Will tech layoffs end the era of remote work? Here's what experts predict for 2023

Bloom's latest research shows that around 30% of paid workdays are done from home in the US, half of what they were during the first year of the pandemic. And that number seems likely to stay the same into next year and the foreseeable future. — Photo by rupixen.com on Unsplash

This time last year in the Bay Area, it seemed plausible that office buildings could become a relic of the past for thousands of workers, with many in tech and other remote-friendly industries comfortably ensconced in home offices after close to two years of pandemic living.

But while the region's office market is in a slump, some local companies and national surveys show it is increasingly common for workers to show up a few days a week, a trend that is likely to continue into 2023.

For the past six months or more, many companies that embraced remote work out of necessity have settled into a two-or-three-day-per-week, in-office rhythm that could play out in the long term. And while a scorching-hot labour market may have given some managers pause in the past about urging skilled tech workers back to their cubicles, lest they flee for more flexible work environments, recent layoffs in the industry have tamped down some of those concerns.

So, experts said, remote working as it stands is likely to remain a feature of professional life for many in the Bay Area in 2023. As will the looming spectre of layoffs, at least for the beginning of the year.

"I think we've landed in a much better place.... It has been stable for the last six months," said Nicholas Bloom, an economics professor at Stanford who studies remote working trends across the United States.

Bloom's latest research shows that around 30% of paid workdays are done from home in the US, half of what they were during the first year of the pandemic. And that number seems likely to stay the same into next year and the foreseeable future.

San Francisco office check-ins continue to hover around 40% of pre-pandemic levels, while San Jose is seeing a little over a third of offices occupied, according to data from Kastle Systems.

That is comparable to Los Angeles, but well below other large metro areas like Dallas and Austin, where the numbers are a dozen percentage points higher — or more.

Earlier in the pandemic, "a lot of companies said we'll have a three-two hybrid plan," where workers come in on the days of their choosing and work from home two or three days a week, Bloom said.

But that often created a host of problems, including people in the office struggling to collaborate over video or phone calls with those at home.

Nowadays, Bloom said people in professional and managerial roles tend to show up on Tuesdays, Wednesdays and Thursdays. "If you want to watch the World Cup or it's cold outside, that's not a reason to not turn up," Bloom said. "The reason is, if you don't show up, it affects everyone else."

One company that has slowly ramped up the number of days it is asking employees to be in the office is San Francisco software maker Envoy.

CEO Larry Gadea said the SoMa company has experimented with letting employees pick some of their days in office, but plans to require people to be in person Tuesdays, Wednesdays and Thursdays, starting in January.

"The idea is to make things more consistent," and to make it easier to know when other people and other teams will be there in-person to collaborate, Gadea said. "We're trying to get ahead of what the rest of the world is doing."

The company's software also captures hundreds of thousands of office check-ins weekly, and has found many metro areas are seeing increases in foot traffic compared with March 2020.

But companies aren't making decisions about in-office time based strictly on worker happiness and retention, Bloom said.

"This is not a social movement," he said. "It makes firms money."

That is borne out in Bloom's research, which has shown that workers value remote work roughly the same as an 8% pay raise on top of any cost-of-living raises they might get.

Simply put, many companies would rather give people more flexibility than increase their pay by that much.

Bloom's research has also shown that workers are slightly more productive when given some days from home with the lack of a commute, and that the change makes it easier to diversify workforces and cuts down on the need for costly physical space.

"In a capitalist economy, anything that makes companies money tends to stick," he said.

Not everyone, however, is so sure that remote work will stay the way it is.

That includes Julia Pollak, the chief economist at job site ZipRecruiter. She said that while the number of jobs advertising remote work has trended down on sites such as LinkedIn, that is "driven by a relative decline in tech job postings recently," as opposed to a drawdown of remote work overall.

She said about 11% of jobs on ZipRecruiter explicitly say they can be done remotely, compared with about 4% in 2019, and that about a quarter of all applications through the site currently go to those postings, many of which are for tech support, human resources and call-centre jobs.

Pollak also said, with the current economic downturn, that the site has seen more people searching for jobs every day instead of casually logging in a few times a month. Periodic surveys run by the company also show people are less likely these days to negotiate an offer and more likely to accept the first one they get — both signs of a continually darkening sky for the labour market.

And while high-profile layoffs at Twitter, Meta, Amazon and other marquee Silicon Valley companies have grabbed headlines, Pollak said she doubts the worst of the job cuts are over.

"January is the No. 1 month for layoffs each year," she said, speaking in the middle of December. "I expect similar numbers, if not greater numbers, of tech layoffs in December and January before things start to get better."

Gadea at Envoy said his company of about 300 people doesn't plan any layoffs at the moment, but the environment of rolling job cuts, particularly across the Bay Area tech industry, changes the calculus for companies pushing for more time in person.

"I do think, these days, it is easier for companies to make harder decisions given the environment," he said. "Companies are feeling a little more confident about making those decisions."

The current layoffs don't equate to a death knell for remote work, though.

Bloom pointed out that Elon Musk's takeover of Twitter coincided not only with a layoff of around half of the company, but his directive that the company's work-from-anywhere-forever policy was over for good.

When Musk sent out a now-infamous email to the remaining employees that they get on board with the new direction of the company, "so many people were resigning, he had to apparently reverse his policy," Bloom said.

And if an in-office die-hard like Musk, known for bragging about sleeping on office couches as a stand-in for a work ethic, can't kick the remote work trend going forward, "most other firms won't either," Bloom said. – San Francisco Chronicle/Tribune News Service

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