Latest Updates: Related to Inflation

A New Model of Work is Here to Stay, We are Closely Watching How It Evolves


By Tom Kozlik, Head of Municipal Research and Analytics

Some Companies Set Deadline to Get Back into the Office
Labor Day is a federal holiday set aside to honor the American labor movement. This year it is being celebrated on Monday, Sept. 5. As we attend vacation destinations, neighborhood parades and family barbecues, not many will likely understand how important this weekend and coming weeks are as they relate to the realization of a new trend in U.S. labor.

A Labor Day deadline was set by some companies who want their employees to return to the office. This could be little more than wishful thinking based on what we have been seeing over much of the summer of 2022. The Kastle Systems Back to Work Barometer Average still shows, as of Aug. 17, 2022, that only 43% of workers are back in the office. This is roughly the same level going back to March of this year. There has not been an upward trend that we can see in the data so far or since then. The participation level of the return to in-office work differs regionally and city to city but overall, it appears as though what the Kastle data is showing could be close to the new-normal. The future-of-work norm going forward could mean only about half of workers are working consistently in physical offices.

This 43% Level Appears to be the New Normal for In-Office Participation
Source: Kastle systems and HilltopSecurities

Hybrid and remote work options are allowing some companies to acquire a higher level of talent compared to what they would have otherwise been able to add prior to the COVID-19 remote work experiment, Chris Herd, CEO of Firstbase, often argues. This will likely have a long-term impact on business recruitment and strategy going forward. “In the same way e-commerce has decimated many physical stores, virtual companies will crush office-based companies,” writes Herd. Some companies are also reporting that remote work options allow them to increase diversity on work teams. This summer, Meta announced that they were able to beat their firmwide diversity goals by two years because of remote work options, according to this World Economic Forum article.

Wondering what companies are reporting office-first, hybrid, or remote-first work models? This Hubble Official List of Every Company’s Back-to-Office Strategy is updated weekly, most recently on Aug. 22. Hint: most are in the hybrid category.

More Statistics
There are still workers who want to work remotely, or at least on a hybrid basis and there are companies and governments that will continue to allow this often because of the advantages cited above. Nicholas Bloom from Stanford University followed work-from-home related trends even before the COVID-19 pandemic. What he and his fellow researchers (Jose Maria Barrero and Steven J. Davis) have found is that working arrangements have settled into three overarching categories. (Please see the Aug. 26, 2022 slides from this group’s analysis related to their paper “Why working from home will stick.”

  • About 58% of employees are working onsite, or in the office.
  • Hybrid work, or a situation where workers usually spend two or three days in the office and the rest working remotely makes up about 28% of workers.
  • Fully remote workers only make up about 14% of workers, according to ongoing analysis by Bloom, Barrero and Davis.

Overall, results differ regionally, and city to city, but for the most part this is going to result in less economic activity in some major metro and other areas.

Almost Half of Workers are Working Remotely or Under Hybrid Work Arrangements

Source: August 2022 Update to Barrero, Jose Maria, Nicholas Bloom, and Steven J. Davis, 2021. “Why working from home will stick,” National Bureau of Economic Research Working Paper 28731 and HilltopSecurities.

Impact on Public Finance, What We are Seeing and Reading
Bloomberg’s Joe Mysak wrote in the middle of August 2022, Dream On If You Think They’ll RTO (Return-to-the-Office), a commentary piece where he also cited the most recent Kastle systems data. Mysak shared some opinions about how the public finance landscape is evolving mostly in favor of the likelihood that some meaningful percentage of workers are likely to remain remote and hybrid. Our opinion: we expect public finance entities more exposed to sales taxes and income related taxes to be most at risk as a result of the remote work transition. However, the credit quality of entities relying on property taxes are not immune to change. It may take longer for property values and then eventually taxes to deteriorate (or increase), but the potential for changes to property taxes to evolve because of remote work trends is substantial in many areas, if not likely.

Last week we also saw an article, Pension Funds Are Selling their Office Buildings, in the Wall Street Journal that outlined, “Big investors unwind bets on office space as changing work environment raises prospect many downtown buildings will be less used.” The on-the-ground impact to commercial real estate could differ by location. But, it is not reassuring to read that one-time real estate giant cities like San Francisco are reporting that there is more unused office space to be subleased now in the city than at any time in the last 20 years. Our opinion: the leasing and sub-leasing process in the commercial real estate industry occurs over a multi-year process. Results will be important to watch over a number of years, not just in 2022 and 2023.

Also in the middle of August an analysis of U.S. Census data in The Remote Work Revolution is Already Reshaping America, is showing that urban areas are losing population while rural and suburban areas are gaining. This is a reversal of many of the demographic trends we observed over the last decade. Details from the article:

  • The latest population estimates by the Census Bureau reveal seismic disruptions as Americans spread into rural, exurban, and suburban areas at rates we haven’t seen in at least a decade, according to Economic Innovation Group’s August Benzow.
  • Notably, two of the counties with the most remote-eligible jobs, Manhattan (New York County) and San Francisco, experienced the fastest population loss of any county with more than 10,000 residents from 2020 to 2021. Each saw their prime working-age population shrink by almost 10 percent.

The potential impact of this remote work related shift will continue to play out on the U.S. public finance landscape. We recently indicated that it is technology that is likely to win the remote work conflict, and that appears still to be the case. Companies and governments are adjusting. The state of Connecticut for example is poised for a hybrid work schedule that would allow workers the opportunity to work remotely for much of the week. This is likely to negatively impact the Hartford economy. Our opinion: urban areas made a demographic comeback since the 1990s in the U.S. We outlined what Ed Glaeser and David Cutler, in their new book Survival of the City: Living and Thriving in an Age of Isolationism, argued in Many Cities Flourished Before COVID-19, but Glaeser and Cutler Argue, “Urban Triumph is Never Guaranteed.” Some urban areas and especially downtown business districts may face new or renewed pressures as office workers fail to return and spend like they did before COVID-19.

HilltopSecurities is Watching How The Future of Work Evolves
We are witnessing an important transformation in how the U.S. labor market is arranged and the effects will continue to have an important and profound impact on the U.S. economy and the public finance landscape.

We created a place on the HilltopSecurities website to better monitor, discuss, and share these future-of-work themes. We included the reports and other research we have highlighted in this blog post. There are also many other meaningful work-related reports, articles and sources that we have and will include in the future. We have also created categories such as U.S. state and local governments and U.S. mass transit to make it easy to navigate.

Please contact me at to discuss these themes, or if you have an article or report you think we should add to our list of research and resources.

Learn More From HilltopSecurities


Technology Will Win the Remote Work Conflict


The Paradigm Shift Despite Divided Opinions

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