The work from home free-for-all is coming to an end

Amazon Chief Executive Andy Jassy set CEOs abuzz with envy—and white-collar workers with fear—this week with a surprise memo calling corporate staffers back to the office full time.

Now, long after hybrid work seemed a settled matter at many companies, suddenly both sides are wondering: Who’s next?

At a party in Seattle Tuesday evening, shortly after Jassy went public with his plan, his return-to-office rally cry was a hot topic among executives in attendance.

“It was the talk of the town,” says Glenn Kelman, CEO of Seattle-based real-estate brokerage Redfin, who was there.

Until Jassy’s memo, 4½ years after the Covid-19 pandemic sent everyone home, bosses and employees had largely reached a truce on part-time remote work. Many company leaders looked out at their substantially empty offices in quiet exasperation. But they feared that forcing their employees to come to the office more often could send top performers fleeing for more flexible work setups elsewhere. The handful of companies that have returned to full-time, in-person work, including United Parcel Service and Goldman Sachs, have been outliers. The number of firms requiring five days in the office has actually fallen by 15% from a year ago, according to data from Flex Index, which tracks the work policies of more than 6,300 companies.

But a tougher labor market, especially for white-collar professionals, is now changing the calculus. With jobs harder to find and more companies willing to cut them, the balance of power is shifting from workers to bosses. Many of those bosses still worry that productivity and innovation suffer when people aren’t together in an office. With Jassy laying down the law at Amazon, some executives predict more full-time office mandates will now follow.

In a KPMG survey of 400 U.S. CEOs released this week, nearly 80% said that they expected corporate employees to be in offices full time within the next three years. That’s more than double the 34% who said so in April.

Kelman said other CEOs will be watching Amazon for two things: Will Amazon bleed workers? Or will this give it a competitive edge?

“There’s one world in which Amazon loses talent—it doesn’t become an employer of choice,” says Kelman. “And there’s another world where Amazon is able to innovate faster, is able to resolve snafus more quickly.”

Redfin employees—currently expected to be in the office two days a week—have already queried Kelman about whether he’ll follow suit, he says. Though he has no plans to require more days, he says, hybrid work is harder than everyone thought it would be.

“It’s working,” he says. “But it’s hard just as a physical fact to pay for an office that is mostly empty.”

A layoff without layoffs

In his note to Amazon workers announcing the change, Jassy said that the new policy will help both the company and its employees.

“We’ve observed that it’s easier for our teammates to learn, model, practice, and strengthen our culture,” he wrote about office work. “[C]ollaborating, brainstorming, and inventing are simpler and more effective; teaching and learning from one another are more seamless; and, teams tend to be better connected to one another.”

Some current and former Amazon employees suspect that Jassy isn’t just interested in more collaboration and connection. They blasted Jassy’s memo as being tantamount to a layoff announcement for workers who will be alienated by the new policy.

“The fact he didn’t use the word ‘layoffs’ doesn’t change the meaning of the lengthy email he sent to company employees explaining a fresh round of flagrantly unpopular and alienating policy changes,” wrote Tony Carr, a former Amazon general manager who left the company late last year, on LinkedIn.

An Amazon spokesman said any inferences about motive beyond what Jassy laid out in his memo are inaccurate. Amazon doesn’t plan to reduce overall headcount as part of its new policy, he added.

Jassy said in his memo that the company understands that some workers will need to make adjustments to their personal lives to accommodate working in the office five days a week, which was why the new policy wouldn’t go into effect until Jan. 2.

Other return-to-office orders have sparked worker exoduses. Nearly half the staffers at Grindr resigned last fall after the dating app shifted from a “remote-first” policy to requiring office attendance twice a week, according to the Communications Workers of America. Some Farmers Group employees quit last year after the insurer said the majority of Farmers employees should be in the office three days a week. A few months later, Farmers cut 2,400 jobs, or 11% of its workforce.

The problem for bosses, though, is that it’s often high-performing employees who leave, since they have the best odds of getting hired elsewhere, says Stanford University economist Nicholas Bloom. “Managers are very happy to tell underperformers, ‘You gotta come in or you’re out of here,” he adds. With more coveted employees, “they often just don’t want to enforce it, because it impacts their own bonus from promotions.”

CJ Felli, a 29-year-old systems-development engineer with Amazon, added an “Open to Work” banner to his LinkedIn profile not long after Amazon made its announcement. He’s hunting for a new job and says the company’s new policy was a tipping point.

