Work-From-Home Era Faces Toughest Test Yet With Looming Recession


The days of working from home may be numbered.

In the ongoing struggle between workers who want flexibility and bosses who are pushing for a return to the office, an impending recession could shift the balance of power.

The strong job market in the pandemic has meant that employees have felt empowered to ask for perks or leave their jobs for better offers. And companies worried about retention have been reluctant to take a strong stance on returning to the office. But an economic downturn threatens to upend that dynamic.

“Companies are going to be able to leverage the recession and the fact that there are not a lot of jobs available to bring people into the office,” said Lindsay Duston, chief operating officer at Find My Profession, a career services provider.

Elon Musk is already requiring Tesla Inc. employees to work in-person 40 hours a week, and bank executives at firms such as Goldman Sachs are pushing for a widespread return to the office. Meanwhile, US office occupancy just hit a new pandemic high.

An official recession hasn’t arrived just yet. And the job market remains tight, with unemployment near a five-decade low. Still, the list of companies announcing hiring pauses and layoffs keeps growing as stubbornly high inflation prompts the Federal Reserve to hike interest rates.

Employer Boon

Recessions are bad for bottom lines, but a boon for employers’ power over employees, according to Dan Cornfield, professor of sociology, political science, and American studies at Vanderbilt University. He says US workers will return to the office if they’re “desperate enough.”

Employee preferences are clear — they want to work from home. A recent survey from McKinsey found that 58% of Americans have the opportunity to work remotely at least one day a week, and 35% can do so every day. Among those given the chance to work from home, 87% take it. Meanwhile, a flexible working arrangement is a top three motivator for finding a new job.

Here to Stay

There’s an argument that remote work is too entrenched in employees’ expectations — especially for Gen Z — to be eliminated by a recession.

“We don’t expect that is likely to reduce the number of flexibility employers are providing,” said Lauren Mason, senior principal in Mercer’s human resources consulting practice.

Giving employees flexibility is usually free for employers and could save them money on office space if they end their leases, she said. Even if some in-person work is mandated, requiring a full five-day return doesn’t make sense, said Nick Bloom, professor of economics at Stanford University.

“This is where the real problems are arising, with compliance rates of under 50% and little if any benefit,” he said.

Young Workers

Forcing in-person work is also seen as a quick way to alienate younger workers. These employees value work-life balance more than past generations and dislike hierarchical workplaces, according to Cornfield. The ones without children or heavy financial responsibilities may just quit instead of returning to the office.

More than 70% of workers ages 18 to 24 say they would consider looking for another job if their employer insisted they return to the office full-time, according to a recent report from ADP Research Institute.

The extent of office return will likely depend on how bad the recession is, said Jay Zigmont, founder of financial advisory service Live, Learn, Plan. Right now, open job opportunities are giving workers the confidence to search for new roles if they’re dissatisfied with their company’s protocols.

“As long as that's the attitude, I don't think employers are going to be able to have people come back,” he said.

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