Good morning! Paige McGlauflin here, filling in for Amber.
Employees may have the last laugh on hybrid work after all.
As top executives in industries like finance and information technology set return-to-office ultimatums, a report from McKinsey Global Institute released on Thursday found that office attendance has stabilized at 30% below pre-pandemic levels. The number of people living in cities’ urban cores declined from mid-2020 through mid-2022 as people, freed from the strain of a daily commute, relocated to the suburbs. Today, just 37% of people report returning to the office daily.
Workers in what McKinsey identifies as the “knowledge economy,” including professional services, information technology, and finance, all report the lowest number of days per week spent in the office, with an average of 3.2 days. Meanwhile, retail and wholesale trade, transportation, and agriculture and mining have the highest in-person attendance, ranging between 3.6 and 3.8 days on average. Large firms, employing over 25,000 people, see the lowest office turnout at around 3.1 of five days in person, while the smallest firms (employing two to 49 people) claim the highest at almost 3.8 days in office.
The discrepancy between executives’ push for higher in-person attendance and how often employees do so is particularly notable in the finance industry. Several banking executives have made their disdain for remote work clear. At Goldman Sachs, where employees are expected in person five days per week, CEO David Solomon called working from home an “aberration.” JPMorgan boss Jamie Dimon said just last week that he does “not believe you can be a leader and not be accessible to your people,” adding that remote work stifles creativity and effective management.
Yet in-office attendance for finance professionals is the third lowest of 15 industries surveyed by McKinsey, with staffers working in person just under 3.4 out of five days, on average.
McKinsey warns that failure to acclimate to this decreased demand for office space could result in an $800 billion loss in property values by 2030. One solution the report outlines is developing mixed-use neighborhoods or multiuse office and retail spaces. But forcing employees back to the office won't solve the problem, McKinsey notes. Hybrid work, it says, is “here to stay.”
Flexible work arrangements are likely to persist for three key reasons identified in the McKinsey report:
1. The rate of employees working in person has remained fairly stable since mid-2022.
2. The number of days that respondents go to the office (3.5) is close to both the number of days they expected to go to the office once the pandemic ends (3.7) and the number of days they’d prefer to spend in person (3.2).
3. Ten percent of respondents reported that they would likely quit their jobs if required to work in the office daily and would be willing to take a substantial pay cut to work from home whenever they desire. Notably, the report suggests that company stakeholders, including senior, high-income employees, were among this contingent.
Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion
