this post was submitted on 15 Aug 2023
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I have posted this on Reddit (askeconomics) a while back but got no good replies. Copying it here because I don't want to send traffic to Reddit.

What do you think?

I see a big push to take employees back to the office. I personally don't mind either working remote or in the office, but I think big companies tend to think rationally in terms of cost/benefit and I haven't seen a convincing explanation yet of why they are so keen to have everyone back.

If remote work was just as productive as in-person, a remote-only company could use it to be more efficient than their work-in-office competitors, so I assume there's no conclusive evidence that this is the case. But I haven't seen conclusive evidence of the contrary either, and I think employers would have good reason to trumpet any findings at least internally to their employees ("we've seen KPI so-and-so drop with everyone working from home" or "project X was severely delayed by lack of in-person coordination" wouldn't make everyone happy to return in presence, but at least it would make a good argument for a manager to explain to their team)

Instead, all I keep hearing is inspirational wish-wash like "we value the power of working together". Which is fine, but why are we valuing it more than the cost of office space?

On the side of employees, I often see arguments like "these companies made a big investment in offices and now they don't want to look stupid by leaving them empty". But all these large companies have spent billions to acquire smaller companies/products and dropped them without a second thought. I can't believe the same companies would now be so sentimentally attached to office buildings if it made any economic sense to close them.

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[–] [email protected] 21 points 1 year ago (2 children)

I suspect they were ‘advised’ by the Banks and perhaps the government, to put the brakes on.

Every Corporation would be delighted to dump expensive city real estate, and “externalise facilities costs” to the workforce. ( which is what working from home is, from a balance sheet point of view). It’s what they teach at business school.

However, it would only take a handful of big players to to do this in succession to collapse the real estate market in most cities.

The knock on effect would likely include some large defaults by landlords and developers and who knows where that ends.

A secondary effect is house prices. certainly in London, where people pay a 2-5x premium to live within an hour of they high paying job.

If people no longer need to live near the office, why would they spend so much on crappy housing ? It would likely trigger an exodus away from the capital, collapsing the housing market.

In the UK if the housing market collapses, the economy follows it down the tube in massive way.

Hence the half hearted ‘push’ to get people back in the office .

[–] [email protected] 9 points 1 year ago (1 children)

It's not just real estate. We've already seen over the pandemic the collapse of some businesses that depend on office workers. Many of the places I used to hit for lunch are gone now.

[–] Kecessa 3 points 1 year ago (1 children)

And by sending people back to the office it's the business outside downtown that are suffering instead.

Decentralize businesses!

[–] [email protected] 1 points 1 year ago (1 children)

Is it tho? It's exceptionally rare for me to eat it for lunch when I'm working from home. When I was in the office it was regularly once it twice a week.

[–] Kecessa 1 points 1 year ago (1 children)

You're still buying food from somewhere, you just make it yourself.

[–] [email protected] 1 points 1 year ago (1 children)

Sure. But WFH or in the office doesn't effect where I grocery shop. Whereas it does effect where and how often I'm eating out.

[–] Kecessa 1 points 1 year ago (1 children)

You're still buying more food from the grocery than you would otherwise and you can make the effort to buy from specialists (like directly from a butcher) instead of going to whole food or similar chains.

[–] [email protected] 1 points 1 year ago

You’re still buying more food from the grocery than you would otherwise

You are probably correct, but eating at home is way more efficient/cost effective at home than out. I make a little more to have leftovers or I buy an extra lb of cold cuts for the week.

and you can make the effort to buy from specialists (like directly from a butcher) instead of going to whole food or similar chains.

Yeah but I don't. 😆

Just to be clear I wasn't making an argument for forcing people back into the office. I'm squarely against it for most jobs that can be performed remotely. I was just pointing out that it's not just landlords and lazy managers who were effected. I know of at least a couple shops who's primary business was the lunch crowd that are now closed due to the pandemic.

[–] [email protected] 7 points 1 year ago (1 children)

When my previous employer announced RTO they literally sent us an infographic explaining why they chose their "hubs" and Denver was "$7 million in tax breaks". It's a multi billion dollar company but 7 million dollars is 7 million dollars, I guess. I don't think they even had a major office there before, they were opening one.

[–] [email protected] 2 points 1 year ago

Thanks, that's a very good point! A physical office is a great bargaining chip for a large company. I remember a few years back when several cities and states engaged ina kind of auction to host the next Amazon HQ. It probably also works at the international level, where I imagine it will be easier to enter a market (from the perspective of local laws and permits) and sell your product there if you also open an office and create thousands of new jobs there.