A recession would boost remote work
Many recent headlines claim that an upcoming recession will sharply curtail remote work. The thinking is that in a cooling labor market, executives have more power to force employees to comply with their demands. And while surveys show that the majority of white-collar employees prefer to spend most or all their time working remotely, most executives want employees to be in the office.
However, the authors of these stories have it backward. What they miss is that in a period of economic growth and comfortable bottom lines for most companies, traditionalist executives have significant leeway to default to their intuitions, which tend to favor in-office work for personal and selfish reasons. If a recession hits, executives will need to show more financial discipline. And there’s no question that a focus on profits over personal preferences would call for more remote work, not less.
Extensive evidence shows that remote work is productive. A Stanford University study found that remote workers were 5 percent more efficient than in-office workers in the summer of 2020. By the spring of 2022, remote workers had become 9 percent more efficient, because companies had learned how to do remote work better and invested in remotefriendly technology. A new study from the National Bureau of Economic Research (NBER) found that productivity in businesses relying heavily on remote work grew much faster than in industries where in-person contact is needed.
Remote workers also are willing to work for less money. Another NBER study found that remote work decreased wage growth by 2 percentage points over the first two years of the pandemic, since employees perceive remote work as an important benefit.
Likewise, remote work improves retention. Nearly two-thirds of respondents to an ADP Institute survey said they would consider looking for a new job if forced to come in full time. And flexibility ranks behind only compensation for job satisfaction in a Future Forum survey.
Companies reap further financial benefits from the decreased need for office space and associated expenses such as utilities, cleaning, and security. Indeed, both Amazon and Meta recently announced halts to office space construction projects because so many of their employees are working remotely.
Of course, the most forward-looking organizations will still invest in office space for their employees — but it will be their home offices. For instance, the University of Southern California’s Information Sciences Institute, a client of my consulting firm, provided a wide range of home office technology and furniture to its staff to improve their productivity. It’s a wise investment even in a recession.
There are still many executives who don’t want their employees working remotely most or all the time. But companies that don’t offer their employees flexibility in where they work will underperform in comparison to more adaptable companies. The best leaders are courageous enough to change their minds when the facts change. Otherwise, they will eventually be forced out for denying reality and replaced by savvier leaders who endorse remote work.