With all the controversial things that Elon Musk says, even our well-informed readers may not have seen his interesting comment in his recent CNBC interview that employees going to the office is a “moral issue”. In the interview, Mr. Musk opined that “I kind of think that the whole notion of work from home is a bit like the you know, the fake Marie Antoinette quote, let them eat cake.” He further observed that “the laptop class living in la la land” worked from home while “people were building cars, servicing the cars, building houses, fixing houses, making the food, making all the things that people consume” had to go to their workplaces. As a result, he concluded it was “morally wrong” for remote workers ‘to assume that yes they have to go to work, but you don’t.”
Musk presents a provocative argument. As we are in the business of hawking office space, would that his lively comments carried any weight on this issue. However, I am hard-pressed to see any moral argument that will entice workers to return to the office unless it is good for a particular business and/or those employees (some of whom may not want to “hustle” as suggested by Jamie Dimon). Of course, it is easy for Musk to be on his high horse when he gets 3,600,000 applications a year to work at Tesla. But back in the land of less famous businesses, the average number of days in the office for companies with hybrid workers was just 2.5 according to Scoop Technologies.
Obviously, most businesses don’t have the luxury of receiving so many job applications as Tesla at a time of historically low unemployment. Lectures on morality won’t cut the mustard for cities like New York with 50% office occupancy that need to stanch future tax losses for years to come. We’ve got to be more practical and focus on real-world ways to address that existential challenge.
In fact, I can think of a couple of good reasons to go to the office from the perspective of employers and employees. For example, BlackRock is returning to the office four days a week for a good reason. In a memo to employees, BlackRock said the following: “Career development happens in teaching moments between team members and it is accelerated during market-moving moments… All of this requires us together in the office.” The memo further asserted that “having our team physically together to find solutions, seize opportunities and learn from each other makes a difference.”
Both Eric and I can attest that this is absolutely true. When a company or professional firm is in the midst of a difficult and complex issue, there is a great deal of learning that goes on in the clash of exchanging ideas and raising questions. Indeed, they still use the Socratic method in law school for a good reason as it sharpens the ability of future lawyers to think quickly on their feet and reason clearly in stressful situations.
But if you really want to get employees to come to the office, there’s a much easier way to do it – pay them. In February, work from home guru Nicholas Bloom’s WFH Group issued a report which concluded that New York City businesses lost approximately $4,661 a year on meals, shopping and entertainment for each employee who is no longer in the office do the remote work. That totaled approximately $12.4 billion (that’s right, billion) a year, which means that New York City and State are losing hundreds of millions of dollars of tax revenues from the job due to these absent workers.
So, here’s an idea – how about if New York City and State offered a combined $2000 tax credit for every employee who comes into the office. It could be calibrated to the number of days that they attend, which could easily be measured with modern technology, just like an E-Z Pass when a car goes through a toll.
This would actually be cheap at the price if the city’s businesses are losing $4,661 for every employee who doesn’t come to work. That is because we know from the WFH Group study that the proceeds from those tax credits will be recirculated right back into the pockets of the local businesses who have been losing out. Further, New York City and State will receive a percentage of those additional sales in tax revenues. Accordingly, this not only makes basic economic sense. It also has the additional benefit of being immediate, as opposed to expensive complicated programs to convert offices to residential housing or incentivize renovation of older office buildings that won’t bear fruit for a decade or more. There’s nothing wrong with those programs, but we need action now to preserve the city’s tax base to which office buildings contribute 10% of total revenues.
In any event, we shouldn’t focus on the morality issue as that’s not going to bring employees into the office from the suburbs. Instead, let’s try something far more practical, like giving those employees a raise via a tax credit. It’s worth a try.