Coast to coast, workers are striking, employees are quitting, and job openings are piling up. American workers are fighting back against the balance of power between worker and employer on practically every front. Caught in the mess are companies that are looking to make real estate decisions while worrying that requiring workers to come back to the office will drive them away to a more accommodating company. If requiring employees to come back to work means they never come back again, where does that leave the value of the office?
Organized labor is asserting its strength. Nearly 40 local labor organizations across the country have gone on strike over the last two months alone. Distillers in Kentucky, nurses in Massachusetts, autoworkers in Iowa, and Hollywood producers in California are among the many hitting the picket line in what some are calling “Strike-tober.” The trend isn’t limited to blue-collar employment or organized labor. Where labor is unorganized, it is quickly becoming organized as union initiatives gain ground. If employers refuse to listen, workers walk. The number of Americans voluntarily quitting their jobs is at an all-time high. Data compiled by the U.S. Bureau of Labor Statistics shows 4.3 million Americans resigned in August. Put another way, 3 percent of American workers left their job in August, the highest percentage ever recorded.
Whether workers are demanding higher pay, better working conditions, workplace flexibility, or more support, all are backed by one of the tightest labor markets the country has ever seen. Total job vacancy across the United States is approaching 11 million as companies in practically every sector struggle to find talent. With finding new employees being such a challenge, companies are doing everything they can to hold on to the ones they have, shifting the leverage employees have over their employers.
“Workers are right to think the ball is in their court,” Adam Seth Litwin, a professor of industrial and labor relations at Cornell University told Time. “They need to take a really big bite of the apple right now because whatever they get they’re going to have it in their mouth for a long time.”
In the world of white-collar office work backing billions of dollars of office value, employees are choosing to flex their muscles over flexible work policies. Whether their bosses want them to or not, a rapidly growing number of employees want to work from home. Online job searches for remote positions have jumped 460 percent according to an analysis published Monday by job site Glassdoor. On Linkedin, the share of jobs offering remote work has increased fivefold, now representing more than 10 percent of all jobs listed on the site, garnering 25 percent of all applications.
Work-from-home trends appear to be the true new office normal. Gallup’s latest poll shows 45 percent of full-time U.S. employees worked from home either all (25 percent) or part of the time (20 percent) in September. Gallup notes that while the virus has been slowly fading, remote work numbers remain unchanged for over a year. A whopping 91 percent of workers in the U.S. who are working at least some of their hours remotely are hoping that their ability to work at home persists after the pandemic.
Employers who are telling workers to get back to the office can only make people do something they don’t want to do for so long. At some companies, workplace policies are no longer mandates but a gamble that people will tolerate them and stay. Empowered workers looking at a ripe job market have fewer reasons to continue working at a job that won’t accommodate their workplace preferences. Offering remote work is giving employers a rare advantage in a tight job market. Telling employees they must come in to justify the price their company is paying for real estate is putting the cart before the horse. That’s the company’s problem, not the employees, and the very definition of a sunk cost fallacy. The calculus of the ‘return to the office’ has never been trickier.
Increasing employee demands towards workplace flexibility are not about workers looking to shirk their workplace responsibilities. Child care has become a critical issue during the pandemic. The only way for many working parents to manage crazy schedules during the pandemic is through remote work. Employed women are three times more likely to be a child’s primary caregiver. Remote work increases the amount of time working parents can dedicate to housework, schoolwork, cooking, and all manner of parenting activities. That has women in particular working harder than ever, burning out at rates far higher than male counterparts. Adding a two-way commute and stripping away schedule flexibility does not help many parents, especially with child care costs on the rise. Studies show flexible schedules and workplace policies help prevent burnout. Therefore, allowing remote work policies is key to keeping women in the workforce.
The physical divide
The divide between employers and employees has become a chasm. Offices are caught in the middle. Workplace activity has yet to recover, practically every office is still seeing less than half pre-pandemic attendance. Some offices are back at full capacity and occupancy numbers are ticking up, but any conversation about the return to work gaining momentum must mention how far the return still has to go. The latest stats from Kastle Systems show attendance is below 50 percent in every major American metro, averaging 36 percent across the city’s Kastle tracks.
For office owners and brokers, the return to the office is starting to sound like finding the end of the rainbow. Valuations of the largest asset class rely on workers coming back, billions hang in the balance. New York City’s office market value lost $28.6 billion last year, 16.6 percent of the market’s total value, according to state comptroller figures. If office buildings plummet in value, city budgets will as well. Declining valuations will cost New York City roughly 1.7 billion in property tax revenue.
As more offices become unable to rely on employers demanding their workers use their space, defining the value of the office has never been more difficult. A year from now we could all be back to normal with full offices, happy landlords, and busy brokers. However, that future is far from assured. America’s historic worker movement is cleaving value off office buildings already. Asserting the office’s supremacy may be a losing bet for some companies where hanging onto talent is a must. If American office workers continue to push for remote work policies, implications for the office sector could be dire.