City workers returning to their desks could signal the comeback of the office
The office may – finally – come back. Look no further than a city worker for evidence.
Since the pandemic began, working from home has been more common in large metropolitan areas than in smaller cities and towns. But that trend has been declining since early 2023, finds the latest issue of WFH Research, published in the National Bureau of Economic Research.
In August, workers in the 10 largest cities spent about 36% of their full paid days working from home, compared to just over 30% of days worked from home for workers in medium-sized cities and almost 27% in smaller urban cities. In January, those percentages shrank to 33%, 30%, and 26%, respectively.
The research follows the latest data from Kastle Systems, which tracks foot traffic to offices in the 10 major US metropolitan areas. It showed office occupancy in the week ending January 25 topped 50% for the first time since the pandemic began.
The “big city phenomenon”, as the WFH researchers call it, arises because jobs in big cities – mostly desk jobs – are disproportionately far away. Also, larger cities have a lot more traffic, “so you save a lot more time when you work from home,” says Jose Maria Barrero, one of the study’s authors wealth.
But after years of faltering attempts to get workers back into the office, early 2023 saw another strong push for return-to-office work from some of the country’s biggest companies, including Starbucks, Vanguard Group and Disney, which mandated employees to move to the office come three to four days a week.
It works. The number of days that U.S. workers worked from home in all cities and towns in January was 27.2% — down from a peak of 61.5% in May 2020, the first month in which WFH Research collected data. The level of work-from-home is “dipping,” Barrero says. “It’s interesting because [it’s been] very stable for at least the last six months – the entire second half of 2022.”
Separately, WFH Research said the pandemic permanently cemented remote work as a fact of business at a fast pace. In just three years, the prevalence of remote work increased by the equivalent of 40 years before the pandemic. However, it is important to note that many companies employing desk workers currently operate a hybrid work arrangement, despite Kastle’s benchmark of 50% in the office.
Bosses should be clear about the best-case scenario
Despite office workers’ reluctance to trade their couches for a commute, evangelists have set their sights higher for the return to the office. Mark Ein, Chairman of Kastle, narrated wealth in December that he expects office occupancy to level off at around 60% in 2023.
That’s a far cry from the 100 percent in-office landscape that Morgan Stanley’s James Gorman and Goldman Sachs’ David Solomon aspire to, especially as airlines, hotels and concert halls have all seen full recovery to pre-pandemic levels of business . But as long as the offices are designed for a way of working that no longer exists – and it costs an arm and a leg to commute – 60% doesn’t seem so bad.
Barrero, on the other hand, isn’t sure even 60% is plausible.
“I think there’s going to be a cap on workplace attendance because I think the kind of companies that work in buildings with Kastle systems will at least embrace some form of hybrid work,” he says. “I don’t expect everyone to be there [the office] most of the time, and the return banner moment is probably already over. I would have thought last fall or last spring, sometime like that.”
In other words, don’t expect many more bombshell office attendance statistics this year. Any companies that wanted to take big steps — like mandating a full return to the office, or even making only certain days of the week flexible — have “probably already done so,” says Barrero.
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