Covid accelerated the trend of work from home in America. In the name of safety, the percentage of employees working from home jumped to 18%. It was a status thing, not just a covid safety measure. Not everyone enjoyed the flexibility. The interest group hurting now due to this change is a powerful lobbying group, especially in cities, and they are suffering: commercial real estate. This is and will continue to be a fight.
Technology in both employee capabilities and employer surveillance allows for both sides to agree on work from home arrangements. Everyone in that relationship is happier. No productivity loss, some productivity gains, no commutes and happier employees make for a better employment experience. Employers can cut back on overhead by altering the space they rent or eliminating it entirely. Commercial real estate suffers. Vacancies have steadily increased since the pandemic. What has followed is financial strain or bankruptcies for CRE.
They know a crash is in the foggy future. The defaults have begun. Big names are holding garbage and defaulting now, even before a full on recession. As the pandemic has become endemic and most people have changed mindset, return to work efforts have been sluggish. These large office buildings and towers are still only at 45-65% full depending on the city. Suburban office parks that cater to satellite office needs and smaller service firms are ghost towns. Keys are being turned in and pain is present and only going to get worse.
This is important because big players in the FIRE economy are being burned. The other factor is much of the recent renewal in urban areas has been catering to white collar office employers. These employers keep the daytime downtown full of customers for a myriad of hospitality jobs and urban retail. Those workers are not there anymore. Those small food and beverage employers are closing or already gone. Cities lose tax revenue up and down this chain.
This doesn’t even touch on the rising interest rate situation, which makes all the floating debt untenable. Landlords cannot get rate increases to cover for rising interest expenses and to make up for higher vacancies. They need the bodies in the offices.
The pain is widespread and the only beneficiaries are employers who can reduce overhead and employees who enjoy the flexibility. Up against major financial powers and nervous city governments, these happy employees do not stand a chance. There is no work from home advocacy group. There is no union.
Cities & financial firms are going to lean on employers to adopt hybrid models or outright force employees back into the office. Too much investment has been made in rehabilitating urban centers with the knock on residential and economic growth to throw it away for a small slice of employees. Taxing work from home employees can be a lever. Employers adjusting pay for remote employees can be another. The system will chisel at that 18% remote number to get office occupancy rates up to help big money.
While work from home is here to stay, the golden era is likely gone. Additional surveillance layered in the last few years has changed the relationship. Governments and major lobbying groups are hurting. They are organized. Sitting in their pajamas, Jane and Michael type away in their makeshift home offices unaware of the forces angry and moving in on them.
The American Sun 
Excellent overview.
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I’d be so bold as to request a follow-up addressing the question: Can they pull it off?
There’s an extent to which entrenched interests will act unprofitably in order to reduce the reproductive success of the people they house and employ. Making people commute makes them have fewer babies and their children grow up to be less functional. But this impulse is limited, and even a kamikaze bomber only has so much destructive capacity and no more.
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WFH in certain sectors speaks to the amount of bullshit jobs in the economy – most people don’t really do much work and skate by. There are inefficiencies all over the place but until the next round of catabolic collapse a lot of these people can just about get stuff done. The cuts we saw were a preview of that, if AI continues a lot of these ‘developers’ especially the hordes that went through boot camps are going to have an unpleasant reality to wake up to.
Secondly most people still WFH do so because modern offices are designed in awful ways that don’t allow real work to be done. Open plan bullshit or depressing layouts. Combine this with the low level fear people have from normal interactions with each other as alienated and isolated people (and the HR lunacy) it is no wonder they stay home.
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Great article, like Aeoli says.
However, some key aspects of this I think are missing. Many, if not most people, would be fine going back to the office if we could go back to pre-March 2020 and these 2 (or 3) issues were addressed — rampant crime and vax/test/mask mandates (and hyper-stagflation).
Also, I don’t think the following is really, or at least completely, true; “Technology in both employee capabilities and employer surveillance allows for both sides to agree on work from home arrangements. Everyone in that relationship is happier.” The Big Brother surveillance, which far too many Americans have to accept in their work and general outside the home life, is something that even some of the sheep are not wiling to accept at home.
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Unmentioned is perhaps the biggest long-term issue, and that is the negative impact on new entrants to the workforce. For three years now, highly motivated kids outta college have been hired by big firms and have not had any time with more-experienced colleagues. No positive reinforcement, no feedback to be better, no tips and techniques that can be all the difference across a lifetime. Nor do these kids have places to meet others – with the resulting drop in family formation and fertility. WFH is doing our future absolutely no good at all. It may be comfortable for the laptop class (of which I am a part), but it is going to prove to be VERY bad long-term for productivity, innovation, families and the future.
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I’d agree this is the most important long-term issue, but WFH isn’t the primary culprit. The main problem is that younger people aren’t in the workforce to begin with–you go to a 50-man engineering office and it’s going to be 40 Boomers, 9 Xers, and a lone Millennial. The secondary problem is that Americans are focused on money and mentoring doesn’t pay, which means if they do it they’re taking a hit. The third problem is when Americans try to pass along knowledge they’re bad at it, for reasons I won’t get into. WFH was maybe another 10% on a mountain of shit.
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For reference, about half of Gen Z is out of college. I’ve met electrical engineering and compsci students from UofM Ann Arbor working at a running shoe store because the store was putting them up in a shared housing arrangement instead of paying them. Yes, it’s exactly what it sounds like.
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Should have said “graduates” to be precise.
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“This is important because big players in the FIRE economy are being burned” which warms my stony little heart to no end. Fuck ’em. A little fear builds character.
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It’s difficult to talk about solutions to modern problems without sounding like a cenobite.
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Cities will force companies to fill office buildings? What planet are you from? Prove your nonsense or go away. Cities, especially Democrat cities, are crime-ridden cesspools. Nobody except migrants and upscale singles want to live in them.
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STAY IN YOUR POD, EAT YOUR BUGS
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Methinks some authors somewhere need to dump FIRE and CRE and stop praying to Evil Dem gods to resolve the “erosion of their positions.” Just dump, it’s only going to get worse.
Dems and FIRE will drive workers back to the City; NO.
Dems are good for Driving people OUT not bringing them IN. Dems are a Combination of Attilas Huns and the Plague. People flee the Dems, no amount of Lobbying by FIRE or “City Governments” -who make Kamala Harris look smart and classy- are going to drive people back to commuting Or back to the cities.
The US cities are going the way of either Mexico or Johannesburg, or Mexico vs Johannesburg. The Talent fled, it shall not return.
And employers have a lobby too;
Their creditors, who will be seeing improved margins.
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