • A widely cited July 2022 study from the highly respected National Bureau of Economic Research (NBER) found strong evidence that remote work decreased inflation. 
  • This poor judgment should be a lesson to all business leaders to rely on the facts, and not wishful thinking, in their public communication and decision making. 

BlackRock CEO Larry Fink claimed in a recent interview with Fox that “we have to get our employees back in the office.” According to him, doing so would result in “rising productivity that will offset some of the inflationary pressures.”  

Fink did not provide any data in the form of statistics, surveys, or studies to support his claims. He simply insisted, without evidence, that in-office work would reduce inflation. So what does the data say?  

A widely cited July 2022 study from the highly respected National Bureau of Economic Research (NBER) found strong evidence that remote work decreased inflation. Namely that because employees have a strong preference for primarily or full-time remote work, they are willing to accept lower wages to work remotely. As a result, the researchers found that remote work decreased wage growth by 2% over the last two years. 

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Plenty of other evidence backs up the finding that remote work reduces wage growth, such as a June 2022 survey by the Society for Human Resources. It reports that 48% of survey respondents will “definitely” look for a full-time WFH job in their next search. To get them to stay at a full-time job with a 30-minute commute, they would need a 20% pay raise. A different survey of 3,000 workers at top companies such as Google, Amazon, and Microsoft found that 64% would prefer permanent work-from-home over a $30,000 pay raise.  

This data shows that remote work decreases costs of labor and thus reduces inflation. What about Fink’s claims about productivity? 

Surveys have long found that workers report being more productive working remotely, but we might feel some skepticism for self-reported answers. It’s harder to feel skeptical of evidence from employee monitoring software company Prodoscore. Its President David Powell said that “after evaluating over 105 million data points from 30,000 U.S.-based Prodoscore users, we discovered a five percent increase in productivity during the pandemic work-from-home period.”  

And we have become better at working remotely over time. A Stanford University study found that remote workers were 5% more productive than in-office workers in the summer of 2020. By the spring of 2022, remote workers became 9% more productive, since companies learned how to do remote work better and invested into more remote-friendly technology 

What about ancillary costs? Employees can save a lot of money, up to $12,000 for full-time remote work according to a Flexjobs analysis. That involves savings on transportation, office attire, and meals.   

Companies save a lot of money on real estate, utilities, office furniture, cleaning services, and related costs. An average office space per employee can be up to $18,000 per year. No wonder office occupancy is down and companies are cutting their real estate footprint. 

All the evidence shows that remote work decreases inflation. Fink could have assigned a summer intern at BlackRock to find the evidence. He chose not to do so, instead making statements that are patently against the facts.  

By doing so, he shows poor judgment, likely due to a combination of cognitive biases. One is called the belief bias, where our belief in the desirability of an outcome causes us to misinterpret the evidence supporting this outcome. Another is the confirmation bias, where we look for evidence that confirms our beliefs, and ignore evidence that does not.  

Fink’s failure to evaluate the abundant evidence accurately casts doubt on the recommendations made by BlackRock more broadly. It’s likely to undermine investor trust in its products. His poor judgment should be a lesson to all business leaders to rely on the facts, and not wishful thinking, in their public communication and decision making. 

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