John Hood | Will hybrids drive the economy?


RALEIGH – Many politicians, planners, and business people believe they know what North Carolina’s economy will look like after the pandemic. But few seem to be entirely sure. They’re noticeably backing up their predictions, which I think is a wise precaution. You should also hedge your bets.

There are unanswered questions across multiple economic sectors and time frames. For many decision makers, however, perhaps the most important question is the fate of hybrids.

I’m not talking about automobiles. I’m talking about work plans. After so many North Carolinians who spent months doing their work from home, do you want to return to the office full-time? If so, traffic behavior, consumer behavior and the commercial and residential real estate market will not change significantly.

However, if a significant proportion ask employers to stay away indefinitely – or, more likely, split their working weeks between the office and home – the outcome could be disruptive. I don’t necessarily mean that badly. But even net-positive innovations have transition and transaction costs.

The early signals are noisy. Some workers are obviously desperate to get back to the office. They found it distracting to be at home, even when school-age children did not need frequent attention, and welcome the strict separation of work and private time that physical commuting can increase. Others really enjoyed doing their work remotely. It saved them the time and cost of commuting and getting dressed. They use the interface between work and home because of their flexibility.

As for employers, some found it pretty easy to inspire, manage, and evaluate remote work. Others felt that their teams, being geographically dispersed and otherwise out of sync, were less productive. This feeling seems to be widespread in jobs like banking, finance, and law. American Enterprise Institute analyst Brent Orrell calls this “a move that seems to be driven by a mixture of tradition and concern for new employees who need regular coaching on work practices and expectations.”

Of course, the smart money is set on a kind of center point. Many workers will resume a regular roster. But not all. A recent paper published by the National Bureau of Economic Research estimates that working from home will account for 20% of full work days in the United States, up from 5% before the COVID crisis. Amanda Mull, a staff writer for The Atlantic, predicts many professionals will ask about hybrid schedules: three days a week in the office, two at home.

Such developments would have serious consequences. The NBER paper estimated that consumer spending in major city centers would decrease by up to 10% if one-fifth of working days were at home. Remember, fewer workers park their cars on decks, have lunch, or run errands on the way home. Remember, big employers will reduce their footprint the next time they renew their leases.

Now consider what is happening to urban transport across the country. During the crisis, the number of passengers fell dramatically in all categories, but the declines in rail use were particularly pronounced, also because those who are most likely to be able to do their work from home make up a disproportionate share of rail users.

The only relevant case in North Carolina is Charlotte – and it’s illuminating. The number of bus drivers in Queen City has decreased by around 49% year on year. The number of tram drivers has decreased by 71% and is not recovering as quickly as bus use.

I confess that I have long been a skeptic about rail transport. I already thought the Triangle area was wise not to follow a long-planned railway line. This decision looks even better in retrospect.

If more jobs are relocated to hybrid schedules, many North Carolinians will likely move further away from central cities, into suburbs and sparse counties. They will of course use public services, but not the same, from the same jurisdictions. And they will likely vote differently than their rural neighbors.

Hybrids could be the wave of the future. Who knew

John Hood is a board member of the John Locke Foundation and the author of the new novel Mountain Folk, a historical fantasy set during the American Revolution (MountainFolkBook.com).

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