Our well-informed readers probably saw the news yesterday that Amazon is directing its 350,000 corporate employees to return to the office full-time, outside of extenuating circumstances. In a memo to staff. CEO Andrew Jassy wrote that looking back over the last five years, Amazon continues to believe that the advantages of being together are significant. But why stop at Amazon if a full-time return to the office will improve productivity? It’s time for some enlightened collusion among companies, as I discuss below.

Jassy also noted that Amazon has observed that in person work (1) strengthens their culture, (2) makes collaborating, brainstorming, and inventing, simpler and more effective, (3) enables more seamless, teaching and learning from fellow employees and (4) results in better connected teams. As a corollary, he stated that these beliefs were strengthened by the last 15 months that employees have been back in the office at least three days a week.

The new policy got me thinking about what this development means for not just Amazon, but the economy as a whole, and what might be done to help the struggling office industry. For many years, we have regarded the technology companies to be not just a crucial building block but also as the innovators and trendsetters for the world economy. Like its peers, Amazon had the ability to go remote immediately when it was desperately needed during the depth of the pandemic. This widespread adaptability, which would have been unthinkable a decade or two ago, helped save us from a depression.

Further, Amazon has effectively redefined efficiency and its logistics are world-renowned. Accordingly, when Amazon decides it is not efficient to work from home, they know of what they speak. As a result, the move was characterized by Emma Goldberg and Karen Weise of the New York Times as a potential “harbinger“ of similar stringent requirements in the future. Their article further quoted a workplace manager who said that “there is a sense that the pendulum has swung way too far in the opposite direction – that the office is super optional”.

I do hope that Amazon is planning to research the before and after impact of its return to the office, which is going to take effect on January 2, 2025. This will be a fascinating case study of the costs and benefits of hybrid versus in-office work. Jassy was careful to note in his memo that exceptions will be available for those who are approved for remote work by their supervisors, but the standard to be applied to determine those exceptions was not disclosed.

Another interesting question is whether talented employees will leave for other companies who do offer remote work. The memo stated that the reason the change was delayed for 3 1/2 months was to allow employees to make adjustments. Indeed, demographic trends have shown that suburban and exurban areas, have enjoyed increases in population at the expense of inner cities, which are just starting to recover from the pandemic. For this reason, we have long been in favor of targeted tax credits to help the office industry.

And if employers actually believe that they will improve productivity by a larger office presence, it’s time to start employing some creative ideas that go beyond the type of one-off solutions implemented by one company on its own, even one as influential as Amazon. Joint cooperation, strategies and solutions are needed among industries, companies and municipalities.

One important point is that the weaker the economy, the less likely it will be for employees to resist their employer’s direction. My view is that in order for these kind of directives to make an impact employers will have to effectively collude with one another and agree collectively to pursue similar return to work policies, again with reasonable exceptions. I don’t think that this is a violation of the antitrust laws because it does not involve price fixing, but I will leave that to the experts in that arcane area of the law.

For example, Jamie Dimon of JP Morgan Chase has long advocated for a return to the office. However, if he were to get together with the chieftains of his fellow banks he would have a better chance of implementing that strategy.

This could be spearheaded by summits held in cities around the country that want a return to office, which is the engine of their economies. These discussions could take the form of conferences and seminars hosted and funded by landlords eager for increased office tenancy.

There is an important related consideration regarding the economic ecosystem in evaluating the return to office, which is the increasingly high rate of default on office loans which are starting to mount and will continue for another five years or more. While we are assured by even Federal Reserve Chair Powell that his does not threaten the banking system, it is also anticipated that those losses will total hundreds of billions of dollars. Accordingly, to the extent that the office crisis can be diminished, it will strengthen banks that are heavily exposed to the completely unexpected threat to their businesses caused by the pandemic.

While we’re thinking about this idea, it’s not just banks that should consider tightening their office requirements. Other industries might want to do the same. Why can’t Amazon, Meta, Google, Microsoft and Apple devise a joint recommended policy? What about law firms and private equity? Moreover, government entities should join in by requiring return to office with reasonable exceptions. For example, instead of New York City looking for efficiencies by diminishing its office portfolio as it has announced could alternatively focus on having employees return to the office.

I hasten to add that my completely unscientific research indicates that for every person who has a good reason to work from home (i.e, health, a physical handicap or a difficult family situation), there is a slacker like Eric who is working the system. He claims that he is more creative at home, but I know better even though he does a good job for us.

Skeptics among us may rightfully point out that who is the beneficiary of increased office activity – landlords and even your favorite office leasing broker. While that is true, there is a larger picture to be considered as the greatest threat to our cities is the significant and long-term drop in tax revenues and income due to significantly diminished property values (see my last blog) and decreased economic activity leading to lower tax collections. As a result, this means less money will be available in the future to support vital public services such as transit, education, schools, hospitals, and the like. There are legitimate trade-offs here between employee convenience on one hand and the efficiency of businesses and the well-being of cities on the other. However, in my view the greatest threat is doing nothing at all.

Thank you,
Ruth Colp-Haber