--:-- Sean Rameswaram: Welcome to Today Explained. I'm Sean Rameswaram.
--:-- Noel King: And I'm Noel King.
--:-- Sean Rameswaram: Yesterday, we were in Portugal, where digital nomads are living the dream. Today, we're off to Miami, where people are surprisingly not at the beach. More than most other big American cities, they're back at the office, if they ever left at all.
--:-- Noel King: How often are you in the office here?
--:-- Guest 1: Miami is five days a week in office. Five. Five? Yeah. Five out of five.
--:-- Noel King: Four days right now. Before it was five, actually, yeah.
--:-- Sean Rameswaram: But it seems like the less hybrid you are, the less happy you are.
--:-- Guest 2: I like the hybrid.
--:-- Noel King: Well, I'm a mom, you know, and so things happen around the house. It's not like I need someone to be babysitting for me, you know, if I'm doing my work or not.
--:-- Sean Rameswaram: Amazon just ordered its people back to the office. Apple, JP Morgan, Chipotle, Disney, IBM, Tesla, and even Zoom have brought people back too.
--:-- Noel King: Companies want to get back to the pre-pandemic life. We're going to try and figure out if it'll work on Today Explained.
--:-- [Support for Today Explained comes from the FIFA World Cup]
--:-- Sean Rameswaram: We talked to tons of white-collar workers in Miami. All of them spent at least some time in an office, some by choice, some because they had to. But we especially wanted to talk to someone at the hedge fund Citadel because they recently moved to Miami and are super proud of their five-day in-office policy.
--:-- Noel King: This floor is a lot fancier than the one I won.
--:-- Guest 3: And people like software engineer Hassan Altaf are actually into it.
--:-- Hassan Altaf: I think personally I like in-office a lot better than being at home. I think it definitely lends itself towards more creativity, collaboration. I think that I'm learning a lot more right now, being in the office and being at home. I'm getting a lot more done, to be honest with you.
--:-- Sean Rameswaram: Hasan is young, like he finished college 10 minutes ago young.
--:-- Hassan Altaf: Did you tell me how old you are? How old are you?
--:-- Hassan Altaf: 22? Oh my gosh. Oh my. 22? And Citadel is providing an easy transition out of college life. They're serving him breakfast and lunch, just like in a dining hall.
--:-- Sean Rameswaram: They give you food so you don't go out, though. You know that, right?
--:-- Hassan Altaf: I mean, I'm still grateful. It's good food. They've got lots of young people to fraternize with, just like campus, and they've got gear. I mean, my setup at the office is amazing. They have me with three monitors, really big TV-like thing, you know, a nice keyboard, desk that goes up and down, the one at home, not as nice.
--:-- Noel King: It's a little monitor type of thing. I don't think I work as effectively at home. There's too many distractions. The bed is right there.
--:-- Hassan Altaf: You taking naps?
--:-- Noel King: I'm not trying to take naps, if I do work from home, obviously.
--:-- Sean Rameswaram: It's clear that he's stoked to be at the office because he's a kid, fresh out of college, eager to discover what it's like to have a real job.
--:-- [Support for Today Explained comes from Built Rewards]
--:-- Sean Rameswaram: We spoke to Alex DiLiarno, the chief people officer at Citadel Securities.
--:-- Alex DiLiarno: My name is Alex DiLiarno, and I'm the chief people officer at Citadel Securities.
--:-- Sean Rameswaram: We spoke to Alex in a dreamy meeting room with sprawling views of downtown Miami and Biscayne Bay.
--:-- Alex DiLiarno: Yeah, it's great. And I think it actually represents all of what Miami has to offer to individuals making their career here.
--:-- Sean Rameswaram: You have the beach out of one side, and you have our skyline out of the other.
--:-- Alex DiLiarno: I think people are actually opting in to work in this culture. So I wouldn't think of it as, oh, they're making a compromise to come to the office. I think they're actually excited about the opportunity to do so.
--:-- Noel King: You generally think that people are excited to come in five days a week?
--:-- Alex DiLiarno: They don't wish for one day, Fridays, let's say, Mondays from home?
--:-- Sean Rameswaram: Individuals that I interview when they're on their way into this organization, some of them are coming from organizations where they do have a less in-office work standard.
