When the pandemic hit, millions of people converted their kitchens, living rooms, and bedrooms into home offices. Now, three years later, companies want workers to return to the buildings they vacated.
The days of working from home are fading for more employees now being called back to the office. Disney recently announcing its employees will be required to spend four days a week on site.
Google will begin tracking worker badge data and include office attendance in performance reviews to get everyone in live.
You're going to go head to head with gold and Socks, who want people back five days a week.
You've got government in tech. Do you think you'll ever get back to pre COVID levels.
Millions of people around the world who got used to doing their jobs from home during the pandemic and grew to like it, are now being told by their employers that it's time to return to the office. At least some of the time. It might seem easy enough for everyone to just go back to the way things were before, but working remotely for a couple of years change the way a lot of employees think about their jobs and whether they need to commute to and from an office
to be productive. Companies, meanwhile, are trying to figure out how to adapt to these shifts in corporate life and balance the needs of their business with the expectations of their workforce. As Bloomberg Senior Management and workplace reporter Matthew Boyle found out, that is not an easy thing to get right, and every country and every company seems to have a different approach.
You have legislation either pending or proposed or actually being passed that is going to codify protect the right to work from home. We've seen these laws pop up in Ireland, They've come up in the Netherlands, beyond Europe as well, even as far as Canada. You're seeing right to disconnect. But then in the US, so we're kind of on our own. To the US, you're left to the whims of your employer, your organization, your boss.
I'm West Ksova today on the big take the tricky transition from WFH to rto Matt. Glad to have you back. I see you're in the office today.
Yes, very happy to be here. Wes.
It seemed like, for a moment there in the middle of the pandemic, everyone was saying the era of the five day at the office work week is over. This is a seismic change and it's never going to be the same. And now it's kind of looking like maybe that's not true.
Yeah, Wes, I mean your question really speaks to one of the big problems talking about this issue is that everybody wants to black and white this issue. Either the office is dead and no one's ever going back ever, ever, ever, or remote work is just for losers in their pajamas and everybody better get back five days a week. And neither of those things are true, but that's what gets
a lot of the headlines. That's what you sometimes here from certain business leaders, you know, bla musk perhaps, but you chuckle. But it's like when he we calls remote work quote immoral. I mean, we've really reached a new level of this debate. So the truth is as always
or usually you know, somewhere down the middle. But what we really wanted to do with this story is spend a little less time focused on the big companies that capture our attention like Google and Goldman Sachs, and a little more time spanning the world, you know, to sort of see, okay, what's going on in Europe and how does that compare to Asia and why and what's going on in Paris versus London. That's what we're really able
to accomplish with this. The good thing about three and a half years into the pandemic is that we finally have a lot of good data as well.
It's important that you mentioned countries around the world because this is one of the things I found really interesting about your story is how different the approaches are in different countries. So can you kind of paint us a picture of what the work from home work from off world looks like right now?
Even within countries. It's not one story, it's not monolithic. Take the US just for starters before I broaden out. In the US, usually the bigger the city, the higher
the rate of remote work. And whether that's due to the fact that you know, in New York and other big cities we've got to spend a lot of time schleppingto in office, or whether that's because in big cities you have more so called knowledge workers or creative types jobs that are more conducive to remote work, or whether that in the US is because we have bigger houses and we're more likely to have a wonderful work from home arrangement in our basement or in that third bedroom
that no one's using, rather than being cramped in a small apartment in Hong Kong with four roommates that you just want to get the heck out of. So there in that city, and this is something we've written about before, but you know, you've got tiny apartments, but you also have a very efficient public transport system, so that's going to give residents there fewer reasons to work from home.
I also came across some fresh research by Biden Nicholas Bloom and his crew, which who are sort of the gurus of remote work research out there in Stanford, and they found that Asian nations, because they did a better job of keeping COVID under wraps in the pandemic's first year, people there didn't get as accustomed to working from home
as we did in the US. To move to Europe, what fascinated to me there was that you have legislation either pending or proposed or actually passed that is going to codify protect the right to work from home, to protect the right of a worker to disconnect from their employer after normal business hours. We've seen these laws pop up in Ireland, they've come up in the Netherlands, there is a pan European movement around this right to disconnect.
You're seeing this legislation being proposed and passed. That's a policy solution that I don't really think we're going to be seeing in the US anytime soon, certainly not in the halls of Congress. May see some statewide protections around the right to work remote, but then in the US, so we're kind of on our own. In the US, you're left to the whims of your employer, your organization, your boss in many cases.
