Return to Remote
A Texas government study published in October of 2024 concluded that remote work had no discernible impact on productivity and actually reduced employee attrition. Texas has over 341,000 state FTEs, placing it in the top 40 of global employers and making this a significant finding. The recent passage and signing of Texas House Bill 5196 reversed an earlier telework prohibition. As Gail Collins says, “What happens in Texas doesn't stay in Texas anymore.”
Recent business strategy has been driven by economic factors, from correcting post-pandemic overhiring, to recouping losses on commercial real estate investments, to anticipating labor cost reductions through AI. Last year the tech sector saw record layoffs, with Forbes reporting 124,000 people being dismissed in the U.S. McKenzie reported tech companies reduced their workforces by 12%. San Francisco office vacancies have soared to 37% from 5% pre-pandemic. Companies are offloading office space at a record pace, with U.S. tech returning more than 30 million square feet of office space just in 2022, an 18% reduction. In San Jose, public transit rates have decreased 60% as fewer people go to fewer offices. Once companies begin hiring again (because this is always a cycle), they will not have the office space. Beyond debunking the productivity myth, Texas’ RTO reversal was in large part due to physics: not enough space for workers, or even places to park.
Much of the tech sector RIF has been driven by an essentialist mindset that AI is a panacea that will radically reshape the labor force. Who needs humans, we have AI - and you don’t need to be nice to it! It turns out, AI isn’t good at a lot of things and is suspiciously unreliable. Part of the reason is that since 2022 learning models have been regularly ingesting recycled AI slop. Yes, your AI is drinking its own dirty bathwater and it is leading to an increase in model collapse. There is a new trend among companies paying top dollar for specialists who can identify and fix AI mistakes. Who are these magicians? The upper tier of skilled and experienced workers who can demand a higher salary and work wherever they please.
What we are witnessing is not new - we saw it in the 90’s with the advent of globalization and offshoring. Three members of my doctoral cohort worked for UTC and all wrote similar dissertations on the unrecognized organizational costs of reworking poorly executed offshored engineering. Offshoring is cheap until you have to fix it. For many companies, their AI strategy is simply offshoring 2.0 and the consequence will be the eventual need to onshore for adult remediation - adults who can dictate their terms of employment and demand to work remotely.
Soon, things will return to normal. AI’s plateau of productivity will have missed the mark, the tech sector will begin hiring again and become desperately sociotropic, and there will be no place to put anybody.
