The percentage of days worked from home surged in the initial months of the Covid-19 pandemic and slowly dropped off through 2022. It has basically stayed the same in 2023, indicating that fewer employers are bringing their staff back into the office. Long-term trends hint that remote work could be on the upswing come 2025 and beyond.
The proportion of workers being invited back to the office has shown no change, suggesting that the pandemic-driven spread of remote work may have become a lasting part of the American labor landscape, economists said. Nick Bloom, an economics professor at Stanford University who specializes in the WFH transformation, posted this week that “Return to the office is dead.” In May 2020, the first month of the pandemic, 61.5% of paid, full workdays were conducted from home, according to the Survey of Working Arrangements and Attitudes. That rate dropped in half in the following two years as businesses began summoning their staffs back on-site. Nonetheless, the scenario has shifted in 2023. The amount of paid work-from-home days has been "static" this year, staying around 28%,Bloom informed CNBC in a conversation. That's still four times higher than the 7% pre-pandemic level. The U.S. Census Bureau's Household Pulse Survey also shows a similar development, he reported.
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Meanwhile, Kastle data indicating the amount of times workers are swiping in at the office reveals that occupancy in the 10 leading metropolitan locations in the U.S. is at a standstill at around 50% in 2023, explained Bloom. "After three and a half years, we are at a stalemate in terms of remote work," said Bloom. "It would take a drastic development like the pandemic to budge it from this situation."
Covid-19 lockdowns and stay-at-home orders sparked the early switch to remote work. But many found they preferred it, owing to its advantages, such as the lack of a commute, flexible timetables, and less time getting ready for work, according to WFH Research. This movement has been boosted by the US's strong job market since early 2021, giving employees greater negotiating power. If they weren't content with their employer's benefits, they could probably quit and find a job with better terms and payment elsewhere. Evidence has suggested that, on average, remote work is equivalent to an 8% salary raise.
Still, it isn't just workers who benefit from this arrangement. Businesses have reaped profits from it as well, according to economists. The potential benefits are reduced costs for real estate, wages and recruitment, plus sustained worker retention and a bigger pool of talent to recruit from. Nonetheless, productivity has not been impacted, Bloom states. "What's good for business often sticks," he remarks.
Currently, a large portion of employees that are able to work remotely are doing so on a hybrid basis, where some days are spent at the office and the rest at home. As of October 2023, an estimated 47% of people with the option to telework are working in this manner, while 19% do their job full-time remotely and 34% are completely on site.Data from WFH Research shows that the number of remote job postings has increased from 3% to 11% since the beginning of the pandemic. Julia Pollak, ZipRecruiter's Chief Economist, noted that companies differ significantly in the way they are handling remote work. The new normal is that remote work is here to stay, but a variety of approaches are being taken.
For example, according to a recent ZipRecruiter employer survey, 7% of workers are mandated to appear in the office one day a week, 9% two days, 13% three days, and 8% four days. Around 1 in 5 (18%) have the authority to choose their in-person workdays. Pollak stated, “The new normal is this incredible diversity. There's still lots of trials taking place, but the final result is that remote work is consistent.”
It's conceivable that a recession in the U.S. could cause the frequency of remote work to slightly decrease, economist suggested. Pollak noted that employers gain the advantage of better retention through remote work, but in a less robust jobs market, that edge would not be as essential. Conversely, since remote work is cost efficient, Bloom argued that a sharp downturn in the economy would need to occur in order for any noteworthy drop in the practice.
Going forward, technological advances which make working remotely more feasible will lead to an increase in the share of people who work from home, possibly beginning in 2025, according to Bloom. He mentioned that newer companies and their CEOs favor hybrid work arrangements, so their usage should become more widespread as older executives depart.For more financial insights, check out these CNBC PRO stories:The S&P 500 appears to be forming a 'cup and handle' pattern. Learn how to watch for a possible breakoutBank of America predicts that the S&P 500 will reach 5,000 points next year, expecting a "stock picker's paradise"Morgan Stanley is bullish on emerging AI technology and singles out six stocks to capitalize on itThese stocks are popular among Warren Buffett fans on Wall Street
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