Getting Rid of Remote Work Will Take More Than a Downturn

Managers are finding it hard to reverse the changes

For a working paper published by the National Bureau of Economic Research, Mr. Bloom, Mr. Davis and others asked the hundreds of senior business executives who are surveyed each month by the Federal Reserve Bank of Atlanta if they had expanded remote work as a way to “keep employees happy and to moderate wage-growth pressures.” Thirty-eight percent said they had done so in the past 12 months, including half of executives working in sectors such as finance, insurance, real estate and professional services. Forty-one percent said they planned to do so in the next year.

The authors used executives’ estimates for how much they saved in pay by offering remote work to conclude that it would cut companies’ salary bill by 2 percent over two years.

“That’s not huge,” Mr. Davis said. “But what it suggests is that there are non-trivial benefits to many firms from remote work.”

A downturn could even make remote work more, not less, sticky. Recruiting more widely, including in cities where the cost of living is lower than where a company is headquartered, could mean paying lower salaries (though in some industries, such as tech, there is some evidence that salaries in different cities are converging).

Workers with an option to log in remotely may also take fewer sick days or decide to work remotely when they would previously have taken a day off to attend a friend’s wedding or extend a holiday.

Of course, there are costs to remote work, too. Managers and workers often disagree about which environment is most productive. And working virtually can involve security considerations, new software purchases and compliance headaches around hiring in multiple states or countries. But, Mr. Davis said, in a lot of cases, companies have already paid for those costs. “We had almost three years of experience doing this,” he said.

Perhaps the most practical reason that companies may hold on to remote work in a recession is that it is difficult to revoke. Even Musk, a little more than a week after mandating full-time office work, reportedly clarified that all that was required of employees who wanted to work remotely was an approval from a manager willing to take responsibility for ensuring excellent work (albeit at the risk of being fired).

Article source: https://www.nytimes.com/2023/01/07/business/dealbook/remote-work-downturn.html