Felli lives only 15 minutes from his office in Seattle and doesn’t mind going in three days a week as the company has been requiring since last year; lately he’s been going in almost every day. He’s a huge fan of Amazon’s culture and says getting a job there was the proudest moment of his life. But he fears as a result of the new policy that the company will lose a lot of its midlevel talent, especially parents and those who have long commutes.

“We are not going to be able to flourish and survive long term if we’re just an entry-level college shop,” he says.

Pavi Theva, 30, was working as a product manager for Amazon’s customer service technology team in Austin last year when Amazon began cracking down on its three-day-a-week mandate for office attendance. After twice going to the office two days in a week instead of three, Theva’s manager had a conversation with her about how if it continued to happen, it could come up in her performance review.

Theva says she enjoyed going into an office before the pandemic. But afterward, her days in the office often didn’t make sense. “No one else from my team was working from Austin but I was still asked to go into the office and sit by myself,” says Teva, who left Amazon in February to start her own leadership and career coaching business.

Employees are more likely to understand the company’s culture and become a part of it if they’re with other Amazonians in person, even if those people aren’t on their team, according to a company spokesperson.

Reversing remote work

It’s hard to overstate how much remote and hybrid work have reshaped the postpandemic labor market. It has enabled moves to lower-cost areas, let working parents better coordinate child care and brought millions of people into the workforce—including those with disabilities. And it made it easier for mothers of young children to stay on the job, helping drive a sharp increase in the number of women working.

Tech-industry workers especially took advantage of the ability to work remotely, flocking from high-cost coast cities to cheaper locales such as Salt Lake City, Utah, and Boise, Idaho. High in demand, many commanded the same pay they made in San Francisco and Seattle. “Work from anywhere” became a favorite recruiting tactic, with some workers being told they’d never need to come back to the office.

Remote work also fueled a digital commerce boom that let online retail giants like Amazon reap record profits, and hire hundreds of thousands of people, many in far-flung places. Over 2020 and 2021, Amazon’s head count roughly doubled to more than 1.6 million employees. Then the company laid off 27,000 workers starting in late 2022.

The once red-hot demand for tech talent has been cooling as the industry adjusts its labor needs and shifts resources into artificial intelligence. Postings for software development jobs are down more than 30% since February 2020, according to Indeed.com. And industry layoffs that began in late 2022 have continued this year: Tech companies have shed around 137,000 jobs since January, according to Layoffs.fyi.

Returning to the office five days a week may prove too difficult for many companies. All of that remote pandemic hiring means many companies’ workforces are far more scattered than before. Nearly a third of workers at large firms last year didn’t work in the same metro area as their managers, up from about 23% in February 2020, according to data from payroll provider ADP.

“For us, and for many CEOs at this time, bringing everyone back fully would be so disruptive—not just to the company, but to employees’ lives as well,” said David Ko, CEO of Calm, a mental-health app. Calm shifted to remote work at the pandemic’s onset in 2020. Nearby staff now typically come into one of its six office hubs anywhere from one to five days a week, depending on the role, and the company periodically brings some teams together for two- to three-day collaboration sprints on specific projects.

Will companies succeed in coaxing remote workers back into offices? The answer likely hinges on hiring demand. Economists David Autor, Arindrajit Dube and Annie McGrew have found that the share of people working from home was significantly higher in states with tight labor markets during the 2021 to 2023 period than states with looser markets.

For now, bosses are likely to get more questions from their workers wondering if they need to get ready to be in the office more often.

In a meeting with Intuit’s New York office this week, employees pressed CEO Sasan Goodarzi to address Amazon’s move, and to clarify whether the company would change its own policy. The maker of TurboTax software generally asks employees to show up in person at least two days a week.

Goodarzi told them he’d like them to come to the office a bit more—say, three days a week—but didn’t call for a full in-office return. He has told employees before that he believes the current ways of working could still evolve, based on what Intuit needs.

In an interview afterward, he said that employee surveys and badge-tracking data show Intuit’s most engaged staffers typically come in three to four days. Those who are there one day, or less, tend to be weaker performers.

“There’s a massive experiment going on,” said Goodarzi of corporate work arrangements. “I think it’s important that we remain curious as to what’s the optimal answer.”

Justin Lahart contributed to this article.

Write to Vanessa Fuhrmans at Vanessa.Fuhrmans@wsj.com, Katherine Bindley at katie.bindley@wsj.com and Chip Cutter at chip.cutter@wsj.com