Many employees have returned to in-person daily life more than two years after the pandemic reshaped public life, but the economic impacts will be ‘quite significant’ if even a fraction of the workforce continues to adopt hybrid models or aloof, Gov. Charlie Baker said Thursday.
Linking a shift in work patterns to the future of inner-city spaces and the “existential threat” posed by a stalled housing market, Baker, in remarks to business leaders, made his final pitch for passing a series of spending packages that he said would help Massachusetts navigate a changing jobs landscape.
Baker opened his remarks at a New England Council event with optimism, saying the state had done a good job of “bounce back” from the worst spells of unemployment during the public health crisis.
But soaring inflation and labor market “churn” will continue to pose challenges for employers as well as policymakers, Baker said. He pointed to working from home in particular, arguing that even a small subset of employees opting against commuting would represent a critical mass.
“They don’t have to be half of what everyone else does,” Baker said. “They don’t even have to be a third party, but if it’s 25% of what everyone else is doing, the consequences of that are quite significant in many ways.”
Employees who have access to remote options may see significant benefits in this model, such as greater flexibility for family care or reduced travel costs.
Fear for urban centers
Baker said he fears the trend will also cripple urban spaces, cutting off the flow of workday customers to restaurants, shops and other establishments in downtown spaces that were once busy.
“They plan breakfasts, they go out for lunch, they pick up their laundry, they shop at these stores, they go out for dinner. They are a big part of what I call downtown vitality,” Baker told reporters after Thursday’s event. “If that’s not the case, if most people are going to move to some kind of hybrid type environment where people work two or three days a week remotely and then two or three days a week in the office, it is a lot of foot traffic going away.
The question is at the heart of the concerns of many business leaders and workers themselves. Next week, the Greater Boston Chamber of Commerce welcomes its third Discussion of the year on “the future of work”, this time focusing on the revitalization of downtown Boston.
A New Boston Business Journal and Seven Letter Insight Survey of 209 Boston-area Professionals published Thursday found that many employees expect the physical footprint of their offices to shrink in the near future, although this trend has yet to materialize.
Around 45% of respondents said their business had grown in space or size over the past two years, another 43% said their business had remained in the same space or size, and 12% said that their business had declined over the past two years.
Going forward, this split is effectively reversed: 43% said they expect their company to reduce office space when their lease is in effect, compared to 42% who expect to stay in the same amount of space and 15% that provide for physical growth.
“The results of this survey have important implications for the commercial real estate market,” BBJ editor Doug Banks said in a statement accompanying the survey results. “If companies are looking for smaller office space when their current leases expire, we could see real estate costs ease.”
Baker pushes housing
Baker introduced a $3.5 billion economic development bill (H.4270) in April that he and his team said would spur new investment in downtown spaces and direct hundreds of millions of dollars towards housing production, transit-oriented development and social housing needs.
Housing has long been a challenge in Massachusetts, where production has been sluggish for decades despite population growth and the boom in new industries, and Baker said Thursday the crisis is “probably more acute now” than it appears. was before the pandemic.
With seven months to go before leaving office, Baker said he sees housing as his main concern, warning that many young adults risk being left out of a future in the Bay State s they hadn’t already been.
Following on from other legislative priorities Baker outlined at Thursday’s event – including his $9.7 billion infrastructure bond bill (H.4561), a relief package taxes (H.4361), a push to ease the detention of certain defendants deemed to be at risk to the community (H.4290) and health care funding reforms (S.2774) – his jobs bill and city centers remains blocked in committee.