--:-- Alex DiLiarno: And I think those individuals, one of the reasons they're excited about this organization is to come here, collaborate with people from other teams, move ideas forward at pace, and again, really perform at what they believe their highest level is.
--:-- Sean Rameswaram: I think we're very clear on our culture and I think people are then opting into that culture.
--:-- Alex DiLiarno: Yeah. So it sounds like what you're saying is Citadel believes that the work is better when performed in person at the office.
--:-- Sean Rameswaram: Absolutely. Individuals come here to have the best shot at the best career they could have in their life.
--:-- Alex DiLiarno: And if you survey knowledge workers and there's much public data on this, they say the most important thing in the value proposition that they expect from their employer is the ability to learn.
--:-- Sean Rameswaram: And we believe that learning happens best in person.
--:-- Alex DiLiarno: If you look at the history of universities, they've largely been in person. So the corollary of that is that individuals would come in person to the workplace to have their best shot at learning and developing their careers.
--:-- Sean Rameswaram: We spoke to a guy who works at Coinbase yesterday, and he was sort of comparing the crypto culture with the sort of more traditional finance, I hope that's not pejorative culture here in Miami and other cities, and how Coinbase crypto is totally flexible, totally hybrid.
--:-- Alex DiLiarno: And maybe you guys and other more traditional banks, let's say, are more in office four or five days a week.
--:-- Sean Rameswaram: And he thinks, he posited that as these boundaries between crypto and hedge funds and venture capital and traditional finance, whatever it is, continue to blur, that we'll end up in a more hybrid place across the board.
--:-- Alex DiLiarno: Do you think five, 10 years down the road, everyone's going to end up being hybrid?
--:-- Sean Rameswaram: Yeah, well, so, you know, as somebody who spent my entire career in the people space, I think it's great that all of these different forms of working are causing organizations and societies to ask questions about how best to enable individuals to succeed in their different roles and their different careers.
--:-- Alex DiLiarno: I think, let me just say that, that I think that's wonderful that we're asking those questions. But I also think that leaves a ton of room for organizations to choose the kind of environment that they provide and be very clear in sort of the social contract, the agreement with the colleague about what it means to work at this individual company.
--:-- Sean Rameswaram: It creates a whole spectrum on which to play.
--:-- Alex DiLiarno: So I don't necessarily think that all of these questions mean that every organization is going to end up crowded around one data point on that spectrum.
--:-- Sean Rameswaram: I think it's great that we now have options and individuals who care about and are optimizing different things can choose among those options.
--:-- Alex DiLiarno: But I think we as an organization throughout our history have been very clear about the importance of in-office collaboration and what it means to our values and the performance and overall success of our colleagues.
--:-- Sean Rameswaram: And I expect that we'll continue to kind of be focused on those themes.
--:-- [Support for Today Explained comes from Built Rewards]
--:-- Sean Rameswaram: We spoke to Nick Bloom, professor of economics at Stanford University.
--:-- Nick Bloom: Which of these really works best? I mean, the first thing is we're all very different in what we like. Think of it kind of like the office air conditioning. Some people like it hot, some like it cold. Some, you know, don't appear to express any opinion.
--:-- Sean Rameswaram: So just in the data we have surveyed about 100,000 Americans by now, you find that about 20% of people actually want to go in every day.
--:-- Nick Bloom: I come in almost every day because I like being able to work around people and interacting with folks. I find it much more productive. They say, you know, it's more social. I find it easier to learn and get mentored.
--:-- Sean Rameswaram: And maybe my apartment isn't great. I'm sharing with four other people and I don't want to work in my bedroom and there's nowhere else.
--:-- Nick Bloom: There's 30% that the complete opposite. They want to work from home every day. And normally when you talk to them, they'll say, I have a massive commute. Yeah, I want to see friends, family. I know how to do my job. And, you know, I just waste time at the office and, you know, I'm just being bothered all the time.
--:-- Sean Rameswaram: The thing is, I can complete 100% my work from home because I'm not seeing clients right now. But if there's a need for me to be here in the office, I will for sure be here, you know. But if they don't require that, why wouldn't I be able to work from home, you know, if I have everything that I need?
--:-- Nick Bloom: And then there's around 50%, which actually probably includes me, that kind of feels like hybrids what they want. They want to come in some days and work from home some other day.
