We are still adjusting to the massive shift of the COVID era whereby many shifted to a different style of working: those working exclusively from home jumped (about 70 million people) and now hybrid models for certain types of work are everywhere.
Chances are this is a permanent trend for some types of work, and here are some of the consequences, both good and bad:
1. Companies that reduce office workers need less office space: those savings go to their bottom line. U.S. firms made about $1 trillion higher profits in 2022 than in 2019, an increase of almost 50%. Part of that profit was savings-related.
2. Companies can hire remote workers not just in the US, but Globally, that are much cheaper. Those savings also go to the company's bottom line, increasing profits.
3. Unoccupied office buildings have reduced the value of those buildings, some more than others, thereby reducing real estate taxation values and the tax take: everyone else will have to pick up the tab for this.
4. Fewer people at the office results in fewer people shopping and eating in the areas surrounding offices with less sales taxes collected. Everyone else will have to pick up the tab for that lost tax revenue.
5. Reduced travel to the office, and less commuting equates to lower pollution and energy use. Cleaner air, less demand for gasoline and electricity but lower tax receipts. A positive and a negative at the same time.
6. Working from home saves commuting time.
7. Working from home is viewed by some as a pay increase of around 8%: that extra disposable income could fuel inflation.
8. Corporations love profits: now with higher interest rates and cooling inflation, replacing expensive remote workers with cheaper ones could grow. This workforce is no longer localized, it's global! It could increase earnings for some in more remote locations while reducing income for those located in bigger cities.
9. Some landlord investors will suffer as their building's values are reduced. Many pension funds and endowments are investors in these properties. All have collectively lost hundreds of billions of dollars of investments.
10. Many cities will be compelled to cut services if the lost tax revenues are not replaced from new sources, with tax increases.
11. Working from home without dedicated space is tough. Extra space is expensive as home prices have increased (supply constraints) along with higher interest rates.
12. The toll of isolation in a work from home setting is not yet fully understood, but there are indicators that this could negatively impact mental health and well-being for some.
13. New technologies will emerge to make working remotely more personal and human. Offices and personal connectivity fuel relationships very differently than what is possible remotely.