Remotely Interesting? Sensing Tools Shed Light on On-Site Expectations in the Fifth District

The Richmond Fed uses a set of tools to continually gather information on economic activity across our Fifth District. These sensing tools include our industry roundtable conversations with business and community leaders and our monthly business surveys. In addition to collecting regular data on indicators such as wage growth and price changes, we are also keeping a pulse on timely topics that play into firm decision-making. One key pattern we've monitored is the intensity of remote work and return-to-office decisions, as businesses and workers have navigated pandemic-era uncertainty and a historically tight labor market. Most recently, our March business surveys included special questions on return-to-office policies and on-site expectations four years after the pandemic motivated a rapid conversion to remote work for a portion of jobs.

What are employers' current on-site expectations for employees? Our March survey data tell us that among companies with employees whose jobs can be remote, only about 20 percent report an expected schedule for employees that allows for more remote work days than on-site days. The majority have an expectation of five days per week on-site. This return to on-site work is generally in line with firms' expectations for an increasingly on-site post-COVID-19 work posture, as captured in monthly survey data from September 2021.

A New Landscape of On-Site Expectations

For many businesses, the question of remote work is irrelevant: Many firms cannot accommodate a remote or hybrid work option for their employees due to the on-site nature of their work. Thus, of the 220 firms that answered the March special question about on-site expectations, a full 27 percent indicated that the question is not applicable to their businesses. Most of these firms are in manufacturing, retail, or specific services like hospitality. Of course, some of the firms in the "Not applicable" category might also have no on-site expectations at all.

When we focus on companies where the question of on-site expectations is applicable, 53 percent of firms expect all employees, regardless of their ability to work remotely, to work fully on-site. Perhaps unsurprisingly, manufacturing firms are more likely than service sector firms to require all employees to work fully on-site (61 percent compared to 49 percent). Service sector firms are more likely than manufacturing firms to expect workers to be on-site less than weekly (13 percent compared to 2 percent).

On average, the share of companies currently reporting fully on-site work exceeds the share that expected to be fully on-site post-COVID-19, which was last captured in September 2021. As mentioned above, in March, 53 percent of firms expected workers to be on-site five days per week. Meanwhile, in September 2021, 27 percent of employers had all employees fully on-site, and 31 percent expected all employees to be fully on-site post-COVID-19. The relatively larger increase may be explained by changes in labor markets, business leadership, sample changes in our survey, or other factors.

After a rapid pandemic-era expansion of remote work options, there was a partial contraction in those options over the past several years, as employers and employees struck a new balance of remote and on-site work. Past posts capture the landscape of remote and on-site work in our district in 2021. In February 2023, Summary of Commentary on Current Economic Conditions by Federal Reserve District — commonly known as the Beige Book and another output of the Fed's economic sensing work — noted that "firms [were] becoming less flexible with employees and beginning to reduce remote work options."

Comments from past business surveys reflect the various ways that firms have approached working remotely and returning to the office. For example, one respondent shared that their "flexible, hybrid telework model created during the pandemic has changed employee work preferences." Another shared that they "[saw] many candidates who [were] only willing to accept remote positions, yet [their clients insisted] that employees come to the office."

Through our March survey data, we learned that among firms with remote-eligible workers, it is increasingly common for them to expect that workers are on-site five days per week, although this can vary somewhat by industry. These insights will feed into our understanding of labor market dynamics, commercial real estate and capital expenditures, and other topics critical to informed policymaking. As the topics emerge and change, the Richmond Fed's sensing tools remain.

Views expressed are those of the author(s) and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.