Musk, Ramaswamy call remote work a ‘Covid-era privilege.’ Some economists disagree

When Elon Musk and Vivek Ramaswamy laid out their vision for slashing the size of the federal government, they touted plans to bring workers back to the office full-time.

Working from home was a “Covid-era privilege,” the duo, appointed by President-elect Donald Trump to lead a new Department of Government Efficiency, wrote in a Nov. 20 Wall Street Journal op-ed.

But labor economists don’t see the pandemic-era uptick in remote work as a passing fad.

Instead, they view it as an enduring feature of the U.S. job market.

“Working from home is here to stay,” said Nick Bloom, an economics professor at Stanford University who studies workplace management practices.

To be sure, many big name employers have curtailed remote work.

In September, Amazon CEO Andy Jassy announced a full-time in-office policy for corporate staffers starting in 2025, for example. The Washington Post recently announced a similar policy. UPS, Boeing and JPMorgan Chase have called some employees back to the office five days a week.

Others have cut the number of remote workdays as part of a “hybrid” arrangement, where employees split time in and out of office. Disney, for example, required four days a week of in-office work starting in 2023.

However, data shows remote work hasn’t fizzled out.

More than 60% of paid, full workdays were done out of the office at the peak in early 2020 — up from less than 10% before the pandemic, according to WFH Research, a project run jointly by researchers from MIT, Stanford, the University of Chicago and Instituto Tecnológico Autónomo de México.

That share has since fallen by more than half. However, it has remained flat at between 25% and 30% for two years, according to WFH Research data as of December.

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“Levels of working from home have been totally stable since January 2023,” Bloom said.

About 8% of job listings on Indeed advertised remote or hybrid work in November, down from a high of 10% in February 2022 but well above the 3% share in 2019.

“Remote work isn’t going away, but it is likely past its peak,” said Allison Shrivastava, an economist at Indeed.

For one, workers’ productivity doesn’t seem to increase if they come to the office more than three days a week, said Bloom, citing research he co-authored that was published in the journal Nature in June.

But workers value the ability to work from home. Additional days mandated in the office increase employee turnover, which is “hugely costly” to firms, Bloom said.

Leaving workers’ output unchanged and reducing attrition therefore boosts profits, he said. A typical large company with tens of thousands of employees can increase profits by tens of millions of dollars a year by reducing turnover costs, he said.

Companies may also be using return-to-office mandates as a “covert strategy for headcount reduction,” according to a recent ZipRecruiter employer survey.

Some organizations cite cultural and productivity concerns as the primary reasons for such a policy, but it seems that’s “rooted more in perception than data,” ZipRecruiter said.

Some officials have pushed back on such notions, however.

Jassy, Amazon’s CEO, denied the five-day in-office policy amounted to a “backdoor layoff,” he said in a meeting, according to notes obtained by CNBC. The decision “is very much about our culture and strengthening our culture,” he said.