If the US job market continues weakening next year, companies could stop allowing employees to work remotely.
Executives generally split between two camps when it comes to working from home, which increased during the pandemic as workers gained influence during a tight labor market. Some believe it has advantageas happier employees, while others say company culture is built in the office.
“There is genuine divergence between organizations”said Melissa Swift, workforce transformation leader at consultancy Mercer. “You’re starting to see companies take sides.” With that said, it looks like remote jobs are here to stay. Gallup projects that about 75% of remote-capable workers will be hybrid or fully remote in the long term.
Here are the top reasons experts say remote work will continue in 2023:
Allowing remote work is crucial for retention. Hybrid work boosted employee satisfaction and productivity, reducing dropout by 35% according to a study published this summer by researchers from Stanford University, the University of Chicago and the Autonomous Technological Institute of Mexico.
“Employees experienced new levels of satisfaction working from home, and it’s been hard for companies to justify backtracking,” said Caitlin Duffy, research director at consulting firm Gartner.
In the meantime, turnover has become a costly problem as dropout rates remain above pre-pandemic levels. In a labor market that remains tight, many companies cannot afford to lose talent. That’s especially true for high achievers, even if the economy takes a turn for the worse, according to Prithwiraj Choudhury, an associate professor at Harvard Business School.
“In any economic environment, the best talent always has outside options,” said Choudhury, who studies remote work.
Remote work opens up recruiting to a larger geographic area and a larger talent pool. That’s a huge advantage, especially for specialized roles where qualified candidates are hard to find. It also gives employers, like the US Department of Veterans Affairs, which has struggled to convince people to move to Washington, a better chance to win talent from tech hubs on the West Coast.
Offering work flexibility can also support diversity initiatives, equity and inclusion of a company. That is especially the case for groups, such as disabled workers, who are often left out of the labor market. Working parents and people of color have also reported tremendous benefits from remote work.
Recession Cost Cuts
Instead of reversing the shift to remote work, a recession could accelerate the trend because it can reduce the need for office space and help companies cut costs, according to Choudhury.
This summer, Yelp Inc. closed its New York, Chicago and Washington offices with plans to put the savings toward hiring and employee benefits. Not long after, Lyft Inc. leased about half of its office space in San Francisco, New York, Seattle, and Nashville. Other major companies, such as Meta Platforms Inc. and Amazon.com Inc., have scaled back on back office expansion plans.
Employees who are allowed to work from home are willing to accept a pay cut in exchange for greater flexibility and lower commuting costs. Work-anywhere policies also allow bosses to keep labor costs down by hiring in states, like Idaho, Louisiana and Kansas, that have lower costs of living.
If a company takes a radical turn, executives risk damaging their reputation. Just look at Twitter. In an effort to shake up the company last month, new CEO Elon Musk ended the company’s remote work model. But so many employees opted for severance pay that he had to soften his stance to convince some employees to come back.
Maximizing leverage in this way is not a good long-term strategy, according to Ben Granger, chief workplace psychologist at Qualtrics.
“Future candidates can see feedback from employees who have left,” Granger said. “They can read the articles. It would be wise for the leaders to think about that.”