A cooling job market is leading to more than a slowdown in hiring, a pickup in layoffs and growing recession fears.
It appears to be the one force capable of prodding America’s workers out of their homes and back to offices.
The slowing labor market is starting to shift some bargaining power from employees to employers, allowing a growing number of companies to require workers to return to the office at least a few days a week, staffing officials and consultants say. Many businesses are still struggling to find workers and so the change is in its early stages, but it’s expected to accelerate as hiring pulls back further and layoffs spread in the months ahead, experts say.
“Companies are a little less concerned that they’re not going to fill jobs if they lose people because of return-to-work policies,” says Jim McCoy, senior vice president of talent solutions for ManpowerGroup, a leading staffing firm. “There’s starting to be less competition for talent, and employers can be a little more selective.”
In late September, 36% of organizations required workers to be in the office at least three days a week, up from 25% in August, according to a Gartner survey of 240 human resources leaders. And just 22% had no onsite work requirements, down from 31%.
Employees ‘more receptive’ to working in office
Workers are similarly becoming less demanding about remote work, if just marginally. Seventy-three percent of fully remote employees said they probably would find another remote or hybrid job if their company forced them to work from the office full-time, according to a Harris Poll survey last weekend for USA TODAY. That’s down from 78% in June.
Ironside Human Resources, a Dallas-based health care staffing firm, has told its employees to work in the office five days a week since spring 2020, chiefly because of the collaboration that takes place when staffers are together, says CEO Doug Carter. But many job candidates insisted on working remotely. About six months ago, the company had to conduct 40 to 50 phone interviews to find one or two applicants willing to work on-site and interview in person, he says.
Now, he says, Ironside does about 25 phone interviews to find eight candidates who are open to on-site work. While the easing pandemic may be partly responsible, Carter mostly cites the slowing job market.
“There are not as many remote jobs as there were. People are definitely more receptive” to working on-site, he says. “The challenge of getting people to work in-office had been difficult, but that landscape is rapidly changing.”
Carter says he has seen a similar turnabout among his clients, such as hospitals. About 50% of their administrative employees are remote, he says, compared with 80% six months ago.
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Job openings fall
Earlier this year, with job openings at a record 11.9 million, workers enjoyed the leverage to demand higher wages and even more significantly, a continuation of the remote work set-ups that prevailed early in the pandemic. Even as companies such as Apple and General Motors announced return-to-office mandates, many had to walk them back after employee backlash.
But the number of U.S. job openings fell from 11.2 million in July to a still historically high 10.1 million the following month. In September, net job growth slowed to 263,000, a solid total but the lowest since April 2021.
In recent months, companies such as Intel, Oracle, Amazon, Netflix, The Gap and Office Depot have cut hundreds or thousands of jobs.
The job market, at least for now, remains sturdy, and employees in many industries still hold the cards because of pandemic-related worker shortages.
“It’s still a very hot labor market,” and many job candidates still insist on working remotely, says Michael Steinitz, senior executive director of professional talent solutions for Robert Half staffing. “
But “the tide is changing,” says Dustin York, a consultant for large corporations and associate professor of strategic communication and leadership at Maryville University in St. Louis.
A softening economy and less robust hiring are beginning to alter the power balance between employers and workers. Soaring inflation is prompting the Federal Reserve to sharply raise interest rates, and higher prices and borrowing costs have clobbered the stock market. The troublesome dynamic is expected to trigger a recession by next year, according to the forecasts of economists surveyed by Wolters Kluwer Blue Chip Economic Indicators.
Targeting workers who resist returning to office?
The slowdown initially hit technology, York says. The industry exploded as Americans worked from home and snapped up TVs, computers and appliances, but it’s downsizing as consumers shift their spending from goods to services, he says. Tech companies, in turn, increasingly are making workers return to the office, he says, and any layoffs are more likely to target employees who have resisted the directive.
“Whom do you choose to lay off?” he says. “People who don’t match with the culture.”
Many tech companies, in fact, are using return-to-office mandates instead of layoffs to get rid of workers, York and McCoy say. Employees who refuse to comply quit, which allows a company to trim its staff without the stain of job cuts.
“The company can say ‘We didn’t lay anybody off’” and save the cost of severance payments, York says.
As the job market downshifts in the next six to 12 months, York expects the back-to-office trend to ripple across all industries. Ultimately, he predicts, there will be slightly more fully remote workers than before the pandemic.
Today, 25% of all workers are remote, 23% are hybrid and 52% are at the workplace full-time, according to a Harris Poll.
Yet while more large companies are making employees return to the workplace, many of their smaller competitors are maintaining remote-work policies and using them as a competitive advantage to scoop up the skilled workers larger firms jettison, York says.
Pulsar Products, which makes stationery and back-to-school items, asks workers who live near its headquarters in Cleveland to come in two days a week, CEO Eric Ludwig says. But some new hires can work fully remotely in other states.
“The ability to be flexible and everyone’s knowledge of how to use (Zoom or Teams) has allowed us to hire the best,” he says.