Remote work is a "Covid-era privilege" that will persist, according to economists.

• The Department of Government Efficiency, led by Elon Musk and Vivek Ramaswamy, plans to require federal employees to return to the office five days a week.
• In 2025, companies such as Amazon and The Washington Post are implementing a similar policy.
• Many companies will continue with remote or hybrid work arrangements mainly to increase profits, economists predicted.
• Some view return-to-office mandates as a stealthy way to reduce employee headcount.

Elon Musk and Vivek Ramaswamy's plan for reducing the federal government involves returning workers to the office full-time.

The duo, appointed by President-elect Donald Trump to lead a new Department of Government Efficiency, wrote in a Nov. 20 Wall Street Journal op-ed that working from home was a "Covid-era privilege."

Remote work is not a passing fad, according to labor economists.

They consider it a permanent characteristic of the American employment industry.

Nick Bloom, an economics professor at Stanford University who studies workplace management practices, stated that remote work is here to stay.

Amazon, Washington Post curtail remote work

To be sure, many big name employers have curtailed remote work.

Amazon CEO Andy Jassy announced a full-time in-office policy for corporate staffers starting in 2025, while the Washington Post recently made a similar announcement. UPS, Boeing, and JPMorgan Chase have called some employees back to the office five days a week.

Disney has implemented a "hybrid" arrangement where employees work four days a week in the office starting in 2023.

However, data shows remote work hasn't fizzled out.

At the peak in early 2020, more than 60% of paid, full workdays were done out of the office, which is a significant increase from less than 10% before the pandemic, as per WFH Research, a joint project by researchers from MIT, Stanford, the University of Chicago, and Instituto Tecnológico Autónomo de México.

Despite a significant decline, the share has remained stable at a range of 25% to 30% for two years, according to WFH Research data as of December.

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Since January 2023, the levels of remote work have remained constant, according to Bloom.

In November 2022, approximately 8% of job listings on Indeed featured remote or hybrid work options, which is a decrease from the peak of 10% in February 2022 but still higher than the 3% share seen in 2019.

According to economist Allison Shrivastava of Indeed, remote work is unlikely to disappear entirely, but it may have reached its peak.

Remote work is 'hugely profitable' for companies

Hybrid work is profitable for companies and has staying power, according to Bloom.

According to research co-authored by Bloom and published in Nature in June, workers' productivity does not increase if they come to the office more than three days a week.

The ability to work from home is highly valued by workers, but mandating additional days in the office can lead to employee turnover, which is "hugely costly" to firms, according to Bloom.

Reducing turnover costs can increase profits by tens of millions of dollars a year for a typical large company with tens of thousands of employees, he said.

A 'covert' way to lay off workers?

The goal of Musk and Ramaswamy is to mandate federal employees to return to the office full-time, as they anticipate that this policy will lead to higher attrition.

"We welcome the wave of voluntary terminations that would result from requiring federal employees to come to the office five days a week," they wrote in the November op-ed.

According to a recent ZipRecruiter employer survey, companies may be using return-to-office mandates as a "covert strategy for headcount reduction."

According to ZipRecruiter, cultural and productivity concerns are often cited as the main reasons for certain policies, but it appears that this is more based on perception than actual data.

Some officials have pushed back on such notions, however.

Jassy, Amazon's CEO, stated in a meeting that the five-day in-office policy was not a "backdoor layoff," but rather a decision to strengthen the company's culture, according to CNBC's obtained notes.