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Your workers feel that a full return to the office is like a 2% to 3% pay cut



Employees have proven over and over again the past two years, by way of joining the Great Resignation, that they’re not afraid to quit. Their reasons encompass everything from underwhelming pay raises to pet policies to return-to-office mandates. Just 6% of workers want to be in the office full-time, which goes a long way towards explaining why companies making the call for them would be hugely unpopular—and costly. And now, thanks to the Federal Reserve, we are starting to learn how much money workers put on their flexibility.

It’s also inefficient; in a September 2022 survey, Gartner found that just 3% of companies would actually fire employees who refused to show up after a mandate went out, and fewer than a third would dispatch HR to talk to non-compliers. 

Just to add insult to injury: Moving to full-time, in-person work from a fully remote or hybrid plan is just as likely to make an employee quit as a 2% to 3% pay cut would, finds a new Federal Reserve report, “The Economic Well-Being of U.S. Households in 2022,” released this week. It draws from The Fed’s Survey of Household Economics and Decisionmaking (SHED), conducted in October 2022. 

Mandates invariably result in losing top talent

Nicholas Bloom, economics professor at Stanford and co-founder of WFH Research, told Fortune last year that any kind of compulsory office return is doomed to result in losing skilled workers. (The workers clearly already know this; as of January 2023, remote-friendly jobs on LinkedIn receive as much as 50% of all applications, despite the fact that they represent only about 15% of listings.)

“Women, people with disabilities, and people of color all have a preference for remote work,” Bloom said. Companies that forge ahead despite those wishes “will face issues of diversity if they continue on this; that’s just another cost I don’t think they’re aware of.”

Say a worker only comes in two days a week instead of the required three, Bloom proposed. If HR discovers this and tells the worker’s manager, “Where does the manager go from there?” he asks. They can either ignore it, which would make it clear to employees that the rule has no teeth, or they can penalize people and say, “I know you perform well and hit your targets, but your attendance isn’t good, so we’re slashing your pay.” Both are bad options. “Either way you execute, I don’t see how it’s a good policy.”

Why remote wins

The Fed found what a lot of research has found over the past couple years: People who work from home at least a few days a week greatly value the arrangement. Workers have said it makes them more productive, provides them with a better work-life balance, and eliminates that pesky commute, freeing up time to check off day-to-day tasks like laundry and grocery shopping or even working more. It also might help their bank accounts.

Many Americans have been watching their household budgets closely with the down economy and inflation, George Anders, LinkedIn’s senior editor at large, told Fortune in February. “Working remotely is often a money saver because it reduces commuting costs to zero, while also making lunch, coffee, et cetera, much more affordable.”

Just one day in the office sets a hybrid worker back approximately $51, according to research from Owl Labs, a video-conferencing devices company. That number comes from the cost of meals and transport, neither of which workplaces typically cover. The smaller day-to-day costs of in-person work—a coffee here, a new pair of sensible office shoes there—comes to $863 per month, nearly double the cost of working from home. 

Employers considering a return-to-office mandate should probably consider providing a stipend, free lunch, or pre-tax commuter benefits to help offset the costs, Frank Weishaupt, Owl Labs CEO, told Fortune.

Where the office edges out an advantage

Yet, working from home isn’t exactly free either. Lack of face time often leads to proximity bias, wherein in-person workers make better connections and ultimately earn promotions at a faster clip than their remote counterparts. Things can also add up pretty quickly on the financial front, like energy costs—those who use heating oil and propane paid $302 a month to heat their homes last year, according to data bill pay service Doxo provided to Fortune. At least in the office, the A/C bill doesn’t show up in your mailbox. Plus, you’re unlikely to be on the hook for computer equipment, coffee, or printer paper. 

But then there’s the matter of time. 

A needless commute could also be seen as a matter of disrespect for workers’ time and energy. “People spent—I just calculated this morning—$16,000 a year to commute, on average,” Koen Blanquart, leadership expert and author of flexible-work book The Suitcase Office, said in February. 

It’s not as though commuting is anyone’s first choice for how to spend their time. Nearly all (84%) respondents to a FlexJobs survey said the top benefit of working remotely was eliminating the commute, which costs an annual average of $8,466. Just to add insult to injury, the Census Bureau found that the average American worker’s commute has jumped 10% in duration since 2006, and doubled over the same period for those taking public transport.

But even in-office perks like free lunch or commuter benefits don’t address the problem of inflation, which, for most workers the Fed surveyed, has created a fairly grim situation. 

As a result, it’s no surprise that most adults are taking a closer look at their habits, and looking for areas to curb their spending. And, perhaps to bosses’ chagrin, going into the office could be first on the chopping block.

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