I have posted this on Reddit (askeconomics) a while back but got no good replies. Copying it here because I don’t want to send traffic to Reddit.
What do you think?
I see a big push to take employees back to the office. I personally don’t mind either working remote or in the office, but I think big companies tend to think rationally in terms of cost/benefit and I haven’t seen a convincing explanation yet of why they are so keen to have everyone back.
If remote work was just as productive as in-person, a remote-only company could use it to be more efficient than their work-in-office competitors, so I assume there’s no conclusive evidence that this is the case. But I haven’t seen conclusive evidence of the contrary either, and I think employers would have good reason to trumpet any findings at least internally to their employees (“we’ve seen KPI so-and-so drop with everyone working from home” or “project X was severely delayed by lack of in-person coordination” wouldn’t make everyone happy to return in presence, but at least it would make a good argument for a manager to explain to their team)
Instead, all I keep hearing is inspirational wish-wash like “we value the power of working together”. Which is fine, but why are we valuing it more than the cost of office space?
On the side of employees, I often see arguments like “these companies made a big investment in offices and now they don’t want to look stupid by leaving them empty”. But all these large companies have spent billions to acquire smaller companies/products and dropped them without a second thought. I can’t believe the same companies would now be so sentimentally attached to office buildings if it made any economic sense to close them.
They’re wasting money on big buildings and rent.
Also, they want control of your activity while your on the clock. It bothers them if you’re more productive, get the same amount of work done but can relax more at home. Which is the way it should be. If I can do the same work in 4 hours than I can in 8, I should get paid the same, and be able to relax, instead of being made to stay at work for 8hrs and be given even more things to do to just stay busy.
I am surprised they don’t just cut costs by not having a physical location then? Or is this just while waiting out lease agreements.
Another reason you’ve not yet been given is that some of these companies have decades long contracts for renting. The government should intervene and cancel the contracts and pay for them to be converted to flats tbqh. Someone will say “But that will cost more than building a new one![citation needed]” but knocking down half the office buildings at once will probably give everyone in the cities supercancer*[citation needed]*
Some smaller companies are doing this. It makes them more agile financially and actually helps their growth to not have a building to pay for. I don’t understand the larger companies.
They spent millions building a facility or are locked into 5/10 year leases. I’ve also heard it’s because cities are dying, no one in offices to eat ‘down the street’ at the food shops, people don’t stop at the bar on the way home, no impulse shopping trip because you’re already out.
Not just rent, they own those big buildings. They’re assets, and what happens when everyone realizes they don’t need those buildings at the same time? Corporate real estate crashes and those assets are worthless. Nobody wants a huge asset dropping off their balance sheet because they let their employees wfh before they could offload their offices.
The shitty middle management who think like your second point are convenient, but I don’t think they’re the ones making the decision to call employees back in a lot of cases.
I’ve never understood the empty buildings argument. Wouldn’t the company be “wasting” just as much money if the building was empty or full? Might even cost more to have it occupied since then you need hvac.
No, if the building was empty, they should get rid of it. But there’s the whole sunk cost thing if they built it themselves or are in a multi year lease
Here’s the fun part:
When execs were hyper focused on outsourcing, not once did they say productivity was a problem
Second local workers wanted to do the same though, suddenly if you’re not in the office you’re useless.
Which is it? Outsourcing is trash or WFH is just fine?
They outsourced because they could pay their employees less.
Some companies attempted to pay workers who moved to areas with cheaper cost of living, but that failed. My guess is that full remote companies are going to shift wages so that they are closer to the national average than the region.
I know why they did it
It’s just a dumb argument when it wasn’t one before
They are looking at it from a productivity per hour basis.
With offshoring, the individual worker is cheaper, so they can be less productive yet still worth it.
With full remote, you are still paying the workers the same amount of money, so keeping productivity up may be worth it.
A comment I’ve seen a few times is that remote work highlights the minimal value that middle-managers provide to companies.