--:-- Sean Rameswaram: So there is enormous variation for individuals and managers. It makes this thing actually, you know, a nightmare. It's just very hard to navigate.
--:-- Nick Bloom: We asked Nick what exactly the American workforce even looks like in the back half of 2024.
--:-- Nick Bloom: So there are about 60% of Americans going every day. That's around 100 million people. It the most common group. Next most common is folks that are hybrid. That around 30. So that around another kind of 50 million.
--:-- Sean Rameswaram: And then the remaining are fully remote.
--:-- Nick Bloom: Most fully remote workers are, there's a lot of them in a call centers, data entry, tech, some journalists and some writers. They're in some ways the most disparate group. They're kind of all over the place.
--:-- Sean Rameswaram: Hybrid workers tend to be a lot of managers professionals and then fully in-person jobs tend to be not always but they're mostly lower paid so think of you know food service transport accommodation but there are some people like pilots surgeons very highly paid jobs traders there's a bunch of traders on wall street they need to use very fast computers be right next to the exchange you can't do that from home i mean there's also security it's just i've talked to companies where they say look we're dealing with health confidential health data or you know financial data. We can't work from home.
--:-- Sean Rameswaram: I'll answer another question, actually. There's a really interesting part on productivity, which is it's not obvious that firms should look at productivity, but they should maybe think more about profitability.
--:-- Nick Bloom: So to explain why this is different, if you look at fully remote workers, imagine you're a manager and you think, hey, look, these folks aren't as productive because they're fully remote. Imagine you think they're maybe 10% less productive. Initially, the knee-jerk reaction is haul them back into the office.
--:-- Sean Rameswaram: But you should pause a minute and think, well, look, how much do they cost? Because it turns out that if you don't have an office, you typically save about 10% on costs.
--:-- Nick Bloom: It also turns out if you're hiring folks remotely, you can hire a lot better employee for your money because you're not looking locally, you're looking nationally or even globally.
--:-- Sean Rameswaram: And numbers suggest that maybe fully remote employees, you can save 20%, 30% on your wage bill.
--:-- Nick Bloom: So what I often find when I talk to companies is they'll say, you know what, the real thing is profits. So if we want to really think about the remote decision, we really got to think about what is the most bang for the buck.
--:-- Sean Rameswaram: And it turns out often fully remote workers are actually extremely cost efficient.
--:-- Nick Bloom: Turns out hybrid is here to stay so if you look at the numbers before the pandemic's very low so as a share of days about five percent of days in the u.s for fully work from home so it happened but it's pretty rare peak of the pandemic that went to 60 percent basically anyone that could work from home was doing it and they were doing it full time this is kind of april 2020 now it's fallen to about 25%, but it's been flat since the beginning of 2023.
--:-- Sean Rameswaram: It's the last almost two years. We've not seen any particular movement back to the office.
--:-- Nick Bloom: You know, it feels like there has been, if you read the media, Google, Walmart, even Zoom. Amazon wants its corporate workers back in the office full time starting next year.
--:-- Sean Rameswaram: But it just turns out in big data for every, you know, one of those companies, there's a bunch of others that there's office leases expired and they say, look, it's a lot cheaper to get rid of the office and work from home.
--:-- Nick Bloom: So we're now kind of stable. This is the new normal.
--:-- Sean Rameswaram: I repeatedly tell managers, execs, employees, look around where we are now in kind of fall 2024. This is where we'll probably be 25, 26, 27.
--:-- Nick Bloom: In about 5, 10 years, we're now looking to the future. We'll probably be doing more working from home just because the technology is going to get so much better.
--:-- Sean Rameswaram: I live out in Silicon Valley and I meet companies designing amazing holograms like out of Star Wars or things called portals, which are 12 by 12 foot screens for video calls or virtual reality, incredible stuff.
--:-- Nick Bloom: And it's not here now, but there are people investing millions into it. Five, 10 years it will be.
--:-- Sean Rameswaram: And we're not never going to meet in person. It's just going to be a little bit more remote than it is now.
--:-- Nick Bloom: I will say, Nick, if you're consulting these companies, let them know. I work hybrid. However, if you made me have a hologram of my coworker in my house, I would just go into the office. Let them know. Forget it. No more beaming. This time I'm going to walk.
--:-- Sean Rameswaram: I'm curious. So it feels like you're saying companies are realizing they can make more money if they go hybrid because they don't need to pay for commercial real estate.
