Since the pandemic made remote work a commonplace nearly three years ago, companies have been negotiating a “new normal” in an environment that some say gives workers the edge: hiring has been difficult, resignations have been popular, and employers have been well placed to accommodate workers’ preferences.
That era is over. As the labor market remains tight, even as many predict the United States will slide into a recession, most economists expect more layoffs and fewer job openings in the coming months, businesses rethinking how they operate. Last week, Amazon announced it would cut 18,000 jobs, or about 6% of its workforce, and Salesforce said it planned to lay off 10% of its employees, or about 8,000 people. Goldman Sachs is preparing to lay off no fewer than 4,000 people.
As the workplace evolves, some prominent CEOs see it as an opportunity to bring their employees back to the office. In May 2021, Goldman Sachs CEO David Solomon told workers to prepare to return the following month to encourage greater in-person collaboration and a shared culture. Elon Musk ended Twitter’s ‘remote work policy’ in his first email to employees after he acquired the company last year, saying he would require them to work at least 40 hours per week from the office. Bob Iger didn’t demand that they work from the office when he took over as director of Disney in November, but reportedly told employees, “I have long-term concerns about the negative impact on people who have decided not to spend so much time in the office. (Disney has since announced that it will require returning to the office at least four days a week.)
But is the pandemic-induced remote work experiment about to come to an end? Economists who study the move towards more flexible workplaces say it’s unlikely, despite pressure from some of the world’s most high-profile CEOs.
The new normal
Last year, remote work stabilized at levels well above pre-pandemic levels, according to data compiled by a group of researchers from Stanford University, the University of Chicago and the Instituto Tecnológico Autónomo de México.
In 2019, about 5% of full-time paid workdays in the United States were done remotely, according to census data. But when the research group began collecting data for the US Work Terms and Attitudes Survey (SWAA), a monthly survey of workers, that proportion jumped to more than 60% in May 2020. Since then one year, the percentage hovers around 30%.
We’re all back to pre-pandemic trends when it comes to shopping online, but unquestionably lagging behind when it comes to working online.
Nick Bloom, Stanford economics professor and 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 working, with employees spending some days in the office and others remotely. Companies, industries, and individual situations vary widely in preferences and the feasibility of remote working, but on average, both parties have similar ideas about the ideal time to spend in the office.
In the December SWAA survey, workers able to do their work from home said they preferred to work remotely about 2.8 days a week. Their employers planned to allow them to work from home about 2.3 days a week. It’s not a big gap in expectations.
There are obvious reasons employees say they like working remotely: they want to avoid the time and cost of commuting; they concentrate better without the chatter at the office; they think it’s better for their well-being to be at home. Last year, when consulting firm McKinsey surveyed 12,000 job seekers on why they were looking for a new job, ‘flexible working’ came in second only to ‘better pay or more jobs’. ‘hours’ and ‘better career prospects’.
What is often overlooked – and one of the reasons why some economists think a recession would have little impact on the evolution of work arrangements – is that allowing employees to work outside the office can also benefit businesses.
In a survey conducted by job search site ZipRecruiter, job seekers said on average they would take a 14% pay cut to work remotely.
Although the labor market remains strong, the economy is slowing, and companies are looking for ways to add value to their jobs without raising wages. And many of them say they are using remote work to achieve this.
“It’s not that there won’t be some loss of workers’ bargaining power,” said Steven Davis, a University of Chicago professor and co-author of the SWAA study. “It’s just that many employers have their own independent reasons for believing that the shift, the partial shift, to remote work is beneficial for them too. »
Leaders struggle to reverse these changes
For a working paper published by the National Bureau of Economic Research, Bloom, Davis and others asked the hundreds of senior business executives surveyed each month by the Federal Reserve Bank of Atlanta whether they had developed remote working in order to “keep employees happy and moderate pressures on wage growth”. Thirty-eight percent said they had done so in the past 12 months, including half of executives working in industries such as finance, insurance, real estate and professional services; and 41% said they plan to do so in 2023.
The authors used executives’ estimates of how much they saved in wages by offering remote work to conclude that it would reduce companies’ payroll bills by 2% over two years.
“It’s not huge,” Davis said. But what it does suggest is that remote work has significant benefits for many businesses. »
An economic downturn could even make remote work more, not less, worthwhile. Recruiting more widely, including in cities where the cost of living is lower than the company’s headquarters, could mean paying lower wages (although in some sectors, such as technology, it seems that wages in different cities converge).
Workers with the ability to log in remotely may also take less sick time or decide to work remotely when they previously would have taken the day off to attend a friend’s wedding or extend a vacation.
“Over the past few months, many companies have insisted that their employees return to the office five days a week, only to reverse their decision after a week or so, after learning that they were going to lose their best people. said Julia Pollak, ZipRecruiter’s chief economist.
Remote work, added Mme Pollak, “is not just used as a sort of advantage in a tight labor market that will disappear in a slower labor market”.
This article was originally published in the New York Times.