I’ll give you four reasons why people like hybrid and then see if I can actually put a profit number on it. One is it keeps employees happier. Quit rates are down. In the randomized control trial we are just wrapping up, quit rates are down 35%. People report repeatedly in survey after survey that they value it at somewhere like 7% or 8% of a pay increase. A free pension plan is about the same value to employees.
Three is harder to quantify, but it’s definitely important, which is support for diversity, equity, and inclusion.has some stuff. We have surveys showing that everyone, all demographics, ages, races, etc. like working from home. But there’s a slightly stronger preference for people with kids, for women, for minorities. And what that means is if you are tough and force a full return to the office, you’re going to see a higher attrition of diverse employees. That’s a real DEI cost.
That’s why every firm just about out there is doing hybrid, because it’s such a no brainer to increase profit. The bigger question is how to execute it. The other thing is trying to get people back for too many days because of sunk-cost fallacies. Like ‘We have this space, we should use it.’ The fact you have this space doesn’t mean you’ve got to force people in unnecessarily. There’s plenty of evidence for the great resistance. And we find the great resistance is from two forms. One is, we survey employers and only 80% are coming in for as many days as their managers or their firm wants them to. So 20% are not, which is a high number.
I’ve been laughing at this Labor Day thing in the media because this is the third Labor Day showdown. I can tell you it’s 2-0 to employees. It wasn’t even close. It’s like Manchester City taking on Grimsby Town—I know what’s gonna happen. It’s going to be 3-0. They’re just not going to come back. I’m not saying they’re not coming back for zero days, but any firm trying to get people back five days a week, that’s the fastest way to exit a whole bunch of employees.
It’s certainly true that the Fed is trying to engineer a soft landing. Even if it’s a soft landing and not a hard landing, it’s going to make labor markets less tight. So it’s going to be harder to change jobs. Employers are going to have more power. The correct question is whether that will affect the uptake of work from home. I don’t think so.
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