--:-- Nick Bloom: Does that also mean that they're not worried about employee productivity, at least in these laptop jobs where you can be doing them from Jakarta?
--:-- Sean Rameswaram: Great question. So it's a trade-off.
--:-- Nick Bloom: So I was actually involved in a very nerdy, very scientific study on hybrid. Weirdly enough, the current chairman and original founder of a company called Trip.com, they're a big NASDAQ listed in a massive tech firm, was in my class at Stanford like 15 years ago.
--:-- Sean Rameswaram: So I stayed in contact and I know their current CEO, Jane Sun.
--:-- Nick Bloom: So they ran a massive experiment. So what they did is they took 1,600 managers, professionals, coders, accounts, finance folks, and they're all at that time coming in the office five days a week.
--:-- Sean Rameswaram: And they said, look, we want to try out hybrid. So 800 of them, those that happen to have odd birthdays, so if you're born on the first, third, fifth, seventh of the month, were allowed to work from home on Wednesday and Friday.
--:-- Nick Bloom: And the rest of the group came in every day. And we started them for up to two years.
--:-- Sean Rameswaram: And what you found is there was just no effect on performance, no effect on promotions, no effect on lines of code written, no effect on leadership scores, innovation scores, anything you could look at.
--:-- Nick Bloom: And when you interviewed them they said well look you're right if we only come in the office three days a week there is a little bit less face time there's maybe a little bit less meeting and culture although generally the firm is better at making sure all the key things happen on those three days they said but on the other two days a week we're at home it's been great because it's a lot quieter for me at home so I can think and study and it's good for deep work and also I'm saving almost an hour and a half a day on extra commuting and sure some of that I used to go to the gym or you know see my kids but some of that I'm actually using to work more and in fact in something we just put out you also see folks tend to take shorter breaks at home like in the office you take an hour for lunch but at home you know go and make yourself noodles maybe eat them over the keyboard or you know whatever But it taking 15 20 minutes
--:-- Sean Rameswaram: It true and it pathetic Yeah, I know. My A key is, I was just saying something over the weekend, my A key kind of crunches and the space bar kind of sticks.
--:-- Nick Bloom: So I think that's too many work from home lunches.
--:-- Sean Rameswaram: But, you know, it all tells you that hybrid at least doesn't seem to damage productivity. What it does do for firms is it dramatically reduces quit rates, which saves them a huge amount of money on recruitment and retention.
--:-- Sean Rameswaram: It's interesting to hear your data from Trip.com because the producer of this show, Victoria Chamberlain, and I took these trips to Portugal and Miami, and especially Miami, where we met a lot of people who are back in the office for five days a week.
--:-- Nick Bloom: You heard them saying, you know, I like the hybrid. Do you think there's some companies out there that just aren't getting the memo here that there's not a great loss of productivity?
--:-- Sean Rameswaram: What do you think it is that's keeping companies with a four to five day in office policy?
--:-- Nick Bloom: It's a good question. So take Amazon. They literally just announced in the last couple of weeks about having folks come back five days a week. Why is that? Why was three days a week not enough for Amazon?
--:-- Sean Rameswaram: I mean, there's a range of potential explanations. One explanation is, look, it wasn't very well organized. They didn't come in on the same three days. So, you know, if you come in Monday, Tuesday, your Wednesday, I'm Thursday, I'm Friday, then that doesn't really feel that great.
--:-- Nick Bloom: You come into the office and it's half empty and you're all on Zoom calls. That's kind of a management issue.
--:-- Sean Rameswaram: May be also you most typically see return to office announcements from public listed companies when they've not been doing very well recently or when they're about to release other bad news.
--:-- Nick Bloom: And it's kind of like the classic scapegoat. so it's kind of like the CEO says you know give me please another six months or a year it's these you know work from home stuff it's messing it up it doesn't fit Amazon's actually been doing pretty well recently it's not perfect so I'm honestly a bit perplexed you know
--:-- Sean Rameswaram: One way this plays out is they have a ton of quits they find it harder to hire I mean I know from talking to my own undergrads and MBAs they don't want to go in five days a week so it's going to be harder to hire them.
--:-- Nick Bloom: They may reverse course two, three. Amazon is a lot like the river itself. Their policy on work from home has changed direction about 10 times. So this may not be the final twist in this story.
