Why the trend toward remote work isn’t going to fade in 2023

If the U.S. job market continues to weaken next year, companies will be emboldened and may pull back on letting employees work remotely.

Executives generally fall into two camps on working from home, which surged during the pandemic when workers gained leverage during a tight labor market. Some believe it has advantages, such as happier employees, while others say company culture is built in the office.

“There’s a genuine divergence between organizations,” said Melissa Swift, a workforce transformation leader at consultant Mercer. “You’re starting to see companies pick sides.”

That said, remote work looks like it’s here to stay. Gallup projects that about 75% of remote-capable workers will be hybrid or fully remote in the long term.

Experts say these are the top reasons why remote work will continue in 2023:

1. Retention

Allowing remote work is crucial for retention.

Hybrid work boosted employee satisfaction and productivity, slashing attrition by 35%, according to a study published this summer by researchers at Stanford University, the University of Chicago and the Instituto Tecnológico Autónomo de México.

Politics

You may soon be asked to take a pay cut to keep working from home

Some bosses consider telework as a benefit. Many workers don’t see it that way but are willing to accept a lower salary, up to a point.

Aug. 23, 2022

“Employees experienced new levels of fulfillment working from home, and it has been hard for companies to justify walking that back,” said Caitlin Duffy, research director at consulting firm Gartner.

Meanwhile, turnover has become an expensive problem as quit rates remain above pre-pandemic levels. In a labor market that remains tight, many companies can’t afford to hemorrhage talent. That’s especially true for high performers, even if the economy sours, said Prithwiraj Choudhury, an associate professor at Harvard Business School.

“In any economic environment, top talent always has outside options,” said Choudhury, who studies remote work.

2. Recruitment

Remote work opens recruiting to a bigger geographic area and a larger talent pool. That’s a major advantage, especially for specialized roles for which qualified candidates are hard to find. It also gives employers, such as the U.S. Department of Veterans Affairs, which has struggled to persuade people to move to Washington, a better shot at winning talent from tech hubs on the West Coast.

Offering work flexibility also can support a company’s diversity, equity and inclusion initiatives. That’s especially the case for groups, such as disabled workers, that were often shut out of the labor market. Working parents and people of color also have reported tremendous benefits from remote work.

3. Recession cost cuts

Rather than reversing the shift to remote work, a recession might accelerate the trend because it can reduce the need for office space and help companies cut costs, Choudhury said.

This summer, Yelp Inc. closed its New York, Chicago and Washington offices with plans to put the savings toward hiring and employee benefits. Not long after, Lyft Inc. rented out about half of its office space in San Francisco, New York, Seattle and Nashville. Other major companies, such as Meta Platforms Inc. and Amazon.com Inc., have scaled back office expansion plans.

Employees who are allowed to work from home are willing to take a pay cut in exchange for greater flexibility and lower commuting costs. Work-from-anywhere policies also allow bosses to keep labor costs down by hiring in states, such as Idaho, Louisiana and Kansas, that have lower costs of living.

4. Reversal risks

If a company does an about-face, executives risk damaging their reputation. Just look at Twitter. In an effort to shake up the company last month, new Chief Executive Elon Musk ended the company’s remote work model. But so many employees opted for severance instead that he had to soften his stance to coax some staff members back.

Taking maximum advantage of leverage in this way isn’t a good long-term strategy, said Ben Granger, chief workplace psychologist at Qualtrics.

“Future candidates can see the comments from employees who left,” Granger said. “They can read the articles. Leaders would be wise to think about that.”