I have to admit that I am a bit of a contrarian. When everyone starts jumping on the bandwagon, I’m inclined to jump off or at least evaluate the bandwagon with a good deal of skepticism. The work-from-home bandwagon is a perfect example.
In the past, I have advocated for a broader use of remote work arrangements because technology was moving rapidly in that direction and it is a valuable perk for many people. But now that the pandemic proved to CEOs that remote work actually works and that it has a number of important benefits, everyone seems to be touting remote work as the best thing since sliced bread. Trendy tech companies, in particular, seem to be competing with each other to see who can be first to divorce themselves from the office building and marry into the work-from-home mania. Twitter, Square, Shopify, Slack and many others have announced major initiatives toward remote work as the corporate norm. Shopify founder and CEO Tobi Lutke apparently went so far as to tweet: “Office centricity is over. As of today, Shopify is a digital by default company.” (1)
In 2018, REI -- the outdoor equipment retailer -- started work on an 8-acre corporate campus in Bellevue, Washington. In keeping with the company culture, the new campus has a very outdoorsy feel with garage-door style walls that can open up to let the outdoors in, and exterior amenities like fire pits and blueberry bogs. Fast Company called it a “summer camp for grown-ups.” (2) But recently REI put the never-used campus up for sale and instead is planning for employees to “flex” between working remotely and commuting to one of three smaller satellite offices in the Seattle area. Interestingly, Facebook is apparently the likely buyer.
REI is one of the more extreme examples, but numerous companies have made the same choice to pivot away from offices even as the pandemic winds down and returning to the office is once again possible. Urban commentators are starting to jump to the conclusion that this is another nail in the coffin of big cities, as remote workers and their trendy employers flee city life for the tranquility of small towns, or the scenic beauty of seaside or mountainside locations.
It is time, I think, for a sanity check. Yes, work-from-home is an important, long-term trend that will have a significant impact on cities. But I think that impact will be different than many people are projecting, and in particular, I don’t think it means that downtown offices and high-rise condo buildings will immediately go dark. In this post, I’m going to look at what I think “work-from-home” as a long-term trend is really going to be like, and then take a hopefully more nuanced look at the likely impact on cities, especially those in the midwest.
“Back of the Envelope” Projections
The first step is to get some sense of the scale that we are talking about. Direct comparisons with the past year are misleading because people and companies will put up with a lot that is sub-optimal during a pandemic simply to keep food on the table and revenue coming into corporate coffers. As the impact of the pandemic fades, not everything that was tolerated during the past year will be continued into the future. Keep in mind that many jobs cannot be done remotely and many people who could work from home won’t want to if they are given the option. Some people don’t have the right personality for remote work and others don’t have the right physical environment.
The reality of the post-pandemic workforce is fluid and undefined enough that any projections should be taken with not just one, but multiple grains of salt. So with that disclaimer, let’s start with the assumption that when employment returns to normal we are talking about 140 to 150 million jobs in the United States. The best estimates I could find are that somewhat over a third of jobs could feasibly be done remotely. That means that roughly 50 million jobs could, in theory, be transitioned to a work-from-home approach.
That number, however, overstates the potential impact for two reasons. First, some of those jobs were already being done remotely before the pandemic and thus don’t represent new work-from-home positions. Estimates from the Pew Research Center indicate that roughly 20 percent of the potential remote-work jobs were already being done remotely before the pandemic hit (3). The second reason is that long-term change is hard. Don’t underestimate the number of managers and corporate leaders who will fall back into the old habits of working from the office and won’t even give their employees the option of working from home. For the sake of discussion, however, let’s be optimistic and assume the 75% of the jobs that could be done remotely but weren’t already operating in that mode will transition in the future to be available for some type of work-from-home scenario. That means 50 million jobs, less the ones that were already remote (10 million jobs), times 75% -- which yields roughly 30 million jobs.