If you’re employees work from home with little interaction with their managers and they do it well/better, then why have those managers? Like you said, companies want to be cost effective. So the push back to the office could be coming from managers who don’t want a light shined on their lack of value.
Ironically that probably ousts out their minimal value harder. Not a good look forcing your “underlings” if productivity was good prior, and subsequently falls flat.
Middle management has gotten absolutely out of control in America
Imo (and this is largely conjecture) it’s an end result of stagnant wages. It used to be that you might stay in the same position but get actual pay increases 50 years ago. Now you don’t get the pay increases really, maybe a 3% annual bump if you’re lucky. They need something to retain talent so a lot of places end up creating bullshit management positions out of thin air to retain staff that come with a slightly more modest pay bump.
So instead of the 3% bump you get a 5% bump and now you’re “director of clinical programming” or “associate manager of marketing and sales for eastern iowa division” and have 10 employees “report” to you but in reality you’re neutered and have no actual power to do anything to them but tattle to the actual boss. But then the company doesn’t have to give you a 7-10% bump that outpaces inflation and feels like an actual raise. They save the real promotions for nepotism.
But this happens constantly and now industries are jam packed with employees that just bother other employees all day and/or create systems that slow down employees en masse to “increase accountability” that are constantly updated and replaced without removing old ones.
Whenever someone goes on about fixing healthcare this comes to mind. I’ve worked in healthcare for years and it is absolutely full of this. Pharma, insurance, hospital admin, all of them are loaded up with tons of these kinds of staff. I can’t tell you how many useless staff I’ve seen get promoted to positions that were literally created for them to supervise a handful of people. I can’t tell you how many times I’ve had to fill out 7 sets of paperwork that takes 2 hours and is all redundant copies of each other because 9 middle managers from the hospital, insurance, and state administration are all constantly convinced I’m a fraudulent liar despite being a licensed professional with a decade and a half of clinical experience and absolutely no investigations or citations on my record whatsoever.
Single payer healthcare is definitely a great idea that should be pursued but this is a huge problem that also needs to be addressed regardless of who’s paying the bill if you want to see changes with actual costs, wait times, clinician burn out, etc.
I’d imagine it’s similar for other industries too. How much wasted resources are in middle management at tech companies, at food production, at basically anything? How much of rising costs are basically going to pay the glut of middle managers that being nothing to the table but resource drain? Who do nothing in terms of bringing in money, who do nothing in terms of providing value? How much cheaper could my cellphone, bread, wood, etc be without these parasites sucking up resources
But then the societal impact comes up. If you addressed this problem tonight that would mean millions of people go from comfortably middle class to jobless overnight. America isn’t known for great social supports as is, what happens when you throw a 7-8 figure number into the mix (with the reduced tax income from the loss of their job income).
Fwiw I genuinely think that point is a huge factor in why our government resists proper single payer healthcare; a true program would displace millions of workers overnight as it would make companies like Aetna, Cigna, etc largely redundant and reliant on their much less lucrative life/home/auto/renters insurance divisions. They would slash workers left and right. If we ever get one it will be a two lane system where the private insurers stay alongside it as a “boutique” option for the rich to receive better service, guaranteed. Plus you know, those companies literally own politicians lol and that’s the other much larger problem
First, a lot of studies have shown the productivity boost for WFH may not be uniform or actually exist. Whether the possible productivity boost is worth the money on office space hasn’t been answered, it is likely more in that gray area than WFH proponents want it to be.
Second, while generic work productivity is about the same level, teaching new skills isn’t. We have data showing educating from home has been worse for students, and that seems to be filtering into the office place. Junior staff aren’t picking up skills fast enough and are probably a major reason why WFH productivity measures are lower than expected. It isn’t because new staff are lazy, just that they have fewer people to ask questions to and don’t ask as many questions in general.
Third, building and maintaining a work network has fallen apart. People don’t know others in an office, which can be a problem in flat company structures where communication is not expected to go through the boss only. So you have people who feel like they are doing productive work, but aren’t talking to others. This can cause a lot of rework that the managers see in slipping deadlines.
