As a recession might be looming, there are lots of ideas of what a recession in 2022 or 2023 might entail. Here is one that stuck out today:
A recessions might help reverse the move to work from home. (WFH)
Now, who said that? Stephen Ross, a billionaire and, as Mike Florio on NBC Sports noted, a developer of (also) offices. So that’s someone with a very strong interest in making these kinds of predictions. So, no need to listen to Ross, it’s all spin? Not quite. Just because someone is biased doesn’t mean they’re wrong.
Here is what Ross said:
The employees will recognize as we go into a recession, or as things get a little tighter, that you have to do what it takes to keep your job and to earn a living.
Essentially he’s saying that when a recession hits unemployemnt rises, which is actually one of the definitions of a recession. And as more and more people are looking for a job, power shifts to employers to make demands. For example to work from the office all the time.
To be fair to Ross, that power shift is probably happening in a recession. The question is: will employers actually want to their workforce to work from the office?
Of course, there are clear proponents of office work. Elon Musk has made demands for Tesla’s employees to return to the office full time. JP Morgan’s Dimon is making efforts and so is Starbucks’s CEO Schultz, to name a few high profile examples.
But many small and big companies have come out in favor of full WFH scheemes, some of the bigger names are Spotify, Twitter, and Dropbox. Partial WFH schemes are being adopted by Google, Microsoft, or Ford.
Might a recession change their mind? Let’s have a look at what Ross is saying about why employers will want WFH to end:
Every executive recognizes that people need to work together. You have to train your workforce and educate them and you work as a team. You don’t work as individuals.
Well. A sentence that starts with “every” is seldomly correct in my experience. And there seeems to be a confusion around what “working as a team” entails. But regardless of these nuances, he’s saying that WFH doesn’t work and that’s why employers want workers back at their office desks.
In this way, Ross seems to be stuck in the past. Before the pandemic, yes, many argued that working from home was either not possible in their industry or that it would lead to people not working at all. The pandemic showed that it was much more useful than many had previously thought. So that’s not an interesting argument.
Are there other ways a recession would affect WFH? I won’t do a full discussion of those possible effects here, but I’d like to point to one possible effect in the other direction:
One of the big recommendations for businesses in a recession is to cut costs where possible. As sales go down, businesses need to tighten their belts—like many people will have to. And what is a big cost every month for many businesses apart from payroll? Exactly: office space.
That means (imagine drumroll):
Of course, Ross wants his offices to be full, but a recession seems unlikely to put the WFH genie back in the bottle.