Thirty million jobs is certainly not a trivial number, but I’m not really done with our projections. What both business and employee surveys are making clear is that the work-from-home trend is not necessarily an all or nothing proposition. It is certainly too early to know for sure, but early indicators are that the clear majority of these jobs are likely to involve what is being referred to as a hybrid work schedule, where some time is spent working remotely from home and some time is spent in the office working much as before. From the surveys that I have reviewed, my best guess is that roughly two-thirds of potential remote workers will end up on some type of hybrid schedule. The remaining third will be split between people who opt to work remotely all of the time and those who hate remote work and opt to be in the office all of the time.
The bottom line is that somewhere around 5 million jobs (a little over 3 percent of all jobs) might become 100% remote and thus in a position to leave the city and move to the beach or the mountains. Of course, some of these people will stay in the city because they like urban living, but they could leave if they wanted. This is still a big number but when spread across the country it is probably not going to have a huge impact. I will come back to this point later on, but the other number that needs to be emphasized is that roughly 20 million workers (about 14 percent of the workforce) are likely to be on a hybrid schedule. If only half of them come into the office on any given day, this is likely to have a bigger impact than those who opt to move out of the city entirely.
The final point for this section is that while these estimates, rough as they are, paint a picture of what things will be like in a post-pandemic world, the trend for the future is clearly toward remote work. Adapting to the immediate shift is one thing, but cities should anticipate that over time technology will improve and job requirements will change to make more and more jobs subject to work-from-home options.
Impact on Workers
There have been a lot of anecdotal stories about people who feel so much more productive working from home, and many companies have been pleasantly surprised at how productive their employees have been during the pandemic despite the adapt-on-the-fly behavior that managers and employees have been forced into this past year. Survey results show that reality is more mixed, however, with a significant number of employees struggling to get their work done. New hires and employees with weaker skills or those unclear on their assignments tend to find working from home stressful. Being in the office provides informal ways of asking for help that are hard to replicate in a remote setting. In addition, research seems to indicate that being in a virtual meeting is more stressful and takes more mental concentration than being in an in-person meeting. Zoom meeting “burnout” may not affect everyone, but it is a real thing. (4)
On the other hand, many people appreciate the extra time that not commuting to work has given them, and the ability to avoid interruptions from co-workers -- particularly those viewed as annoying or disagreeable -- can make time working seem more productive. Add to that the benefits of having your own kitchen and your own bathroom readily available, and it can make working from home far better than going to the office.
The downside is that many remote workers do not have a work space at home that is anywhere near ideal. People adapted as best they could, but moving forward it will be less and less acceptable to work from your bedroom or your kitchen counter. Some people have an office-type space already in their home and many others have found ways to add a permanent desk in an underutilized corner, but that is certainly not universal. Multiple monitors and high quality desk chairs that were commonplace in the office are often missing for those working at home. Finally, wi-fi speeds vary widely and can make a huge difference in whether working from home is enjoyable or frustrating.
In essence, employees are effectively subsidizing their employers by providing floor area, office furniture, and network connectivity at their own cost. Some companies have provided a stipend or bonus to help offset those costs, but that is not universal and probably doesn’t really cover the full cost even when it is available. For many workers, this may be a reasonable trade-off for the benefits of working from home. Increased flexibility in personal schedules is particularly valuable to many people. What needs to happen, in my opinion, is that costs and benefits need to be more explicitly explored by both workers and companies to make sure that the trade-offs which we were forced into during the pandemic are really ideal for the long-term.
The other worker related topic that I think needs further exploration is the dividing line between when you are on the job and when you are not. For years, this line has been getting fuzzier and fuzzier simply because smartphones made it harder to avoid work phone calls or emails during non-work hours. But working from home blurs the line even further. Surveys have shown that the number of meetings, emails and instant messages between the hours of 6 pm and midnight have gone up significantly. Is that intentional because people are compensating for doing a personal errand during the day or involuntary because people feel guilty if they don’t respond immediately? If work-from-home is going to be a long-term thing, I think that company policies and the corporate software used for communication and scheduling needs to reinforce the ability to be “off the clock” so that work/life balance is not just a meaningless buzzword. (5)
Perhaps what is needed is the home office version of a Murphy bed. A piece of furniture that can open up to be your office, complete with whatever monitors, webcams, headsets, files or other work paraphernalia might be needed. When closed, it would return the room to more of a home setting and be a clear signal to the worker (and his or her family) that work is done for the moment and personal lives should take precedence.
