February 25, 2024

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Return to office is ‘dead,’ says Stanford University economist.  this is the reason

Return to office is ‘dead,’ says Stanford University economist. this is the reason

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The proportion of workers being called back to their offices has remained steady, economists said, indicating that the widespread phenomenon of remote work in the era of the pandemic has become a permanent fixture in the American labor market.

“The return to the office is dead,” says Nick Bloom, an economics professor at Stanford University and an expert on the work-from-home revolution. books this week.

In May 2020 – the early days of the Covid-19 pandemic – 61.5% of full paid workdays were from home, according to the Work Arrangements and Attitudes Survey. This share fell by about half through 2022 as companies called on employees to return to in-person work.

But the story changed in 2023.

The share of paid days worked from home has been “pretty flat” this year, at about 28%, Bloom said in an interview with CNBC. (This is still four times greater than the pre-pandemic level of 7%). The U.S. Census Bureau’s Household Pulse Survey shows a similar trend, he said.

Meanwhile, Kastle data measuring the frequency of checkouts at employees’ offices shows that office occupancy in the 10 largest U.S. metro areas has stabilized at about 50% in 2023, Bloom said.

“We’ve been here for three and a half years, and we’re completely stuck,” Bloom said of remote work. “It would take something as extreme as a pandemic to get rid of it.”

Why has remote work had staying power?

The initial increase in remote work was driven by coronavirus lockdowns and stay-at-home orders.

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But many workers liked the arrangement. Among the key benefits: no commute, flexible work schedules, and less time getting ready for work, according to WFH research.

This trend was reinforced by A The labor market has been hot in the United States since early 2021, giving workers unprecedented leverage. If a worker didn’t like his company’s benefits, odds were good that he could quit and get a job with better working arrangements and pay elsewhere.

Research has shown that the typical worker equates the value of working from home with an 8% increase in salary.

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However, the work-from-home trend is not just an advantage for workers. Economists said the arrangement was profitable for many companies.

Among the potential benefits: lower real estate, wage and recruitment costs, improved worker retention and expanded talent recruitment. Meanwhile, Bloom said worker productivity was not affected.

“What makes corporate money tends to be stickiness,” he said.

Remote politics show ‘astonishing diversity’

These days, most remote work is done as part of a “hybrid” arrangement, where some days are at home and the rest in the office. About 47% of employees who can work from home were hybrid as of October 2023, while 19% worked remotely full-time and 34% were fully on-site, according to WFH research.

About 11% of online job postings today advertise fully remote or hybrid positions, versus 3% before the pandemic, said Julia Pollack, chief economist at ZipRecruiter.

While remote work is the new normal in the job market, there is a lot of variation from company to company, Pollack said.

For example, 7% of employees are required to be in the office one day a week, while 9% are required to be in the office two days, 13% three days, and 8% four days, according to a recent employer from ZipRecruiter. reconnaissance. approximately 1 in 5, 18% have discretion in their personal workdays.

“The new normal is this amazing diversity,” Pollack said.

“There is still a lot of experimentation going on,” she added. “But the overall effect is that remote work is flat.”

Why is remote work likely to increase after 2025?

While the prevalence of remote work is unlikely to fall to its pre-pandemic level, the U.S. recession — and a weaker labor market — will likely push it down a bit, economists said.

“Employers say the biggest benefit of remote work is employee retention,” Pollack said. In a more slack labor market, “it becomes much easier to retain workers.”

However, since work-from-home arrangements also save companies money, a severe recession would likely be necessary to see a significant decline, Bloom said.

Long-term trends suggest that the proportion of employees working from home is likely to grow from here on out, likely starting in 2025, Bloom said.

For example, improving technology will make remote work easier, Bloom said. He added that younger companies and CEOs also tend to be more enthusiastic about hybrid work arrangements, meaning they will gain greater popularity over time as current business chiefs retire.