It turns out that a lot of people like working from home. One of the things they like about it is that they don't have to commute. This survey suggests that Americans dislike commuting so much that 35% of us would take a pay cut in exchange for the ability to work from home.
An American Hero
Since the pandemic has pushed more people into remote work that means a lot of us have gotten a stealth pay raise. After all, if you would be willing to take a pay cut to work from home, and then you get to work from home without a pay cut, you've essentially gotten a raise, though that raise comes in the form of not commuting twice a day rather than in the form of dollars. The most recent inflation numbers we have show it running at about 6.8% in October 2021. This is well above the Fed's target of 2%. There are a lot of factors that go into that. Most importantly, we've all shifted from buying as many services (it's hard to get a haircut in a pandemic) and towards buying stuff. With demand for stuff up, prices for stuff have risen.
What many economists really worry about, though, is a wage price spiral. This is when prices go up, causing wages to increase, pushing up prices further, and so on and so forth. We haven't seen much of this so far. I think one reason is that many people are getting increased compensation in the form of not commuting. But, because this isn't dollar compensation, it doesn't push inflation higher
I think remote work is here to stay, as long as the labor market stays tight. And, tight labor markets are typically when you would worry about inflation. By encouraging working from home we may have inadvertently created a nice relief valve for inflationary pressure. That would be a bit of a silver lining to the pandemic, in economic terms at least.
