Wall Street doesn’t want to come back to the office

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The continuing saga of remote versus in-office work acquired a new data point recently when Bloomberg released its latest Markets Live Pulse survey, which found that roughly half of people who work in finance and investing would – or already have – changed jobs rather than return to the office full time.

This creates a significant tension, since many CEOs have been attempting to lead their workforces from Covid-era dispersion back to the usual 9-to-5 office routine. JPMorgan Chase chief Jamie Dimon, for example, called his firm’s senior managers back in April, while opining that working from home “doesn’t work” for either younger staff or senior managers. About 40% of financial professionals say they already work from the office four days a week or more, according to the survey — roughly double than the number that said they prefer working from the office.

Granted, saying that you will quit your job if you’re not allowed to work from home is not the same as actually doing so. The likelihood that people in any industry will quit rather than comply has a lot to do with what they perceive their other options to be.

The United States right now has an extremely low unemployment rate, around 3.7%. A labor market that tight suggests significant bargaining power for job seekers and current employees when it comes to both wages and quality of life perks like work flexibility.

Those benefits aren’t necessarily spread evenly across the economy and market sectors. Bloomberg reports that the finance industry has cut 37,000 jobs this year. Goldman Sachs is apparently working on a third round of layoffs in less than a year and Morgan Stanley is rolling out its second round of cuts in less than six months.

Even those layoffs, however, don’t seem to have influenced how often people are coming into the office – at least not yet. Only about one in ten Wall Street professionals in the Bloomberg survey said that the recent downsizing has motivated them to badge in more frequently.

Most respondents say they’re in compliance with their company’s policies, but even those who admit they aren’t in compliance report few reprisals. Of the 1,320 financial professionals surveyed, only 28 said they’ve been reprimanded by their manager or HR for failing to comply. Five said they’d faced compensation-related penalties and only two said they’d faced the threat of actually being fired for not coming in.

The other angle to office workers not wanting to commute into their downtown jobs every day is the effect this is having on the economic activity in the cities in question. New York City, for example, is losing more than $12 billion a year as workers spend 30% fewer days in the office and therefore give less business to restaurants and vendors during the week.

New York, Chicago, San Francisco, and Philadelphia are all seeing far less weekday lunch traffic compared to before the pandemic, according to the restaurant software provider Toast. Big city mayors, like New York’s Eric Adams, are begging workers to come back in to the office and support the local businesses that they used to spend money at.

Here in Washington, D.C., Mayor Muriel Bowser is in a unique position because so many of the workers in question are employees of the same big employer – the federal government. That means that a single decision at the federal level could potentially bring them streaming back in to the city, whether they like it or not.

One Politico headline from earlier this year read: “D.C. Mayor to Biden: Your Teleworking Employees Are Killing My City.” At the beginning of the year, Bowser said “The federal government represents one-quarter of D.C.’s pre-pandemic jobs and owns or leases one-third of our office space. We need decisive action by the White House to…get most federal workers back to the office, most of the time.”

In the absence of a return to the office, Bowser suggested that federal agencies “realign their vast property holdings” so that they could be leased out to local government, nonprofits, or other businesses. So far, we have not seen either of those two major developments.

We also covered this topic in Episode 26 of the Free the Economy podcast (work from home segment starts at 1:05).