Impact on Companies
On the surface, it might appear that companies with remote workers are the big winners in this new world of work. With a significant portion of their workforce working from home, companies should be able to reduce the amount of office space they either own or rent, particularly in high-rent downtown locations. Think back to the REI example above -- they traded a high-dollar mega-campus for three satellite offices and remote work. The cost savings will be big, and while some employees might miss the outdoor fire pits and blueberry bogs, most will appreciate the flexibility of working from home and the convenience of a satellite office which is probably closer to their home than the mega-campus.
In my opinion, the corporate campus or signature corporate high rise was always more of a CEO ego thing rather than a real strategy to improve productivity and creativity. Most of the real work gets done in relatively small teams or departments. Having 10,000 employees all in one place is not all that likely to generate as much cross-team collaboration or brainstorming as CEOs seem to believe. Anyway, if working from home signals the end of the corporate campus, I think most companies will be far better off.
In addition to saving on office rent, companies with a strong work from home focus are likely to benefit from higher employee satisfaction scores, higher productivity (in most cases) and an enhanced ability to recruit from around the globe. This last advantage applies more to recruiting superstar employees than it does to the routine recruiting of college graduates. If your company needs 10 junior lawyers or 20 entry-level accountants, having a strong work from home platform will be an advantage but it will be just one factor out of several that new grads will be considering. On the other hand, if you are trying to convince a high-profile, proven performer to join your company, being able to allow that person to work from wherever they want while still having a high level of integration with company personnel, systems and data might be a game changer.
The final advantage is that supporting work-from-home employees is very nearly the same as supporting freelancers who work on an as-needed basis. Prior to the pandemic, companies were using more freelance and contract employees in place of their own employees to either reduce cost or to provide added flexibility for either rapid growth or unexpected shifts in demand. Bolstering corporate systems to handle remote work also improves the ability to integrate freelancers more comprehensively into the corporate workflow, regardless of whether they are across town, across the country or around the globe.
However, all of these advantages are going to come at a cost that I think many corporate leaders are probably underestimating. It is still the right thing to do, but the “win” may not be quite as big as they are expecting. Remember that what people and managers were willing to do during the pandemic crisis is not likely to be sustainable over the long term. And hybrid scheduling, in particular, is likely to introduce new costs that aren’t currently well defined.
To begin with, the savings in office space probably won’t be as large as it might appear initially. Even if only half of their employees are coming into work on any given day, most companies probably won’t reduce their office costs by half. The types of tasks that are likely to be most important on the days that people are in the office are the collaborative, team oriented tasks that are harder to do remotely. That means that companies will need to rip out cubicle farms and build both formal and informal collaboration spaces -- including state-of-the-art video conferencing/recording hardware and software so that collaboration efforts can still include remote workers. Advances in virtual reality and augmented reality technology will make this easier over time but don’t expect it to come cheaply. In addition, scheduling work spaces, meeting rooms and other employee resources for dozens or hundreds of employee teams is likely to require software that most companies have never had to purchase or use.
To make workers comfortable enough to come into the office even on a hybrid schedule, companies are going to need to ramp up their cleaning and disinfection routines and probably revamp their HVAC systems to include higher air flow rates, sophisticated filtration and perhaps UV purification systems.
