In early summer 2021, before the Delta variant surge, the general consensus was 62% of big city workers returning to the office in September. Thirty six percent of the workforce was back in New York City offices in the first week of October which was a 5% increase since Labor Day but well below what people expected as vaccines became widely available. Why aren’t big city workers returning to the office?
“We expect that there will be teams that continue working mostly remotely, others that will work some combination of remote and in the office, and still others that will decide customers are best served having the team work mostly in the office,” Amazon’s CEO Andy Jassy said of the decision to permit many of its corporate and tech employees to telecommute to work indefinitely. As Executive Recruiters working with advanced degreed professionals there is a strong preference for positions that allow Amazon type flexibility in choosing where to work. At times it seems as if the only candidates looking for new jobs are those requiring positions that are 100% remote.
Impact on Service Workers
The National Bureau of Economic Research (NBER) published a working paper discussing the urban bias of remote work. Big, dense cities employ skilled knowledge workers who have generally kept their jobs during the pandemic but stopped going to the office and still haven’t returned. This lack of professionals or big city workers returning to the office is negatively impacting the people who serve them lunch, shine their shoes, clean their suits, drive them around and cut their hair. Low-skill service workers in big cities bore most of the pandemic’s economic impact. In August the U.S. unemployment rate was 5.2% but in larger cities that rate was much higher: 10.2% in NYC, 10.1% in LA and 8% in Chicago.
Big City Job Losses
Seven metropolitan areas, NYC, LA, Chicago, San Fran, Boston, DC and Philly, accounted for 21.6% of U.S. payroll jobs in February 2020 and 25.1% of the job losses in the first two months of the pandemic. These seven big cities are responsible for 44.8% of the pandemic job deficit. The NBER paper said, “The pandemic jobs deficit isn’t just a big city thing, but it’s starting to look as if it may soon be mostly a big city thing.”
The good news is the exodus from urban centers “has now largely ceased” according to UBS economists. Permanent movers are no longer outflowing from cities to suburbs and cities are once again growing. It will take months, though, for urban areas to return to their pre-crisis density. “The speed of that rebound depends on when large-scale employers call workers back to offices, and how many workers who left cities are willing to return,” the UBS economists added.