That said, the answer seems to be hybrid for these jobs as workers won’t tolerate full time in the office anymore. However, hybrid has been a clusterfuck in a lot of companies because the hybrid model is new and not everyone knows how to manage to it.
Thanks for helping bring this perspective to light. Most threads on work from home go all in on productivity being higher, but don’t take into account the longer term consequences of working from home on knowledge sharing, education, training, and team building. Even if productivity is higher now, that doesn’t mean it will remain that way in the long run.
while generic work productivity is about the same level, teaching new skills isn’t.
As someone who did his last year of college and first two years of career from home this is spot on. My senior simply refused to teach me anything, or even answering my chats and my manager didn’t care. I had to learn doing inverse engineering on the excel files because I cannot even sit at his side and saw him work ans learn. I changed companies a month ago to a full-time in office position and I’m learning more in this month that what I did on the past two years (its also helps that my new manager is also a college professor and have like 40 years of industry experience).
I work 95% remote, and I’ll be the first to admit, there is value in working physically close to your teammates. Discussion and camaraderie can happen organically, which allows people to better understand each others’ strengths. There are also fewer things to distract you, and the reality is that many people these days are experiencing a sort of internet-induced ADHD, so being in an office can make it easier to concentrate. All of this allows you to be and feel more productive.
That’s the best argument I’ve got, but I wouldn’t mandate it on anyone. The only people mandating working from office are people who are insecure with their workforce and hiring methodologies. They don’t trust their workers to do the job, so they feel the need to micromanage their workers like children. If you’re a manager, and you don’t feel like you can trust your employees, you’ve already lost.
I actually have ADHD and the opposite is true for me. Working from home I can concentrate without distractions of office workers walking by, or talking about something that I’m not interested in but can’t block out. I work in my office at home with the door closed for practically the whole day and it’s great. My work has it’s own built in structure, but I imagine that other kinds of less structured work could be very difficult for someone with ADHD.
I can tell you from experience, there is nothing more distracting than having your manager walk up behind you and tap you on the shoulder while you’re working on code. While this problem doesn’t go away completely with remote work, at least you have time to compose yourself and bookmark your work before you respond
I haven’t had a manager that makes a habit out of that, that’s a no no. If someone is in the zone, you don’t mess with em. We did have Do Not Disturb signs we could put up, but I never felt the need.
Also for me there is value in occasionally seeing people in person. The exact ratio will depend on the job, but for me it would be about 2-3 days per month in the office. We see each other, talk about how things are going, blockers, stuff we need to change, a little office gossip and then off we go again.
In that sense, a lax hybrid schedule works best for me personally. However, for it to work, everyone should agree to be in the office in the same days. Coming to an empty office and doing the same zoom calls you could have done from home is less than useful.
And since, again, the ratio of individual work Vs collaborative work varies by person and team, we’d need to find an average that sort of works for everyone and agree on a common schedule That is where I think the idea of hybrid comes in: 2 or 3 days per week in the office for everyone. My company is trying this and asking (but for now not forcing) people to concentrate attendance in the days in the middle of the week.
This clearly works better for some and worse for others.
I heard from a colleague that some companies are trying a different model. They shut down the offices and used part of the savings as budget for managers to create more frequent team events, so teams can e.g. meet in person at a restaurant a couple of times per month. I have no idea who these companies are and how this approach is going.
I think it should be on a case-by-case basis. I’m in the legal field, and there’s definitely days I don’t need to be in the office as almost all of our work is online now. State and federal mandatory efiling, e-discovery is online, and even our document management system is headed to the cloud, so no need for remoting in, just log into Microsoft 365 from any browser. Don’t even need to own any Microsoft apps natively anymore.
On the other hand, there are days that I do need to be in the office: depositions and prepping witnesses, trial preparedness, and sometimes, you just need to touch base with everyone to see how things are going. I work in securities litigation, and those are frequently very complex, document and fact intensive cases.
We have a entire practices that are 100% remote now. The partners are either elderly, or they live far away from the office and were hybrid remote before the pandemic. The paralegal that works with those attorneys is also 100% remote.
