September 11, 2023 • 22 mins
By now, most people across the globe have returned to pre-pandemic routines like traveling and going to the movies. But when it comes to where they work, many remote employees want to leave their offices in the past. Bloomberg’s Matthew Boyle joins this episode to discuss companies’ ongoing battle to lure employees back to in-person work, and where the return-to-office movement has gained the most traction around the world.
Read more: Return-to-Office Is a $1.3 Trillion Problem Few Have Figured Out
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
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.
Speaker 2 (00:12):
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.
Speaker 1 (00:22):
Google will begin tracking worker badge data and include office
attendance in performance reviews to get everyone in live.
Speaker 3 (00:30):
You're going to go head to head with gold and Socks,
who want people back five days a week.
Speaker 4 (00:34):
You've got government in tech. Do you think you'll ever
get back to pre COVID levels.
Speaker 3 (00:39):
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
(01:00):
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
(01:21):
Boyle found out, that is not an easy thing to
get right, and every country and every company seems to
have a different approach.
Speaker 4 (01:29):
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
(01:51):
of your employer, your organization, your boss.
Speaker 3 (02:00):
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.
Speaker 4 (02:16):
Yes, very happy to be here. Wes.
Speaker 3 (02:18):
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.
Speaker 4 (02:34):
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
(02:57):
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
(03:20):
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
(03:42):
have a lot of good data as well.
Speaker 3 (03:45):
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?
Speaker 4 (04:02):
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
(04:22):
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
(04:45):
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
(05:06):
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
(05:26):
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
(05:49):
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.
Speaker 3 (06:08):
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.
Speaker 4 (06:18):
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.
(06:40):
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,
(07:01):
to your function for why you're in, and I think
you're going to get a lot less.
Speaker 3 (07:05):
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
(07:27):
all day instead of having all those conversations.
Speaker 4 (07:30):
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
(07:51):
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
(08:13):
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
(08:33):
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.
Speaker 3 (08:43):
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,
(09:04):
and we need people to come back in. And it's
sometimes the same companies.
Speaker 4 (09:08):
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
(09:31):
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
(09:54):
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
(10:15):
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
(10:35):
uproot a lot of people's lives. And of course you're
still going to you're going to lose some of those people.
Speaker 3 (10:41):
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
(11:03):
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.
Speaker 4 (11:11):
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
(11:32):
to have some say over where, when and how you'll work.
Speaker 3 (11:37):
After the break, with fewer people working downtown, what will
happen to all that office space?
Speaker 5 (11:51):
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.
Speaker 3 (12:06):
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.
Speaker 4 (12:21):
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
(12:42):
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
(13:03):
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
(13:24):
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
(13:45):
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
(14:08):
make some hard choices about what these offices look like.
Speaker 3 (14:11):
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.
Speaker 6 (14:26):
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.
Speaker 4 (14:49):
DC New York, you know, Mayor Adams has been very vocal.
Speaker 1 (14:52):
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.
Speaker 4 (15:03):
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
(15:26):
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
(15:48):
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
(16:10):
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,
(16:31):
So we'll see what holds this time around.
Speaker 3 (16:34):
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?
Speaker 4 (16:49):
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
(17:10):
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
(17:33):
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.
Speaker 3 (17:46):
And Matt, you write about people at the very other
end of that spectrum, what you call digital nomads.
Speaker 4 (17:53):
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
(18:13):
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
(18:34):
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
(18:55):
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
(19:16):
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
(19:38):
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.
Speaker 3 (19:53):
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
(20:13):
the office. Where do you think this is heading?
Speaker 4 (20:16):
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
(20:37):
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
(20:57):
people are able to balance integrate their work and their
life together, I mean, it's really funny.
Speaker 6 (21:03):
We was.
Speaker 4 (21:03):
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,
(21:24):
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
(21:45):
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.
Speaker 3 (21:56):
Matt, always great talking with you. Thanks for coming on
the show.
