Is Work-From-Home Still the New Normal For Corporate America?

A lot can change over the course of five years — especially if they happen to follow a norm-shattering, once-in-several-generations pandemic.

In the white-collar workplace, the pandemic meant a sudden shift to remote work. And just as the world started to return to normal with the arrival of COVID vaccines, companies and their employees entered a cold war over return-to-office mandates.

Now, five years out, the work-from-where debate is reaching a fever pitch. Earlier this year, corporate giants such as Amazon and JPMorgan Chase — as well as much of the US federal government — ordered employees to return to the office a full five days a week. More recently, Paramount and Novo Nordisk have declared an end to remote work, while Microsoft and NBCUniversal beefed up their hybrid work requirements. 

The return-to-office (RTO) orders have taken on new weight amid a softening labor market and broader economic anxiety. Meanwhile, the corporate world’s multi-year work-from-home (WFH) experiment has left the relative merits of remote work solely in the eye of the beholder (though it’s seldom difficult to guess which people on your company’s org chart hold which opinions). Basically, depending on whom you ask, remote work has officially become the cause of — or solution to — all of the corporate world’s problems.

Stalled Out

Despite the raft of high-profile return-to-office orders this year, the actual WFH rate has remained roughly stable since 2023, experts told The Daily Upside. About 62% of salaried employees worked from an office full-time in August, according to data from university researchers Nicholas Bloom, Jose Maria Barrero and Steven J. Davis — roughly flat since RTO orders came back in full swing in 2023, though way below pre-pandemic norms. About 25% of full work days have been WFH since 2023, the researchers have also found.

“There does appear to be a slight uptick in RTO activity” this summer, Bloom, a professor of economics at Stanford University who has studied WFH trends since 2004, told The Daily Upside. The Placer.ai Nationwide Office Building Index, which tracks foot traffic data from about 1,000 top-tier office buildings across the country, showed foot traffic was up about 10% year-over-year in July, and another 2.9% in August — though it still remains about 30% below the 2019 level.

One reason the overall figures may still look flat, despite major new RTO orders? “Big shrinking firms are tending to RTO, while younger growing firms tend to be more WFH. This generates offsetting impacts, and it’s very possible the net impact is zero,” Bloom said.

Meanwhile, Indeed Hiring Lab’s Remote Tracker, which tracks the percentage of job postings on Indeed that mention hybrid or remote work, similarly shows that such postings are roughly flat, if not slightly down, since 2023, and are below a 2022 peak.

Harbinger of Doom

For the commercial real estate industry — which feared the pandemic and WFH trends could trigger so-called “urban doom loops” — the RTO trend has been life-renewing.

Monthly office visits in New York City inched above pre-pandemic levels for the first time in July, according to Placer.AI data. Miami is just 0.1% below pre-pandemic levels. Meanwhile, the AI boom has led to a near-miraculous downtown recovery in the tech hub of San Francisco.

“There’s been a lot of false starts [since the end of the pandemic], but there’s a huge push right now to return to office,” Jeff Ingham, commercial real estate advisor at Jones Lang LaSalle (JLL), told The Daily Upside. “It’s not the same as it was. It’s actually real this time.”

The Sunk-Cost-Fallacy Fallacy: That push has coincided with a “flight to quality,” Ingham says, with companies increasingly chasing office space in so-called Class A buildings that come packed with everything from high-end gyms to dog-friendly areas, and even golf simulators. The message to employees: Come back to the office; it won’t be that bad!

“All of our clients think that the office market’s depressed, but the reality is the buildings they want to be in are actually more expensive than they were in 2019,” Ingham said.

In other words, your corporate overlords aren’t simply (or, at least, always) falling victim to the sunk-cost fallacy of ordering a return to office because they’re already locked in to expensive leases. They’re signing up for even more expensive leases to get employees back in the office.

Blowing in the Wind: The recovery is not equal, however. Lower-tier Class B and Class C buildings are increasingly getting the brush-off, and Ingham says, are being converted to non-office use, be it industrial or residential.

Not every city has bounced back in the same way, either. Chicago “is a tough one,” Ingham said, because the city has less need to convert office space into residential buildings and has struggled to return office work to near pre-pandemic levels. Office foot traffic is down around 34% compared with pre-pandemic levels in the Windy City, according to Placer.AI data.

Still, overall across the US, “there’s a shift,” Ingham said. “It’s not going to be monumental, but it totally is going to stabilize the office market compared to where it was, which was kind of free fall.”

Culling the Flock

So if it’s not (always) a case of sunk-cost fallacy, then what is it? The answer, in many cases, may be cost control. Indeed, given that employees tend to favor the flexibility of WFH, employers have begun using RTO orders to cull headcount after pandemic-era overhiring.

“Contacts in multiple districts reported reducing headcounts through attrition — encouraged, at times, by return-to-office policies,” the Federal Reserve wrote in its August Beige Book report.

“From talking to hundreds of firms and executives, this is widely acknowledged as one reason for RTOs,” Bloom told The Daily Upside. “It is very similar to policies that eliminate free food, reduce health-care coverage or cut pension contributions. They make it less pleasant to work at the firm and will increase attrition.”

Bloom said attrition via RTO mandates is concentrated among larger firms that are typically stalling on growth, and full-time mandates are likely to reduce headcounts by as much as 10%.

“Executives do not want to talk about this,” Bloom said. “The reason is this is damaging for share prices. Firms known to be focusing on reducing headcount via RTO are clearly on a less promising path.” While the motivation is a cheap way to reduce headcount (freely departing workers are often not entitled to severance pay), “the obvious [downside] is you don’t choose who leaves.” 

Amazon, for instance, has seen top-flight AI talent flee amid its strict RTO mandates, according to a recent Business Insider feature. The more WFH-positive Oracle has poached as many as 600 Amazon employees in the past two years, according to a Bloomberg report.

Masculine Energy: Still, shedding employees isn’t the only reason companies are embracing RTO orders. At the end of the day, productivity equates to profit — and some leaders still believe that in-person work culture is the spark that drives growth.

Who, exactly, believes that is somewhat predictable, however.

“We found return-to-office mandates are more likely in firms with male and powerful CEOs,” Mark Ma, an associate business professor at the University of Pittsburgh who studies the topic, recently told CNBC. “They are used to working in the office for five days a week. And they feel that they are losing control over their employees who are working from home.”

The profile of employees who leave companies following RTO mandates is predictable as well. A 2024 research report from Ma and associates found that turnover rates following RTO orders are “more pronounced for female employees, more senior employees, and more skilled employees.” That’s similar to findings in a study by Bloom and associates published in Nature last year, which also found that companies with hybrid work structures reduced employee quit rates by one-third compared with full-time in-office companies, saving millions of dollars in recruiting, hiring and training costs.

The RTO turnover trend is taking its toll on equitable pay. Data released last week from the US Census Bureau showed that the gender wage gap increased for the second straight year in 2024, returning to 2017 levels.

The RTO push “is a big part of that,” Indeed Hiring Lab economist Allison Shrivastava told The Daily Upside. “Remote work for mothers, in particular, is pretty important.”

It could spell trouble for the US economy down the line, Shrivastava said.

“We may have a soft labor market, but long-term, we do also have a declining labor force participation rate. We’re going to need more people to work. Increasing the female labor force participation rate is going to be important, and increasing flexibility is going to be important across the board for a lot of these jobs.”