Lastly, I am much more productive at home than in the office. I do not have ADHD, and do not have a problem with attention, and do not get distracted easily. On the other hand, I’m an introvert, and really loathe the interpersonal nonsense and constant interruptions of ppl barging into my office, more often enough that just to chat. Last month, I had to do a major document review of going through 10s of thousands of emails, and to just plow through that at home, comfy in my bed, where my bathroom is just a few steps away, made me so much more productive than being stuck in the office.
Look: a lot of companies would suffer from an office real estate crash.
- the businesses that own the office real estate
- car manufacturers
- tire manufacturers
- petroleum companies
- coffee franchises
- fast food franchises lining freeways on the way to work
And most importantly, funds invested in all of the above.
People who own businesses also own stocks in other people’s businesses. Meaning they all fall and rise together. Trying to keep the “work commute” and “office rental” industries alive is just an attempt on the part of those who hold capital to keep their portfolios growing.
In secret, they are probably also trying to hedge their bets, diversify and make themselves immune to the coming collapse. They’ll try to position themselves and their capital in such a way so that the working class is the only group hurt when it happens.
But in public? They are not going to devalue their assets by standing by, complacent, as an office apocalypse approaches.
I think what they don’t realize is that it’s basically Pandora’s box at this point, and what’s been let out is a ticking time bomb. Unless something changes, remote work will always be on the cards now and will probably always be preferable.
Maybe they’re focused on playing for time so they can insure their assets and move to hedge funds that are shorting all of the above industries? I don’t know investing that well.
Yup. A lot of companies benefiting off the inefficiency of commuting.
I really feel like this makes the most sense. It beats out all the other arguments.
Middle managers need more control? Big bosses never care that much about what middle managers say, why now? And across tons of companies? Seems silly. Middle managers are notoriously ineffective.
They want to retain control/keep you tired? Maybe, but it would take a large conspiracy coordinated between the execs, which seems like a stretch. There would need to be a massive Illuminati-esque organization like that Stonecutters episode from The Simpsons.
But as always, it comes back to “follow the money.” The people making the decision will lose money somehow, so they are trying not to lose, or to minimize losses. All board of directors people have multiple investments and interests, so of course they are trying to make the best of their situation. They own part of the IT company renting the space, but also have investment in office retail space and some local businesses. If the office life drives an area to stay alive, its dying will shift the money away from all their investments. As usual, they are making those decisions without giving a shit about anything but money and their own interests.
There are a few reasons.
- The people who own the buildings are going bankrupt and so to help out their rich friends CEOs are trying to force people into using office buildings.
- Companies don’t want to let go of their power over an employee.
- They don’t trust their employees.
- They can’t watch their employees.
2,3,4 sure but I don’t think 1 is plausible
1 is plausible.
Remember the super rich have bank friends.
Ever heard of “If you owe the bank $100 it’s your problem. If you owe them $1mil it’s their problem”
A giant building that’s empty that nobody pays rent on is a huge bill to settle somehow with the bank.
1 is not plausible, you can’t believe that all rich companies are money hungry capitalists that only care about their bottom line, then also say that they are going to spend more money they are greedily hoarding to help out their rich friends. That’s the only way that 1 would be plausible, so you have to have that dichotomy of a thought process to believe it.
Go high up enough and everything is in the same hands. Boards of directors are full of people that own business real estate. Even if they might not own that one building, they have vested interested in that market going up, and that means RTO. People still need a house so it’s not like it devalues the personal housing market either.
Oh sweet summer child.
In an ideal world you’d be correct and I want you to be correct. But there are a lot of people who want to live on both sides of the grass here. They want to say they have no money to pay anybody to certain people and have all the money at the same time.
So, maybe not all, but definitely a lot. There is a reason why economies tank. Wall Street has no morals. Recessions, depressions, inflation, and the like happen. It’s because people get greedy and corrupt.
1 is not just plausible, it’s happening all the time.
