If the US labor market continues weakening next year, companies could stop allowing employees to work remotely.
Executives generally fall into two camps when it comes to working from home, which has increased during the pandemic as workers have gained influence over a tight labor market. Some believe he has advantagelike happier employees, while others say company culture is built in the office.
“There is a real divergence between the organizations”said Melissa Swift, head of workforce transformation at consulting firm Mercer. “You’re starting to see companies taking sides.” That said, it looks like remote jobs are here to stay. Gallup predicts that about 75% of remote workers will be hybrid or fully remote in the long term.
Here are the top reasons why experts say remote working will continue in 2023:
Allowing remote work is crucial for retention. Hybrid working has boosted employee satisfaction and productivity, reduce 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 turning back,” said Caitlin Duffy, research director at consulting firm Gartner.
While, turnover has become a costly problem as drop-out 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 performers, even if the economy is deteriorating, according to Prithwiraj Choudhury, an associate professor at Harvard Business School.
“In any economic environment, top talent always has outside options,” said Choudhury, who studies remote work.
Remote work opens recruitment to a wider geographic area and a larger pool of talent. This is a huge advantage, especially for specialized positions 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 of recruiting talent from West Coast tech hubs.
Offering flexibility at work can also support diversity initiatives, equity and inclusion of a company. This is particularly the case for groups such as disabled workers, who are often excluded from the labor market. Working parents and people of color have also reported huge benefits from working remotely.
Recession cost reductions
Instead of reversing the shift to remote working, 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 offices in New York, Chicago and Washington with the intention of spending the savings on hiring and benefits. Soon after, Lyft Inc. leased about half of its offices in San Francisco, New York, Seattle and Nashville. Other large companies, such as Meta Platforms Inc. and Amazon.com Inc., have scaled back their back-office expansion plans.
Employees authorized to work from home are ready to take a pay cut in exchange for greater flexibility and lower travel costs. Work-anywhere policies also allow bosses to cut labor costs by hiring from states, like Idaho, Louisiana and Kansas, that have a lower cost of living.
If a company takes a drastic turn, the leaders 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 working model. But so many employees opted for the severance package that he had to soften his stance to convince some employees to return.
Maximizing leverage in this way is not a good long-term strategy, according to Ben Granger, chief occupational psychologist at Qualtrics.
“Prospective applicants can see comments from employees who have left,” Granger said. “They can read the articles. It would be wise for leaders to think about it.