The pandemic may be winding down, but the work-from-home revolution marches on.
Nearly 30 percent of all work happened at home in January, six times the rate in 2019, according to WFH Research, a data-collection project. In Washington and other large urban centers, the share of remote work is closer to half. In the nation’s biggest cities, entire office buildings sit empty.
The COVID-19 pandemic transformed the American workplace. The share of all work performed at home rose from 4.7 percent in January 2019 to 61 percent in May 2020. Some economists consider the remote-work boom the greatest change to the labor market since World War II.
“It’s affected so many things,” said Nicholas Bloom, a Stanford University economist and WFH researcher. “It’s affected city structure. It’s affecting days of the week that people play sport: golf, tennis. It’s affecting retail. It’s completely skewed, mostly in a positive way, the American economy.”
In 2021 and 2022, employers gradually summoned American workers back to the office. Last spring, the back-to-the-office movement hit a wall, and the work-from-home population stabilized around 30 percent.
Workplace experts say remote work is here to stay. Workers love it. Employers have learned to live with it.
“There’s sufficient and growing evidence that people do work well when they’re working from home,” said Barbara Larson, executive professor of management at Northeastern University’s D’Amore-McKim School of Business. “It’s not like everybody was working hard when they were in the office.”
The average worker saves 70 minutes of daily commuting time by working from home – and spends almost half of that extra time doing work: a win-win.
A slim majority of Americans are back in the office for good. Many never left. That group includes the restaurant and retail sectors, factory and warehouse workers, bartenders and farmers.
“Fifty-five percent of Americans can’t work from home,” Bloom said. “They all would like to work from home. They can’t.”
A much smaller group, around 13 percent, work entirely from home. They include many IT and payroll workers, contractors and people who pick up the phone when you call customer service.
The remaining 30 percent of U.S. employees populate a vast “hybrid” workforce. They are the bulk of suburban, white-collar America, mostly college graduates, comparatively well-paid.
“About one-third of Americans can work hybrid,” Bloom said. “Managers, professionals. My students,” future Stanford graduates, “they’re all going into hybrid jobs.”
Much of corporate America has settled on a weekly formula of three days in the office and two at home for the hybrid worker. Tuesdays, Wednesdays and Thursdays are popular choices for trudging into the office. On Fridays, city centers can look like depopulated ghost towns.
The work-from-home movement has reshaped the largest cities. Only last month, for the first time since the pandemic began, did the occupancy rate in urban office buildings reach 50 percent in the 10 largest cities.
As of last week, 49 percent of desks sat empty in Chicago, 53 percent in D.C., 51 percent in New York and Los Angeles. The figures come from Kastle Systems, a company that manages office-access security.
Other researchers have identified about a dozen large urban centers where one-quarter or more of employees work entirely from home. The top five telework cities: D.C., San Francisco, Austin, San Jose and Seattle.
For some mayors, tax collectors and downtown businesses, the remote-work boom has seeded fiscal disaster. New York, alone, “is going to see about $12 billion less in expenditures in downtown Manhattan” because of remote work, Bloom said.
Working from home “means less consumer spending, and it means less transit use,” in big cities, said Adam Ozimek, chief economist at the Economic Innovation Group, a public-policy nonprofit.
Long-term office leases have softened the tax blow. Many companies are stuck with unused space in empty buildings, rented on five- or 10-year terms. But they will eventually leave. When they do, Ozimek said, cities will have to repurpose vacant offices as residential dwellings.
“It’s not the end of cities,” Ozimek said. But “if cities aren’t flexible and smart about how they change their fiscal policies and tax policies, you could end up in a bad situation.”
Not everyone wants to work from home. Two-fifths of workers aged 50 and above prefer fulltime remote work. Three-quarters of 20-somethings, by contrast, want to spend time in the office.
Young people “are more likely to want to work in person and benefit from working in person,” said Ben Zweig, CEO of Revelio Labs, a workforce intelligence company. “But also, for young people, it’s much more important to be in a city, especially if they’re single and dating.”
Employers want less telework. Employees want more. The remote work “gap” amounts to roughly one day. The average worker would like to go in to the office two days a week. The average employer prefers three days.
That dilemma begets another: Which three days should workers spend in the office? If a company allows employees to choose, then conflicting schedules can defeat the purpose of calling everyone in.
“You end up with meetings where some people are in person and some are remote, and that’s the worst of both worlds,” Zweig said. “People go to the office and spend their days on Zoom calls. They end up thinking, Why the hell did I come in?”
An easy fix is to send everyone home on Fridays and Mondays. On a recent Friday, occupancy rates in downtown office buildings dipped to 32 percent, according to data from Kastle Systems.
Some high-profile companies, including Disney and Starbucks, have made headlines by pushing back against remote work. Yet, the number of CEOs lobbying for a return to fulltime office work “is dwindling to basically zero,” Bloom said.
“If you’re a for-profit business, you don’t do things that massively piss off your employees and that don’t improve performance.”
For elite job-seekers, remote work has emerged as the ultimate bargaining chip. Employers know this. The share of hybrid job listings has risen steadily since 2020, Bloom said. Employees will trade thousands in annual salary for the right not to schlep to the office.
“If you withdraw remote work and your competitors are still offering remote work, you’re going to lose your top talent,” Larson said.
At the same time, employers seem to be advertising fewer jobs that are entirely remote. As the labor market softens, companies may feel they no longer need to dangle a “work-from-anywhere” offer to lure applicants.
“I actually think the all-remote model doesn’t exist,” said Prithwiraj Choudhury, an associate professor at Harvard Business School. “There’s no company in the world that never asks its employees to meet occasionally.”
The work-from-home movement shifts a company’s center of gravity from a physical office to a technology platform. “And your office becomes an ancillary tool,” Larson said.
Some forward-thinking companies take the work-from-anywhere concept to its logical conclusion, operating with no office at all.
“There are companies that are meeting in ranches,” Choudhury said. “There are teams that are meeting in railway stations or airports.”
Corporate leaders can choose to frame the remote-work movement “as an opportunity or a threat,” he said. “And if I were a CEO, I would frame this as an opportunity.”
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This story was originally published February 20, 2023, 6:00 AM.