Below is a complimentary Demography Unplugged research note written by Hedgeye Demography analyst Neil Howe. Click here to learn more and subscribe.
Return-to-office rates in Europe and Asia are considerably higher than those in major U.S. cities. Get ready for the possibility that American workers, unlike those abroad, may not be returning to the office anytime soon. (The Wall Street Journal)
NH: Workers in Europe and Asia have returned to offices at higher rates than those in America. According to JLL, a global commercial real estate firm, occupancy ranges from 40-60% of pre-pandemic levels in their US offices. In contrast, the share ranges from 70-90% in Europe and the Middle East. And it's a whopping 80-110% in Asia.
Why are American workers staying home while the rest of the world returns to in-person work? Three explanations come to mind.
- Larger Homes: In the average US home, there are 2.4 rooms per person. And in the average OECD home, there are only 1.7. As a result, Americans have more space for at-home offices. And they can more easily separate themselves from cooking, noisy children, and other activities.
- Longer Commutes: Many Americans live in the suburbs far away from their city-center offices. Moreover, the US lacks robust public transportation, unlike many other high-income nations. NYC and Chicago's average one-way commute is 58 and 57 minutes, respectively. In comparison, London clocks in at 46 minutes and Hong Kong at 44. Many Americans telecommute simply to avoid sitting in traffic. Within high-income nations, the top four cities with largest share of commuters travelling more than two hours one way are all in the United States: Washington, D.C.; Chicago; Philadelphia; and Miami.
- Tighter Job Market: The unemployment rate in the US (3.4%) is almost half of what it is in the EU (6.1%). As a result, US companies are more likely to offer remote work to attract new hires.
The first two of these explanations—bigger homes and dilapidated cities—may in fact be manifestations of one bigger and deeper explanation. Americans, culturally, have always subscribed to a deep strain of Jeffersonian individualism which vaunts the isolated plantation and detests the teeming metropolis. No other affluent nation has invested so abundantly over the last century in vast suburbs. And no other has invested so little in decent urban mass transportation. So is the recent work-at-home trend an utter novelty? Or is it, perhaps, a sign that Americans are using the pandemic as an excuse to return to their roots?
One thing is for sure. Of the three explanations we highlighted, only one—the hot job market—will change with the business cycle. We should therefore prepare for the possibility that a higher share of US workers will continue to telecommute indefinitely.
We recently wrote a NewsWire about plans in NYC to convert office buildings into apartments. (See "The Uncertain Future of NYC's Business District.”) Now a similar conversion initiative is taking root in downtown D.C.: 383 apartments are currently under construction. And 2,105 units are planned for future projects.
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ABOUT NEIL HOWE
Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.
A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.
Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."
Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.
Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.
Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.