Getting rid of remote work will take more than a downturn

A handful of prominent CEOs have recently tried to put an end to remote work. But some economists say that even in a cooler labor market, working from home is likely to remain common. (Image: Jared Oriel/NYTimes)
During the nearly three years since pandemic precautions pushed remote work into the mainstream, companies have been negotiating a “new normal” in an environment that some say gives workers an upper hand: Hiring has been difficult, quitting has been popular, and employers were in a good position to accommodate workers’ preferences.اضافة اعلان

That era is over. While the labor market remains tight even as many forecast that the US will fall into a recession, most economists expect more layoffs and fewer job openings in the coming months as companies rethink how they operate. This past week, Amazon said it would cut 18,000 jobs, or about 6 percent of its corporate workforce, and Salesforce said it planned to lay off 10 percent of its employees, or about 8,000 staff members. Goldman Sachs is preparing to lay off as many as 4,000 people.

As the workplace shifts, some prominent CEOs see an opportunity to get their employees back in the office. In May 2021, David Solomon, CEO of Goldman Sachs, told workers to get ready to return the next month to encourage more in-person collaboration and shared culture. Elon Musk ended Twitter’s “work from anywhere policy” in his first email to employees after acquiring the company last year, saying he would require them to work at least 40 hours a week from the office.
 “I worry long term about the negative impact on people who have decided not to spend as much time at the office.”
Bob Iger stopped short of an office mandate when returning to Disney as CEO in November, but he reportedly told employees that “I worry long term about the negative impact on people who have decided not to spend as much time at the office.”

But is the pandemic-induced remote work experiment about to end? Economists studying the shift to more flexible workplaces say it is not likely despite the push by some of the world’s most high-profile CEOs.

Hybrid work is establishing itself as the new normal.Last year, remote work stabilized at well above pre-pandemic levels, according to data compiled by a group of researchers at Stanford University, the University of Chicago, and Instituto Tecnológico Autónomo de México.

In 2019, around 5 percent of full paid working days in the US were completed remotely, according to census data. But when the research group started gathering data for the US Survey of Working Arrangements and Attitudes (SWAA), a monthly poll of workers, that proportion jumped to more than 60 percent in May 2020. For the past year, the percentage has been hovering around 30 percent.

“We are all back to pre-pandemic trends in online shopping but permanently up on online work,” said Nick Bloom, an economics professor at Stanford and a co-author of the monthly survey.

The most common remote work situation, according to the SWAA and a number of other surveys, is now hybrid work, with employees spending some days in the office and some working remotely. Companies, industries, and individual situations vary greatly on preferences and the feasibility of remote work, but on average, both sides have similar ideas about the ideal amount of time to spend in the office.

In the December SWAA survey, workers able to do their jobs from home said they preferred to operate remotely about 2.8 days per week. Their employers planned to allow them to work from home about 2.3 days per week. That is not a big gap in expectations.

There are obvious reasons employees say they like working remotely: They want to avoid the time and costs of commuting; they focus better without office chatter; they feel it is better for their well-being to be at home. When McKinsey, a consultancy, asked 12,000 job seekers last year about their reasons for looking for a new job, “flexible working” came in just behind “greater pay or hours” and “better career opportunities”.

What often gets glossed over — and one reason some economists believe that a recession would have little impact on the shift in working arrangements — is that allowing employees to operate outside the office can also benefit companies.
“Many, many companies in recent months have insisted that people come back to the office… only to reverse that mandate within about a week after hearing that they’d lose their best and brightest”
In a survey conducted by ZipRecruiter, an employment search site, job seekers on average said they would take a 14 percent pay cut in order to work remotely.

While the labor market remains strong, the economy is slowing down, and companies are looking for ways to make their jobs more valuable without raising pay. And many of them say they are using remote work to do it.

“It’s not that there won’t be some loss of bargaining power by workers,” said Steven Davis, a professor at the University of Chicago and a co-author of the SWAA. “It’s just that many employers have their own independent reasons to think that the shift, the partial shift, to remote work is beneficial for them as well.”

Managers are finding it hard to reverse the changes.For a working paper published by the National Bureau of Economic Research, Bloom, Davis, and others asked the hundreds of senior business executives who are surveyed each month by the Federal Reserve Bank of Atlanta if they had expanded remote work as a way to “keep employees happy and to moderate wage-growth pressures”. Thirty-eight percent said they had done so in the past 12 months, including half of executives working in sectors such as finance, insurance, real estate, and professional services; and 41 percent said they planned to do so in the next year.

The authors used executives’ estimates for how much they saved in pay by offering remote work to conclude that it would cut companies’ salary bill by 2 percent over two years.

“That’s not huge,” Davis said. “But what it suggests is that there are nontrivial benefits to many firms from remote work.”

A downturn could even make remote work more, not less, sticky. Recruiting more widely, including in cities where the cost of living is lower than where a company is headquartered, could mean paying lower salaries (although in some industries, such as tech, there is some evidence that salaries in different cities are converging).

Workers with an option to log in remotely may also take fewer sick days or decide to work remotely when they would previously have taken a day off to attend a friend’s wedding or extend a holiday.

“Many, many companies in recent months have insisted that people come back to the office five days a week, only to reverse that mandate within about a week after hearing that they’d lose their best and brightest,” said Julia Pollak, the chief economist ZipRecruiter.

Remote work, Pollak added, “is not just used as a sort of perk in a tight labor market that’s going to go away in a slacker labor market.”

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