--:-- Sean Rameswaram: Speaking not only to an employee of Citadel, but also to an executive at Citadel, their chief people officer, they really seem to be pushing this narrative that this is just our culture.
--:-- Nick Bloom: Our culture is one where people come in to learn and learning happens best, just like at a university, in person.
--:-- Sean Rameswaram: You studied this professionally. You've seen the writing on the wall. Do you think it's just a matter of time or do you think in five, ten years we'll still see companies like Citadel, maybe like Amazon, maybe like Bank of America, who are demanding their employees be in office five days a week?
--:-- Nick Bloom: So it's definitely true a chunk of learning happens best in person. So I'm a professor at university, you know, I kind of teach for a living. And for sure, online class was horrible. So I'm never going back to that.
--:-- Sean Rameswaram: And I did, you know, I did while it was necessary. But as soon as we were allowed back in person, I was like, I'm back in the classroom.
--:-- Nick Bloom: But as a teacher, if folks have to do reading for their class or write an essay, that's probably better done at home because it's quiet.
--:-- Sean Rameswaram: Imagine you're, I'm a professor and, you know, at one extreme, I say students have to stay in the classroom from 8am to 5pm every day. They have to do all their reading, writing. It's a noisy environment. That's not ideal.
--:-- Nick Bloom: At the other extreme, you never meet in person. It's not ideal either. Generally, innovation, learning, a lot of these activities are best done in a mix of some in-person and some quiet time.
--:-- Sean Rameswaram: Citadel, I totally agree that you want some in-person time. I'm sceptical you need all five days. I suspect, for example, if folks came in four days a week, that may be enough. Let them work from home on Fridays. Let them have that as quiet, a reflection, deep work type time.
--:-- Nick Bloom: But, you know, it's their company, so they're free to choose.
--:-- Sean Rameswaram: Nick Bloom is an econ professor at Stanford University.
--:-- Nick Bloom: That's what you call it when your A key is sticky from too many work from home lunches.
--:-- Sean Rameswaram: Sometimes it's like, geez, how did people do this before COVID every day and not even complain or anything, you know?
--:-- Nick Bloom: Oh, they complained. Yeah, I'm sure they did, but there was no other option, you know what I mean?
--:-- Sean Rameswaram: Now it's like, it's impossible to make people do it. And really, if you don't want to do it and a company makes you, you can just leave and go to another company that doesn't mandate it.
--:-- [Discussion continues with the hosts]
--:-- Sean Rameswaram: Victoria Chamberlain produced today's show.
--:-- Jolie Myers: Edited by Jolie Myers.
--:-- Laura Bullard: Fact-checked by Laura Bullard.
--:-- Patrick Boyd: Engineered by Patrick Boyd, Andrea Kristinsdottir, and Rob Byers.
--:-- Sean Rameswaram: And we had help from our executive producer, Miranda Kennedy.
--:-- Halima Shah: The rest of our team includes Halima Shah, Avishai Artsy, Hadi Mawagdi, Amanda Llewellyn, Miles Bryan, Peter Balanon-Rosen, and Rob Byers.
--:-- Sean Rameswaram: Our supervising editors are Amina Al-Sadi and Matthew Collette.
--:-- Noel King: Noel King is my co-host.
--:-- Sean Rameswaram: Breakmaster Cylinder is our remote worker.
--:-- Sean Rameswaram: Today, Explained is distributed by WNYC.
--:-- Sean Rameswaram: The show is a part of Vox.
--:-- Sean Rameswaram: I was having a mini panic attack. I was at F-U-C-K. It's friggin' Sunday.
--:-- Noel King: What the hell? Where did the weekend go?
--:-- Sean Rameswaram: Support for this show comes from Macy's.
--:-- Noel King: Fall is right around the corner and that means layering season is too.
--:-- Sean Rameswaram: Macy's fall fashion guide can help you get a pulse on all the latest trends and must-haves.
--:-- Noel King: Try a romantic look with a sheer top from inc or mix it up with some fun textures like a faux fur bomber jacket from carl lagerfeld paris.
--:-- Sean Rameswaram: No matter your vibe you can explore the macy's fall fashion guide and find the perfect look for you.
--:-- Noel King: Shop in store or online at macy's.com.