Another cost that is probably being underestimated is in IT. Expenses for hardware, software and IT personnel are all likely to grow significantly. Many companies have already issued laptops to most of their office staff, but those who haven’t are going to be forced to do so if they really want to be serious about promoting work from home. Again, relying on employees to log into corporate systems from their personal devices might have worked during the COVID crisis, but it won’t work as a long term strategy. And to be really progressive, companies are going to want to offer multiple monitors, headsets and high quality office chairs either for free or at substantial discounts.
On the software side, buying Zoom or Teams licenses is just the beginning. Corporate legacy systems will need to be upgraded or replaced to support remote workers, and new software for team communication, collaboration and performance monitoring will be needed to really get the most out of a work-from-home strategy.
Supporting all of this far-flung hardware and software will put a tremendous amount of stress on the IT staff. Expect staffing needs to increase, particularly for help desk personnel and training personnel. In addition, working from home is an IT security nightmare because it multiplies the number of vulnerabilities that hackers can exploit. (6) Companies dealing with sensitive data may need to deploy laptops with bio-metric authentication (e.g. fingerprints or facial recognition) to lessen the risk when laptops are inevitably lost or stolen. High end encryption technology may be needed to fortify communication with remote employees using the home wi-fi set up they bought from Target. Phishing and ransom-ware attacks are likely to explode, and fighting off those threats will be expensive and labor intensive.
Finally, companies should plan on increased training costs, particularly for managers. In my experience, the more senior the manager the more likely they are to be technically challenged -- to the point where many simply delegate any technical issues to their underlings. In a corporate world where the vast majority of workers are remote either full-time or part-time, that will no longer be acceptable. In addition, managing remote workers requires different skills and management techniques. Many managers who were successful in the office will struggle with remote or hybrid teams unless they are given the necessary training resources.
Impact on Cities
I’m going to start this section by pushing back on the story line that remote work means the decline of cities. Yes, I’m sure some people have traded their central city condo for a nice single family home with lots of room in a quaint and serene village 100 miles away. But anecdotal stories like that tend to distort reality, mainly because the pandemic made people do extraordinary things that in many cases won’t last once the pandemic has passed. How long will it be before quaint and serene turns into trite and boring?
As I pointed out near the beginning of this post, the work from home trend will increase the number of households that work remotely 100% of the time, but not as dramatically as some have suggested. The biggest impact will probably be felt in a few big cities where the cost of living and the cost of office space has gotten completely out of hand -- cities like New York, San Francisco or Boston. People who can work from home full time have a substantial economic incentive to leave those locations. Even then, it might just as frequently be a move from Manhattan to Long Island or Hoboken as it is to a fishing village in Maine. And companies might downsize their downtown corporate presence but they aren’t likely to leave Silicon Valley entirely. The value of office buildings might drop but they aren’t going to plummet.
For most cities, the bigger story is the rise of hybrid work-from-home opportunities which will weaken (but not break) the ties between companies and urban locations. Hybrid work will change commuting patterns and the location of office space within communities, as companies rethink the role of office space as a corporate resource. Office space will be less about doing typical work and more about reinforcing corporate culture, building effective teams, fostering creative collaboration, and allowing informal relationships to grow. The question of “where will my employees want to work?” will become increasingly intertwined with “where will my employees want to live?”.
As the concept of the location of the worker becomes more amorphous, one by-product might be the long overdue elimination of business relocation incentives based on the number of new employees. This is a generally unproductive approach to economic development even without the issue of a remote workforce, but it makes even less sense when the location of the new office and the location of actual workers are only loosely linked. Cities will be far better off spending money on making their community an enjoyable place to live with a vibrant arts scene, a good educational system (including adult ed), efficient municipal services, solid infrastructure, and a reasonable assortment of recreational options. Midwestern cities are not likely to be the best in any of these categories, but being above average in all of them can count for a lot. If cities want to give incentives to something, give them to developers who are creating interesting places. The value of placemaking is hard to pin down, but people gravitate toward places that offer energy, a creative edge and unexpected surprises. Great places are the antidote to “midwestern bland” but they take effort and financial resources to build.
