In a surprising twist against the corporate push towards physical offices, Federal Reserve Chair, Jay Powell, has stated that he believes the rise of remote work is here to stay. His comments come as a blow to many in Corporate America who have been lobbying for the return of the traditional office-based work model.
Ever since the advent of COVID-19 vaccines and the easing of lockdown restrictions, many have claimed that the face of the American economy has changed forever, particularly with respect to the working-from-home (WFH) model. Powell echoed these sentiments on Sunday during his appearance on CBS’s 60 Minutes program, stating, “We do see that it looks like it’ll be a persistent thing.”
Following the pandemic, many CEOs had assured their employees that remote work would continue to be an option. As a result, numerous workers left major cities like San Francisco and New York, opting for more affordable living in far-off locations. However, with the recent push by employers to revoke WFH privileges, these employees are now stuck in a predicament.
Notable figures such as Elon Musk and David Solomon of Goldman Sachs have been vocal critics of the WFH model. Internet Brands CEO, Bob Brisco, even released a controversial video in which he stated, “We’re not asking or negotiating at this point, we’re informing,” regarding the company’s return-to-office mandate.
Employee Resistance and Employers’ Monitoring Tactics
Despite the pushback from employers, employees aren’t backing down. Software developers at SAP lead a rebellion against management’s attempts to revoke WFH privileges. To counter, many employers have resorted to monitoring turnstile data to gauge the frequency and duration of office visits, suspecting that some employees only show up for brief periods.
A recent survey from coaching platform BetterUp revealed that the number of primarily remote roles has halved. The average U.S. employee now spends an extra $561 per month on transportation, childcare, and other commitments upon returning to the office—equivalent to an average month’s grocery bill for a two-person household.
Debunking Economic Impact Fears
Many argue that the economic impact of maintaining large, mostly vacant office buildings is detrimental, affecting businesses that rely on office workers, such as downtown cafes and lunch spots. However, Powell dismissed fears that the U.S. banking system would face systemic problems from commercial real estate loans.
“There’s some smaller and regional banks that have concentrated exposures in these areas that are challenged, and we’re working with them,” he stated, suggesting that only minor banks might face closure or need to merge with healthier entities.
During the interview, Powell admitted that the Fed had been slow in counteracting inflationary pressures in 2021, believing it to be a temporary effect of pandemic-induced supply chain issues. “The data were kind of friendly to that assessment, to that hypothesis, right up to the point when they weren’t,” he said. “In hindsight, it would have been better to have tightened policy earlier. I’m happy to say that.”
Looking Ahead
Powell acknowledged that despite a generally good economy, higher prices for staple goods have left many Americans feeling dissatisfied. He also urged a return to an “adult conversation” about the unsustainable fiscal path of the U.S. federal government, which he pointed out is expanding its debt faster than the country’s GDP.
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