Drop in business productivity could encourage stricter RTO mandates

May 30, 2023
  • Jacob Rowden
  • Elena Lanning

Source: JLL Research, BLS

  • New quarterly data on business sector productivity released in May shows a continued decline in efficiency among white collar industries in the United States – productivity measured by the BLS has declined 1.9% over the past two years, the sharpest two-year decline in over 75 years of recorded data, widely eclipsing the previous record decline of 1.5% from Q1 1973 – Q1 1975.
  • Increasingly, executives are identifying large shares of remote work as one potential culprit for lagging productivity – in recent weeks AT&T issued a new mandate for managers and other roles to return to offices on a regular basis, Blackrock also announced an increase to their attendance requirements from three to four days later this year.
  • While some studies have found efficiency gains for certain office roles shifting to remote work settings, a more holistic view helps illuminate the motivations behind RTO mandates: younger remote workers develop skills at a slower rate, innovation has lagged in remote settings, and employee engagement has fallen dramatically, impacting productivity and retention. In other words, marginal efficiency gains from remote work are overshadowed by diminished ability to develop human capital.