Stephanie Ferguson Melhorn
Senior Director, Workforce & International Labor Policy, U.S. Chamber of Commerce
Published
February 14, 2024
The workplace is changing as rapidly as the U.S. workforce. For many workers today, their physical work environment is no longer bound by in-person attendance, designated corporate headquarters, or bustling cities.
Meanwhile, the share of Americans in the workforce is shrinking, resulting in the need for employers to compete for distant talent; the cost of living is rising, spurring an urban-to-rural migration phenomenon; and many office spaces remain vacant, catalyzing an economic cascade in American cities.
Here we examine the evolving dynamics of America’s workplaces and share insights on what businesses need to know.
The Past, Present, and Future of Remote Work
According to data from the National Bureau of Economic Research, remote work hit its peak amid the height of the COVID-19 pandemic in 2020 and 2021. Although remote work has dropped precipitously since then, workers’ preference for workplace flexibility remains.
In 2023, just a quarter of all employees worked remotely part of the time. While this is a small number compared to the pandemic high, it still towers over the pre-pandemic norm, indicating the permanence of some remote work in the years to come.
Similarly, the latest Workforce Special Report by RSM and the U.S. Chamber of Commerce found that the percentage of middle market companies who reported having employees in remote or hybrid arrangements decreased to 27% from approximately 36% a year ago, but the report notes the current share reflects a normalization of the trend.
Additionally, 60% of the middle market survey respondents said flexible work models have positively affected their organization’s culture, up significantly from 39% a year ago.
Prior to 2020, remote work was uncommon.
-
6%
Workers in metro areas who worked remotely in 2019
-
5%
Workers outside of metro areas who worked remotely in 2019
Bolstering employee’s ability to work and learn from home over the last decade is the increased prevalence of Wi-Fi. The percentage of individuals with Wi-Fi at home has grown significantly, from 72% in 2010 to 87% in 2019. The prevalence of at-home Wi-Fi has continued to grow over the last three years, reaching 92% in 2023.
While remote work remains popular for those with the option to do so, there are industries that need employees in-person to function. Hospitality and food services, transportation, and retail trade industries have the highest propensity for in-person work.
Alternatively, industries that involve less physical labor or customer service tasks are more likely to have the option to work remotely—or allow employees to be fully remote—such as in the information and finance sectors.
The Migration of American Workers
The normalization over the last several years of employees working remotely at least part of the time coincides with another trend: the migration of people out of America’s cities. According to the U.S. Census Bureau, over the last two decades Americans have been moving out of major cities, while other areas are growing in population.
-
NYC, Bay Area, Chicago
Places Americans moved out of
-
Orlando, Tallahassee, Charlotte
Places Americans moved to
The South gained the most people from migration between regions in 2021, while the Northeast lost the most. The South may have attracted more people with its lower cost of living, warmer climate, and diverse economy, while the Northeast may have lost people due to its higher cost of living, colder weather, and dense cities.
While more individuals moved out of the U.S.’s most iconic cities than moved in, cities aren’t going to convert to ghost towns any time soon. As migration trends continue, cities will have to grapple with the changing needs and desires of communities to retain residents and attract new ones.
According to The U.S. Census Bureau, 53.5% of respondents who moved in 2022 remained in the same county, and only 17% moved to an entirely new state. The reasons for moving across state and county lines differ across regions and groups.
Americans have moved for various reasons over the last few years, but the most common reasons Americans decided to move in 2022 were to upgrade housing, establish a new household, and to start or transfer to a new job.
-
42%
Movers motivated by housing in 2022
-
27%
Movers motivated by family in 2022
But overall, Americans are moving less. The rate of movers dropped to a historical low of 8.4% in 2021, continuing a long-term decline. The share of Americans who moved in 2022 barely increased, to 8.7%.
The Purpose of the Workplace
In the wake of a metropolitan exodus and increased instances of remote work, commercial office space vacancies have stacked up. In November 2023, 17.8% of all commercial space in the nation was vacant.
Houston has been impacted the worst with nearly one in four office spaces vacant; more than one in ten remain vacant in the nation’s capital. The unused space is causing a ripple effect on cities’ cafés, retail stores, and housing markets.
The labor market remains tight with the number of open jobs outnumbering available workers, so many workplaces have continued allowing the flexibility of remote-work at least part of the time. If the labor market loosens, employers will have greater control in mandating employees to more in-office work.
Many employers cite company collaboration, teamwork, and company culture as top reasons for in-person work. Office spaces should reflect these priorities to truly foster a conducive work environment.
To achieve this environment, many companies are engaging in broad design changes by moving away from beige cubicles and toward more open floor plans. This includes features like lounge seating, full kitchens, gyms and game rooms, and cutting-edge technology that workers find exciting to work in and truly foster innovation and brainstorming in the workplace.
Retaining workers in the workplace will become increasingly important as Americans’ attitudes toward cities and urban areas change.
Conclusion
The future of the workplace is not a fixed or static concept, but a dynamic and evolving one that reflects the changing needs and preferences of workers, employers, and society. Remote work, which was accelerated by the pandemic, has become a viable and desirable option for many people who value flexibility, autonomy, and work-life balance.
However, remote work does not mean the end of the workplace, but rather a shift in its purpose and function. The workplace will still serve as a place for collaboration, innovation, socialization, and learning, but it will also need to adapt to the hybrid model of work that combines remote and in-office activities.
Office space will also change to accommodate different types of work modes, such as focused work, teamwork, and creative work. The future of the workplace will also be influenced by the geographic mobility of workers, who are moving to different regions and cities in search of lower costs of living, higher quality of life, and more opportunities.
The workforce of the future—and workplaces of the future—are exciting, but ever evolving topics that will require continued flexibility, research, and analysis for businesses to compete and succeed.
Related
About the authors
Stephanie Ferguson Melhorn
Stephanie Ferguson Melhorn is the Senior Director of Workforce & International Labor Policy. Her work on the labor shortage has been cited in the Wall Street Journal, Washington Post, and Associated Press.
Isabella Lucy
Isabella has created stunning visualizations tackling pressing issues like the worker shortage, the benefits of hiring veterans, the lifespan of small businesses, and the future of work.