Speaker 4 (22:00):
Thanks a lot. Wes, great to be here.
Speaker 3 (22:02):
Thanks for listening to us here at The Big Take.
It's a daily podcast from Bloomberg and iHeartRadio. For more
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Email us questions or comments to Big Take at Bloomberg
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(22:26):
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.
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.
Speaker 2 (00:12):
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.
Speaker 1 (00:22):
Google will begin tracking worker badge data and include office
attendance in performance reviews to get everyone in live.
Speaker 3 (00:30):
You're going to go head to head with gold and Socks,
who want people back five days a week.
Speaker 4 (00:34):
You've got government in tech. Do you think you'll ever
get back to pre COVID levels.
Speaker 3 (00:39):
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
(01:00):
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
(01:21):
Boyle found out, that is not an easy thing to
get right, and every country and every company seems to
have a different approach.
Speaker 4 (01:29):
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
(01:51):
of your employer, your organization, your boss.
Speaker 3 (02:00):
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.
Speaker 4 (02:16):
Yes, very happy to be here. Wes.
Speaker 3 (02:18):
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.
Speaker 4 (02:34):
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
(02:57):
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
(03:20):
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
(03:42):
have a lot of good data as well.
Speaker 3 (03:45):
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?
Speaker 4 (04:02):
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
(04:22):
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
(04:45):
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
(05:06):
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
(05:26):
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
(05:49):
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.
Speaker 3 (06:08):
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.
Speaker 4 (06:18):
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.
(06:40):
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,
(07:01):
to your function for why you're in, and I think
you're going to get a lot less.
Speaker 3 (07:05):
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
(07:27):
all day instead of having all those conversations.
Speaker 4 (07:30):
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
(07:51):
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
(08:13):
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
(08:33):
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.
Speaker 3 (08:43):
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,
(09:04):
and we need people to come back in. And it's
sometimes the same companies.
Speaker 4 (09:08):
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
(09:31):
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
(09:54):
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
(10:15):
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
(10:35):
uproot a lot of people's lives. And of course you're
still going to you're going to lose some of those people.
Speaker 3 (10:41):
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
(11:03):
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.
Speaker 4 (11:11):
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
(11:32):
to have some say over where, when and how you'll work.
Speaker 3 (11:37):
After the break, with fewer people working downtown, what will
happen to all that office space?
Speaker 5 (11:51):
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.
Speaker 3 (12:06):
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.
Speaker 4 (12:21):
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
(12:42):
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
(13:03):
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
(13:24):
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
(13:45):
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
(14:08):
make some hard choices about what these offices look like.
Speaker 3 (14:11):
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.
Speaker 6 (14:26):
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.
Speaker 4 (14:49):
DC New York, you know, Mayor Adams has been very vocal.
Speaker 1 (14:52):
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.
Speaker 4 (15:03):
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
(15:26):
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
(15:48):
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
(16:10):
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,
(16:31):
So we'll see what holds this time around.
Speaker 3 (16:34):
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?
Speaker 4 (16:49):
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
(17:10):
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
(17:33):
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.
Speaker 3 (17:46):
And Matt, you write about people at the very other
end of that spectrum, what you call digital nomads.
Speaker 4 (17:53):
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
(18:13):
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
(18:34):
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
(18:55):
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
(19:16):
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
(19:38):
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.
Speaker 3 (19:53):
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
(20:13):
the office. Where do you think this is heading?
Speaker 4 (20:16):
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
(20:37):
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
(20:57):
people are able to balance integrate their work and their
life together, I mean, it's really funny.
Speaker 6 (21:03):
We was.
Speaker 4 (21:03):
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,
(21:24):
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
(21:45):
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.
Speaker 3 (21:56):
Matt, always great talking with you. Thanks for coming on
the show.
Speaker 4 (22:00):
Thanks a lot. Wes, great to be here.
Speaker 3 (22:02):
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
(22:26):
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.
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