Is The Golden Age Of Remote Work Over?

Here's how American companies feel about

remote

work

in 2023. The laptop classes that live in la la land, it's a disaster to assume they have to go to

work

. But you don't. It's not just a question of productivity. I think it's morally wrong. Listen, it doesn't work for little kids. It doesn't work for spontaneity, it really doesn't work for management. And that's how the business world felt about

remote

work in 2020, during the height of COVID-19. I think the biggest advantages are access to large talent pools, who don't live in big cities and aren't willing to move there.

Since we've all been forced to be remote for nine months, I think we've realized that if you have someone in a particular location who is willing to work the hours necessary to be able to collaborate, you can do that very effectively. So what we were thinking about hiring has changed. Let's pause here and notice something: In less than three years, corporate leaders have reversed their approach to remote work. And it seems this tactic has worked: The latest data from the Census Bureau found that less than 26% of American households still have someone working from home. That's down from 37% at the beginning of 2021.

So the reason we're having all this conversation about the death of remote work in the first place is because we still think we're going to bounce back to, quote, unquote, normal when the pandemic began. and we had people working from home. The idea was that this is very temporary and we were all going to return. So what has really changed the remote work debate is the slowdown in the labor market. There are many employers who were wary of remote work from the beginning. And you can see that when people really went remote during the start of the pandemic.

Thus, the concerns that employers had about remote work were present throughout the Great Reorganization. But they didn't really have much choice. But with emergency orders expiring due to the pandemic this year. Now they can start to bring people back and address some of the concerns they may have about productivity. Remote work came to us basically because of the pandemic, before the pandemic remote work was quite rare. So about 5% of the days they were forced to work from home, you know, all the managers and professionals were basically completely remote since March 2020. And then it turns out that it worked very well, like not having to commute to work at sweatpants. doing laundry between Zoom calls, but also just the savings in terms of time, in terms of money, in terms of commuting, in terms of being able to spend more time with their kids or picking them up from school, people quickly found ways to do it. productive, to continue communicating together and continue collaborating together.

And any tools that they could invest in to support that work and that teamwork. As the world slowly began to open up, American companies began to change their tune on remote work, to the point that some companies even threatened to fire their employees if they didn't show up for work. Throwing in the towel on fully remote work, even Zoom, the video conferencing company that helped bring about the remote work boom, is also taking a hard line on returning to the office. It's an abrupt change from last year, when I suggested that most of your employees would work a hybrid schedule with only 2% working in-person full time.

Therefore, part of the rejection of remote work is due to productivity concerns. There have been some experimental studies showing that remote work can have some impact on productivity. But those studies are also experiments, right? It is unclear how they were applied to the broader workforce; The United States has a productivity problem. Before the second quarter of this year, the country had experienced five consecutive quarters of year-over-year declines in worker productivity. In fact, a major study co-authored by Professor Nicholas Bloom found that fully remote working led to a decrease in productivity of around 10 to 20%, compared to fully in-person working.

Now, the other important thing in this study is that, as we pointed out, what companies ultimately care about is profitability. And it turns out that if you have a remote employee, you also save a lot of costs. So you're saving about 10% less overhead because you don't have an office and then you could have these people, maybe nationally or internationally, and maybe save another 20 30 40% of remote workers; They may be 5-10% less productive, but they are much cheaper and it is profitable for companies to have many teams and many remote employees if you come with the statistic of protecting yourself and putting a positive narrative to get people back to work.

I like to think, what was productivity like when everyone worked from home? You're not allowed to have any workers face to face, right? So now you're turning it in your favor. So I would like to question whether the employee can perform his duties and handle his responsibilities. They should be encouraged to work from whatever location makes them feel as excited about life as possible. I camped in Key West for three weeks. I was in North Dakota in February, toured the California coast and visited our national parks. For me. That's where I feel best working. And that's where I've done my best work.

I think we can work from anywhere. My name is Sujan Parajuli, I used to work for JPMorgan and Chase, everything was remote. But once they changed their policy to get into office, that was in Plano, Texas, but I live in California. So I decided not to move there because of my children. So I have two children who go to school. I also have to manage work-life balance. That was the reason I left my job. JP Morgan had given me 45 days to find another job. And I applied to other companies and found a remote job at Leidos, so I have been working remotely with Leidos as a senior systems analyst.

Parajuli is not the only one who decides to resign rather than return to the office. However, finding a fully remote job is increasingly difficult. New research from Indeed found that job postings are declining most rapidly in metropolitan areas where many jobs can be done remotely. A similar trend is also occurring on LinkedIn. So on LinkedIn last year we saw that about one in seven jobs was remote. And now that's down to about one in 11. But during this time, we've also seen a reversal. We now see that approximately one in seven jobs is hybrid, up from one in eleven last year.

So, we're seeing more people returning to the office, but not returning to the office five days a week, many employers are building their team members strong and would love to see remote work die faster. As a result, I see remote work, quote, slowly dying and becoming more competitive. The pandemic-induced shift to remote work has raised concerns about the future of commercial real estate, especially office spaces. The latest report from the McKinsey Global Institute suggests that remote work threatens to erase $800 billion from the value of office real estate in nine major cities around the world. Other experts say the empty offices created by remote work in several cities are also giving rise to what has been called the urban doom cycle.

The problem starts with the demand for offices at that time which we have seen with the advent of remote work and hybrid work and the dramatic reduction in demand for offices over the last two years, which has led to increased rates of unemployment and, in fact, at all times. high vacancy rates in the office market at the moment. And that puts downward pressure on the valuations of these offices, you mentioned they're down, you know, probably 20 or 30%. More are likely to fall. And that causes downward pressure on property tax revenue, because for many cities, office tax revenue represents a large portion of their tax revenue, often up to 50%.

Part of that comes from the position, maybe 20%. So maybe 10% of cities' total tax revenue comes from offices; If those offices lose about half their value, tax revenue falls and that creates a huge hole in the budget. Like everything, there will be winners and losers as we transition to a world where remote work is a permanent feature. One of the potential losers is commercial real estate, in part because offices are not as needed or not needed at all. Therefore, commercial real estate may be a loser for remote work. We may also be concerned about companies that support workers coming to the office.

So think about your food trucks, your laundry services, all of these businesses that are focused on people who come to the office five days a week and may face difficulties, when that doesn't happen, as a lot of commercial real estate is problematic in a number of large cities. But now there are a lot of people saying we need people to go back to the office because our commercial buildings are empty, which is a bit like saying, we need people to use the horse-drawn carriage because the cars are leaving. To end that industry, we have to understand that the world has changed.

Our ways of working have changed and we cannot go back to an obsolete way simply because we are motivated by commercial real estate, commercial real estate needs to be rethought, as we have already seen in some cities, which are being transformed, it is being used for other purposes, Some of it is being converted into residential housing, and we're going to have to be much more creative about what to do with those empty buildings. If you're pushing your employees to come back to the office, you need to make sure they come back to the office for more than just me.

I don't think we'll ever go back to those pre-pandemic days. What I do think we will see and we are already seeing is that it is beneficial to also be in person and that is why we are seeing companies first saying to come back one day a week, two days a week, three days a week, maybe. Even four days a week. But I do think that the old school five days a week, 40 hours in the facility, I think it's dead. I do not think I'll come back. I am a family person. And most importantly, I can save several hours working from home, saving hours traveling and I can give them to my family.

I can give those hours to myself, which has benefited me a lot and I always prefer to work remotely. Working from home is here to stay. You know, if you're worried about it, the best thing you can do is figure out how to make it work because it's definitely not going away.