The 2020 global pandemic made Working From Home (WFH) a mandate for millions of workers across the globe. After it became safe to return to the office, many employers adopted a hybrid model (2-3 days a week in the office) that gave workers the advantages of working from home: a reduction of time spent commuting, savings on clothing, eating out, and commuting expenses. They brought them into the office a couple days a week so they could gain the advantages of working together in person: greater team bonding, mentoring from peers or managers, and visibility to executives, which increased the chances of promotions or more challenging assignments.
A 2023 study showed that 40% of work in the U.S. was performed remotely, up from 10% pre-pandemic.
Now the trend is reversing. Amazon CEO Andy Jassy sent out a September memo ordering employees bac to the office full time. It sent a ripple through white-collar employment. A September 20 article in the Wall Street Journal said, “Until Jassy’s memo, 4½ years after the Covid-19 pandemic sent everyone home, bosses and employees had largely reached a truce on part-time remote work. Many company leaders looked out at their substantially empty offices in quiet exasperation. But they feared that forcing their employees to come to the office more often could send top performers fleeing for more flexible work setups elsewhere.”
There are several obvious trends driving the return to the office. One is real estate. In 2023, Global real estate services company Jones Lang LaSalle reported that more than 20 percent of office space was vacant across the United States. All that empty space being heated, cooled, maintained, and wired, was costing billions. Small businesses that supported commuters and workers, like dry cleaners, coffee shops, restaurants, and after work watering holes, closed down. The economic impact has been devastating in high density office districts like Manhattan, Seattle, and other hubs.
The second trend is a softer job market. Employers are less worried about losing droves of their best talent to companies who make WFH a priority. Privately, they figure it’s a matter of time before most companies make most employees return. They worry that if it doesn’t happen now, the generation of workers who started their careers during the pandemic may never understand why in-person work is an essential part of building and maintaining company culture and sparking innovation.
The last driver is worker productivity. Recent government reports show that between mid-2021 and mid-2023, worker productivity slipped by 2%. That’s the largest drop in the last seven decades. A 2023 post by Mike Walden, a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State, posited several theories about what’s happened. “There’s no shortage of potential answers,” he writes. “Among them are a loss of education during the pandemic that reduced workers’ skills; workers suffering from stress related to inflation and the pandemic; a change in attitudes about work, particularly among younger workers; the movement of workers to new jobs during and after the pandemic [4 million workers a month were changing jobs at one point]; and the rise of remote work.
There’s also a counterargument that recent labor productivity looks bad only because productivity surged during the pandemic.”
The Wall Street Journal says, “A tougher labor market, especially for white-collar professionals, is now changing the calculus. With jobs harder to find and more companies willing to cut them, the balance of power is shifting from workers to bosses.” In a KPMG survey of 400 U.S. CEOs released in September, nearly 80% said that they expected corporate employees to be in offices full time within the next three years. That’s more than double the 34% who said so in April.
In-person work does promote teamwork, mentoring, and gives managers more control over work distribution and quality standards, which makes managers happy. Needless to say, workers who are being ordered to return to the office full time are not nearly as happy.
One former Amazon general manager called Amazon’s return to work memo “a layoff without a layoff,” since many workers will choose to quit. CEO Jassey said in the memo that he understands many workers will have to make adjustments to their personal lives to accommodate the change, so the policy doesn’t take effect until January 2, 2025.
New year, new work reality.