‘Folks don’t live near the office anymore’: Remote work guru Nick Bloom gets real on why RTO is so hard
Despite return-to-office mandates and a move toward more hybrid and in-person work, employees are moving farther away from the office. That may not make sense until you look at the price of housing in city centers where most office buildings are located. Indeed, home prices in more than 85% of U.S. cities in the last quarter of 2023, according to the National Association of Realtors.
As a result, more workers have moved to the suburbs and are forced to make longer commutes. The average distance from work for employees who were hired in 2023 is now 35 miles, up from 10 miles in 2019, according to a Stanford University and Gusto study published earlier this month. Stanford surveyed nearly 6,000 firms for the survey.
“Americans are moving away from the office,” Nick Bloom, the Stanford University economics professor and longtime expert on remote work, posted on X. “So firms now are hiring in a much bigger area, [which] is why RTOs are now so hard. Folks don’t live near the office anymore.”
Bloom has a history of studying employment trends and remote work, with prior stints at the U.K. Treasury, McKinsey & Co. and the London School of Economics, where he’s published an array of studies and research about the remote work revolution. He also spoke about remote work at the 2014 White House Working Families Summit alongside former President Barack Obama and then-vice president Joe Biden. He’s also an American Academy of Arts and Sciences fellow and earned a National Science Foundation Career Award.
What’s more, he’s noticed, is that “as folks move further away and come into the office less, vacancy rates keep rising,” Bloom posted on X. Indeed, office vacancy rates are the highest they’ve been in decades, and Cushman & Wakefield predicts there could be 1 billion square feet of unused office space by the start of the new decade. Bloom did not respond to interview requests by Fortune.
The rise of commuter towns
Because city housing has gotten so expensive during the past few years, it’s become increasingly difficult for workers to shell out to stay put—unless you’re a manager. An ADP study released earlier this month shows that living in large cities has only become affordable for people working at a management level, and not frontline workers.
This study found a relationship between affordable housing and individual contributor and frontline workers, while more expensive cities (like New York City, Los Angeles, Washington, D.C., and Seattle) attracted folks with more money. This also plays on the idea of a housing Catch-22, asFortune reported in November 2023: Broadly speaking, you can either have a high-paying job or an affordable house, but getting both is the issue.
In turn, this trend has pushed more low-income and middle-class families into the suburbs since they can’t afford housing in big cities.
Indeed, “the suburbs came back into vogue during the pandemic while cities fell out of favor—largely due to the shift to remote work and the housing affordability crisis,” according to a Redfin study.
Another study by IWG, a company that supplies hybrid work products and spaces, also shows the rise of “commuter towns,” or the outskirts of bigger cities where workers can actually afford housing. IWG projects that the number of office workers in commuter towns could increase by up to 175% in the U.K. and 60% in the U.S. as businesses shift more toward a hybrid model.
“Hybrid working is radically reshaping the geography of work,” IWG CEO Mark Dixon said in a statement. “Suburbs [and] rural communities everywhere are being revitalized and this trend will continue to accelerate over the coming years.”
While data shows that more people are making the long commute to work, the hybrid model was still a major change for people who anticipated working remotely indefinitely and moved during the pandemic.
“Many employees made drastic changes to their lives during the pandemic, such as relocating, and are now required to make significant changes again,” LynnAnn Brewer, executive advisor at leadership and human resources consultancy McLean & Company, tells Fortune. “Leaders must practice empathy and flexibility throughout the return process to mitigate the risks of losing talent or damaging employee engagement and employer reputation.”