And what do we know about how workers feel about coming back to the office versus working from home or just having some sort of flexibility.
I think they really they don't mind it if there is a reason. There is nothing worse than spending eight hours on zoom calls that you could have had from your home office or just or from Starbucks or from anywhere. If you're coming into an office, you want some intentionality about it. You want to be part of a brainstorming session, or perhaps it's just something more informal, like an afterwork gathering.
That's what I think employers need to realize that if you're going to do a policy, you need to be going in for a reason, and usually it's around your team itself. I mean, it's one thing to just say, Okay, the whole company has to be in. It's like, well that's great, you know, but I'm not really interacting with the engineers today, or I have nothing to do with the sales team. Make it very specific to your team, to your function for why you're in, and I think you're going to get a lot less.
Pushback, Matt. One thing we hear from CEOs a lot is that part of the office culture is you bump into people in the office and you have impromptu conversations that lead to really good ideas. And I find that that's actually true. I do run into people and get good ideas. But I also find that when I'm working at home that sometimes the company gets more work out of me because I'm just focused and sitting here working all day instead of having all those conversations.
The number of times I've bumped into someone and bounced the story idea off them and realized it was either a a good idea or B I should just shut up about it and move on. I mean, those are valuable, but let's say, if I'm writing a story doing heads down work, that is, when being home I think really benefits any sort of desk base worker. You don't have the constant drumbeat. You know, you might still have the pinging of slack, but at least you can turn that off.
But you're not going to have people so called desk bombing you just sort of sidling up and say, hey, hey, Wes those nicks. You know, you don't really need that when you want to get heads down focused work done. So I think there's definitely a value for both of those. It's figuring out how much time do you need spend at home to get that sort of private, more focused work done, and what are the opportunities for you to be in an office and again having those more sort
of spontaneous connections that I agree certainly do happen. It's just sometimes it seems like a little bit more is made of them. A lot of interactions people have in inn office, especially under represented minorities, are not wonderful. They're
not wonderful at all. They're microaggressions. And that's a big reason why when you polled, for example, black Americans, they were much happier, felt much more productive and satisfied in the early months of the pandemic when everybody was remote Matt.
There also seems to be sort of an about face on the messaging from companies during the pandemic. A lot of companies were really quick to say, even though our workforce is at home, they've never been more efficient and never been more productive. And now that the pandemic is behind us and people can come in, and people are saying working from home isn't as efficient, it isn't as productive, and we need people to come back in. And it's sometimes the same companies.
Yeah, there was this sort of sense of Okay, I think, okay, we can do this. This is amazing. This was surprising again to at least to some people, those who didn't really study remote work. Now, though, as some of the more data is trickling out, you are seeing cases where sometimes people will cherry pick a new bit of research that comes out that says, for example, you know, Indian data entry workers were eighteen percent less productive you know
while working remote. Everybody jumps on that. But then the other hand, you still have you know, reams of data and research showing from different researchers that call center workers can be as productive, if not more productive, and happier working remotely. I mean, you look at a call center worker, for the most part, you can be doing that from home. We are at least finally seeing some more nuanced and progressive approaches to this, with a lot of companies settling
on some type of hybrid. And again, a hybrid doesn't always work. You can really screw up a hybrid plan if you don't spend a lot of time researching it and figuring out what types of work your workers do
and where do they best do those jobs. I've got some data for you from Gallop, which is a very reputable polling organization, that shows that when you go from three to four to five days in the office, employee engagement kind of drops off a cliff because you might have people who are very used to three days in the office and they had their life sort of fixated around that, I know when i'm home, I know when I'm in the office, and then you move that to four or five days kind of on a whim, It'll
uproot a lot of people's lives. And of course you're still going to you're going to lose some of those people.
And That's an important point because this balance of power between companies and workers is always lightly shifting. During the pandemic, when there was this very tight labor market, work from home was one of the incentives. I remember people would say, It's like the first question they would often hear from new job applicants, what is your flexible work arrangement? Now, now that the labor market isn't quite as tight and people aren't as willing to leave, maybe there aren't as
many opportunities. Companies seem to be understanding that they've got a little bit more power.