It’s not necessarily about being a money hungry capitalist though – it’s not even necessarily about rich friends. Many of these buildings are owned/leased by the company. Problem is, that land value is on a company’s books as an asset. People don’t RTO, the value of that asset drops, company has to post a loss, stock value plummets as shitty traders take advantage of the numbers to turn a profit. In a good number of cases, it’s survival.
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They took the risks, in hopes of higher rewards. They want the rewards without the risk.
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The people in the boards of directors, the major investors, people who run large investment funds etc. are the same or very close to the owners of commercial real estate.
They don’t want to fuck themselves.
Also many times corporate rent is used as money laundering, to hide profits etc. Like the building is owned by company A, which is incorporated in the Virgin Islands, but is actually owned by the same group that owns company B that rents the building. So they pay money to themselves. So company B is not profitable and doesn’t have to pay taxes. Presto pronto.
Just a very obvious manoeuvre, there are certainly many more.
It’s easy, a lot of companies have board members who are also board members in office space companies.
Imaginary feeling of loss of control.
Control.
As an anecdote, I work at a midsized software company as a product manager. I have an international team of about 20 that I manage from home (full-time remote). Overall there is some loss of speed and agility versus having a full-time in-office staff. I’m not a fan of trying to quantify productivity per se, but for things like estimations and deviations there’s no question that in my environment at least, things move a little slower and take a little longer. Now personally, the fact that we can hire engineers anywhere across the globe (including in LCOL areas), don’t have to pay rent and related fees, and that some of the best engineers specifically want full-time remote more than outweighs the reduced agility (putting aside all of the other potential QOL benefits) – and if needed, some of the savings from reduced rent and salaries could be used to expand the team anyway. Thankfully my management team agrees and has continued to pursue a remote/hybrid environment. But for those places that value speed and agility most it could be a bit of a problem.
I’ve been helping a Chinese company and it includes getting on the phone at 9am to talk to them right as they’re leaving the office. For an international team there can be time zone issues like that, but if you can find overlap between Europe and China then you can find overlap between anywhere
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A lot of large companies and executives have investments in real estate. If everyone stopped using offices all of a sudden, they would lost a bunch of money because the space wouldn’t be in demand anymore.
I think you’re attributing far more coordination to these guys than they’re actually capable of.
There doesn’t have to be coordination if there’s incentives.
It’s like how so many people who drive cars act in ways that benefit cars and is counterproductive for those who don’t drive. They want plentiful free parking, lots of lanes, and cheap gasoline. They’re not particularly coordinated. They’re just incentivized because of their position. They benefit from those kinda things, so gravitate towards them (and also don’t oppose them).
What’s the incentive here, though? They personally lose money paying for office space they don’t need.
What I’ve learned from following cryptocurrencies is that people don’t need intentional coordination to be affected by the reality-distorting bias of their investments. If someone has bought a narrative about why the thing they invested in has value, when faced with evidence that this narrative may actually be wrong, most of them aren’t going to be sophisticated enough to think “Well that’s a strong argument, I guess it would be in my interest to pretend that it’s false while privately defecting”. Instead they are going to want to dismiss it outright, shit-talk everyone disagreeing, and throw more money/time/effort in the hole. Being financially invested in something messes with your emotions like that.
Basically I think that being invested in commercial real estate is likely to make someone actually believe any ideas that imply that commercial real estate has value, even if they are bullshit.
I don’t think there’s some shadowy Illuminati organisation behind it. They are pretty blatent when they manipulate things.
That said, I do think there are a lot of investors and analysts that have come to the same conclusion and are talking to each other and passing info to their clients.
Well, maybe you know something I don’t, but I’d expect most rich guys would be happy to save on office costs for themselves while still collecting rent from other rich guys, if they were personally okay going remote.
Sure, but if everyone who can goes remote, all that rent money dries up. Most also don’t directly own buildings to rent, but rather have investments in companies that do. If those other companies go under then they lose money on investments. I don’t have any inside knowledge though, this is just the conclusion I’ve been able to come to. Other than just being control freaks.