Another step that cities can take is to rethink their development plans and zoning tools with respect to office development. To begin with, the demand for office space is likely to soften and there may be a short-term surplus of space if companies downsize their office leases. Long range plans will also need to be downsized. But more importantly, the distribution of office space may change.
If people are going into the office for team meetings, training classes, and strategic planning sessions, are they more likely to want to be in the middle of an office park or in an area where there are restaurants, bars and shops within walking distance? If you go to the office for “group” reasons, my guess is that a neighborhood that supports social interaction -- be it happy hour with the team or shopping after work with a friend -- is likely to be the strong preference. This means that future office development might be more of “an innovative office design in a mixed use district” and less of “a sleek corporate cube in the office park out by the airport.” In fact, cities may want to encourage traditional office parks to redevelop into mixed use districts before they fall into decay and become this decade’s version of the enclosed shopping mall.
Third, cities need to monitor the health of their transit systems. My gut feeling is that transit will never fully regain the ridership levels that existed before the pandemic. Most transit systems had pre-existing financial issues and the pandemic has put them into crisis mode. If fewer people are commuting to work and there is a lingering distrust of packing into a confined space with dozens of strangers, major cutbacks may be needed. In the long term, transit needs to be about mobility for all sorts of people on all sorts of trips, not just people commuting to and from work, but commuters often paid the bills and without them tough decisions will need to be made.
Finally, cities should allow flexibility and variety in housing formats and construction even if that means deviating from districts that are exclusively residential. Apartment complexes, for example, may find that coworking space is an attractive amenity for remote workers in their complex but to make it feasible they may need to open it up to others in the surrounding area. Or some people working from home might need to host team or client meetings that run afoul of local restrictions on home occupations. Cities need to approach problems like these with fresh eyes and not be stuck with traditional practices.
The rapid shift of millions of jobs to remote working arrangements of one kind or another is an almost unprecedented change. I’m fairly confident that the thoughts I’ve shared in this post will end up being generally accurate, but the situation is fluid enough that I could be wrong on multiple fronts. What is needed now is data, data, data. Cities need to be tracking not only employment trends and office vacancy rates, but also commuting patterns, housing trends, transit ridership, expenditure patterns, and economic productivity. I suspect there will be a fair amount of trial and error over the next few years, so real trends may not be clear until the best practices for a work-from-home workforce are standardized.
Thoughts? As always, share your thoughts and ideas by leaving a comment below or sending me an email at email@example.com. Want to be notified whenever I add a new posting? Send me an email with your name and email address.
Notes:1. “These Companies Plan to Making Work From Home the New Normal”; Rob McClean; CNN Business; June 2020; https://www.cnn.com/2020/05/22/tech/work-from-home-companies/index.html
2. “REI’s New Headquarters are like Summer Camp for Grown-ups”; Evan Nicole Brown; Fast Company; March 2020; https://www.fastcompany.com/90469523/reis-new-headquarters-are-like-summer-camp-for-grownups
3. “How Coronavirus Has - and Hasn’t - Changed the Way Americans Work”; Kim Parker, Juliana Menasce Horowitz, Rachel Minkin; Pew Research Center; December 2020; https://www.pewresearch.org/social-trends/2020/12/09/how-the-coronavirus-outbreak-has-and-hasnt-changed-the-way-americans-work/
4. “The Future of Work - the Good, the Challenging, and the Unknown”; Jared Spataro; Microsoft; July 2020; https://www.microsoft.com/en-us/microsoft-365/blog/2020/07/08/future-work-good-challenging-unknown/
5. “The New Future of Work”; Jaime Teevan et al; Microsoft; January 2021; https://www.microsoft.com/en-us/research/project/the-new-future-of-work/
6. “Future of Secure Remote Work Report”; Cisco; https://www.cisco.com/c/en/us/products/security/future-secure-remote-work-report.html
7. Special thanks to Craig and Rebecca Ciuppa for their numerous insights into remote work at a large corporation during the COVID-19 pandemic.