I mean, if you're a smart employer, you're going to be offering at least some type of flexible work arrangement for the people you want to hire. So while yes, the balance of power has shifted back certainly more towards the employer in recent months, I still think if you have skills that are in demand, you should be able, if not to write your own ticket, then at least to have some say over where, when and how you'll work.
After the break, with fewer people working downtown, what will happen to all that office space?
Their statuesque vast and staggering, and they're empty skyscrapers and office buildings, once stacked high with businesses, are experiencing high vacancy rates in the US nearly nineteen percent, five and a half percent higher than before.
The pandemic MATT. Another thing that comes into play in these discussions about return to office seems to be office real estate and cities. Companies have a lot of office space and they don't want it to stand empty.
Yes, and twenty percent of it in the US is empty right now. Office vacancy rates are at an all time high, and with interest rates rising, a lot of the loans that are back in these offices are coming do companies are just wholesale sometimes thirty, forty, even fifty percent of their real estate, and many times these were
long overdue moves. You know, companies grew up fast. Let's say, if you're especially if you're a hot, fast growing tech startup, you'd sometimes have five or six offices in the same city in like Austin. You know, we got offices everywhere, we just need them. No, you didn't really need six different ones, so consolidated into one or two probably a wise idea, But yes, there is a reckoning here for
the commercial real estate sector. And unless you have what they call, you know, class A real estate with all the bells and whistles, you're probably you know, on the hunt for some tennis right now. You know, why is it that eighty percent of offices traditionally we're just individual desks and cubicles, and only twenty percent was collaborative space that should be flipped. And in a lot of workspaces and offices it is flipping right now. A lot more
space set up for what we call neighborhoods. You'll do some work with your team, but there's also space for hanging out, a lot more open space, outdoor space. So we are seeing some more creative approach as to how offices are laid out, and if you don't want to get creative, it's going to cost you. The issue is that commercial real estate, folks, it's a very risk averse industry historically, because if you've made a mistake on a seven year lease, you were going to get reminded of
that mistake for the next seven years. So they've often not really you know, let's say, taken chances or pushed the boundaries because all you had to do is line up a bunch of desks cubes, and you know, everyone had to go there because where else were you going to do your work. Now that people have a choice about where work gets done, I think offices need to make some hard choices about what these offices look like.
And it's not just companies that are bringing pressure on workers to return. Its politicians and governments. You see the mayor of Washington, d C. Telling Joe Biden, you have to bring federal workers back to the office because the downtown businesses can't survive.
We need decisive action by the White House to either get most federal workers back to the office most of the time, or to realign their vast property holdings for use by the local government, by nonprofits, by businesses, and by any user willing to revitalize it.
DC New York, you know, Mayor Adams has been very vocal.
I'm trying to fill up office buildings and I'm telling JP Morgan Goldman Sacks, listen, I need your people back into office so we can build the ecosystem.
But it just sort of speaks to the fact that, yes, this is having a massive impact on downtown economies, but not in every city. That's one thing I learned from doing this story is that kind of a lot depends on how your city is laid out. There was a great report recently from the McKinsey Global Institute that found that if sort of pandemic attendance rates hold, as much as eight hundred billion dollars of real estate value is going to evaporate by twenty thirty in nine cities around
the world. And that includes New York and San Francisco, which of course gets so much attention here, but also includes cities like Paris and Munich. But in some cities we do see that when you have a city that's not just set up as a downtown business district where all you have is offices and coffee shops and delis, when you actually have people living and working and playing in a city, the impact there is much more muted. And that's what this McKenzie report found, which I found
very very interesting. But you're right the price tag. At the end of the day, I asked them what their worst case scenario was. They said one point three trillion dollars in real estate value gone by twenty thirty in these nine global cities. If attendance rates continue to fall or even sort of plateau where they are because right now in the US, attendance is not going up. We'll
see if it goes up. We will see if we can get above fifty percent of pre COVID levels in these ten major cities that are often tracked and that we track on the Bloomberg terminal. But I don't know. The past two years, we've thought, Okay, Labor Day, everyone's going to come back, right, No, for two years straight, No, no, no, So we'll see what holds this time around.
I can imagine a lot of our listeners who don't work in an office, maybe they work in manufacturing, or they work in retail or drive a delivery vehicle, seeing this conversation saying, oh boo, who these people have to go to work?
Yeah, there's That's been sort of a common theme throughout the pandemic, is that I think we spend far too much time focusing on desk workers, and in terms of the coverage, in terms of the re search reports, it's always you know, what are the software engineers going to do at Google? And you know what are the journalists at Bloomberg and the New York Times doing with their
ARTEO policy? And meanwhile, you have more than half of America frontline workers, nurses, teachers, doctors, truck drivers, Walmart cashiers. But I think a step back perhaps is required so that again, it doesn't just become black or white, or you know, a conflict. You know, then all of a sudden you've got sort of the frontline workers and the knowledge workers sniping at each other when everyone should be realizing the way all of us are working has changed.
And I think there have been improvements, maybe not as noticeable improvements for frontline employees, but I think work is changing no matter what type of work do you do.
And Matt, you write about people at the very other end of that spectrum, what you call digital nomads.
Yeah, and these are people who, throughout the pandemic, or at some point the pandemic, just said, look, I've got a job that I know I can do anywhere from anywhere in the world, not just at Starbucks. I'm talking about Portugal, I'm talking about the beach, you know, and I'm very highly compensated. And my employer either doesn't know where I am or doesn't care as long as I
get my stuff done. Some of them moved upstate New York to the Catskills or Lake George or something like that, and they used to live in Manhattan or or one of the nearby counties, but others went much further afield, and countries realizing this, started to roll out all sorts of incentives, remote work visas, special visas if you bought
real estate there, although not everyone did. You also saw some cities in the US as well doing this, giving incentives to more far flung cities who suddenly said, wow, we can attract a lot of workers. Boise is a perfect example. Boise, Idaho. I don't think a lot of tech workers were living there in let's say the two thousand and eight, but during the pandemic, a place like that became much more popular, so much so that actually
property prices guess whatever is the proper prices? When a lot of well off, well to do remote workers show up, they skyrocket. Sometimes the locals get a little bit annoyed at that, and then guess what happens. Sometimes the companies say, oh, by the way, we now want you back. You have issues around how do we tax those workers. We have issues around how do we pay them? Do you give a ten percent pay cut to someone who moves from
San Francisco to Boise or not. What we've seen with digital nomads though, is that where cities like Lisbon, when a lot of European cities had been very popular, we're now seeing a bit of a migration. Both Portugal and Ireland have kind of thrown out the welcome matt to some of these digital nomads, rescinding some of the benefits and visa related stuff they had extended in years past. So those digital nomads are smart people. They are just packing up and moving to places like soul Ho, Chi
Minh City, Manila. So what impact they will have on those local economies remains to be seen.
When we come back. So what does the office work week of the future look like? Sometht We're seeing companies that had two days at home now saying they want three days in the office, they want four days in the office. Where do you think this is heading?
Well, I hate to say it depends, but a lot does depend. If you go from three days in the office to four and your turnover spikes, you know, and you lose some of your most creative workers, some of your best and brightest, or some of your younger employee you know, people that you had spent a lot of time recruiting and saying you are the future of the organization.
If you then lose those folks, I would hope that a CEO might rethink that policy unless there's something else here or she is really, you know, gaining from it. On the other hand, you know, you could go from three days to four days, and if you're giving people reasons to be on all four of those days, and people are able to balance integrate their work and their life together, I mean, it's really funny.
We was.
We did a column the other week from Sarah Carmichael, one of our opinion columnists, who said, these RTEO battles sometimes pit spouses against each other where and I know that for a fact. I'm in currently three days a week. My wife is in two days a week in offices in Manhattan. That works out very well because that equals five. But if let's just say one of us moved to four, or my wife moves from two to three, that is
going to shake up our life a little bit. Not as much as if you know, we had two young kids in diapers, but we do have two kids, and we were balancing a ton of stuff outside of work and outside of the home. What impact will that have? We shall certainly see. But I would hope that any business leader, any organization is not just going to do this as a knee jerk reaction or just because they read something about, you know, moving from here to there.
Talk to your employees, survey them, ask them, you know, how the current policy is going.
Matt, always great talking with you. Thanks for coming on the show.
Thanks a lot. Wes, great to be here.
Thanks for listening to us here at The Big Take. It's a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen, and we'd love to hear from you. Email us questions or comments to Big Take at Bloomberg dot net. The supervising producer of The Big Take is Vicky Bergolina. Our senior producer is Catherine Fink. Our producers are Mo Barrow and Michael Falero. Kilde Garcia is our engineer.
Our original music was composed by Leo Sidrin. I'm Wes Kasova. We'll be back tomorrow with another Big Take.