By mid-2023, one might have anticipated a return to office work with the pandemic officially behind us. However, according to the Flex Report, which gathers insights from over 4,000 companies employing more than 100 million people globally, the percentage of workers in the office full-time decreased to 42 percent in the second quarter of 2023, down from 49 percent in the first quarter. Meanwhile, the share of offices implementing hybrid work arrangements rose to 30 percent in the quarter, up from 20 percent in the previous quarter, according to a report in Time Magazine.
Robert Sadow, the CEO and co-founder of Scoop Technologies, the publisher of the Flex Report, notes that it appears hybrid work is gaining popularity. Sadow refers to this as “structured hybrid” work, where a specific number of days are required for employees to be present in the office. On average, companies mandate a minimum of 2.53 days, with two and three days being the most common requirements. Tuesday is the most popular mandatory day, followed by Wednesday and Thursday. Few offices require attendance on Fridays, and only 24 percent require employees to be present on Mondays.
Nevertheless, not all companies are willing to accept the idea that they cannot compel employees to return to the office while still bearing the burden of rent expenses. Tesla insists on full-time office attendance, J.P. Morgan Chase requires senior staff to be present full-time, and Apple reportedly monitors employee attendance and threatens disciplinary action against those who fail to comply. Disney mandates employees to work in the office four days a week, although thousands signed a petition in protest. Critics argue that return-to-office policies disadvantage people of color and women who experience discrimination in person. Additionally, these policies create difficulties for working parents who do not wish to waste hours commuting and cannot afford nearby housing in today’s market.
The level of workplace flexibility varies significantly depending on the industry, size, and location of the company. According to the Flex Report, nearly two-thirds of companies with fewer than 500 employees offer complete flexibility, allowing employees to work remotely if they choose. In contrast, only 13 percent of companies with over 50,000 employees provide complete flexibility, although 66 percent do allow for structured hybrid work.
In terms of geographical distribution, states in the western and northeastern parts of the U.S. have the highest proportion of fully flexible companies, with Oregon, Washington, and Colorado leading the way. Conversely, Arkansas, Alabama, and Louisiana have the highest share of companies requiring full-time office attendance.
Apart from the insights provided by the Flex Report, other indicators suggest that the traditional five-day-a-week return-to-office plans are not succeeding. According to data from Kastle Systems, which tracks key-card swipes in 2,600 buildings, office occupancy in the top 10 most populous U.S. cities was only 49.9 percent of pre-pandemic levels during the first week of May. Consequently, consumer spending has declined in central cities like New York, Los Angeles, and Washington, D.C., while home values in exurbs and suburbs continue to rise.
Although the commercial real estate market has not yet completely collapsed due to long-term leases signed by many companies, the structured hybrid work model prevents employers from significantly reducing their office spaces at this point. If every employee comes in for the same three days a week, the company still requires the same amount of space as it did before the pandemic. Thus, companies end up paying for unoccupied office space on the remaining days.
Research conducted by Nicholas Bloom, a Stanford professor specializing in remote work, suggests that the percentage of days worked from home has stabilized at 30 percent, approximately five times higher than pre-pandemic levels. Bloom finds that this could be advantageous for both employees and employers, as remote workers tend to be more productive and are 33 percent less likely to quit.
Bloom predicts that the share of people working from home will continue to increase as technology advances. With the improvement of video calls, augmented reality, and virtual reality, the distinction between working in an office and working from home may diminish. The office world, which seemed unchangeable before the pandemic, is now undeniably different.
