'Labor Day as the First Day of School?' Why Wall Street Is Pushing for Office Returns [Jjinbit]

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunjin Jung] "Do you remember last year? Many companies expected that with the return to offices in New York in September, daily life would be restored. But variants like Delta and Omicron shattered those expectations." - On the 6th (local time), The New York Times (NYT)

Among U.S. industries, the financial sector has been the most proactive in returning to office work following the expansion of remote work due to COVID-19. Especially major Wall Street financial firms such as Goldman Sachs and Morgan Stanley have repeatedly emphasized the many advantages of working in the office. Since last year, they have been vocal about resuming face-to-face work, but faced difficulties due to obstacles like the spread of Omicron. On Labor Day, September 5th, they once again introduced measures to encourage 'return to office.'

◆ "Don't Use COVID-19 as an Excuse" Goldman Sachs Removes Protocols

According to reports from the New York Post and others, Goldman Sachs notified employees at the end of last month, about a week before Labor Day, that it would eliminate COVID-19 protocols. This means vaccination, testing, and mask-wearing are no longer mandatory. They declared that protocols allowing remote work due to COVID-19 would no longer be applied. The New York Post described this as "the first major company to privately notify that COVID-19 related measures should not be used as a reason for remote work."

Mike Mayo, an analyst at Wells Fargo, another Wall Street investment bank, told the New York Post, "Goldman Sachs is essentially saying, 'School is back in session, and we want our employees to come to the office' in a different way after Labor Day." Another source told the outlet that compared to competitors like Morgan Stanley and JP Morgan, which allow hybrid work, Goldman Sachs is leading by bringing more employees back to the office.

[Image source=Reuters Yonhap News]

However, besides Goldman Sachs, Morgan Stanley also lifted COVID-19 related regulations last month, and JP Morgan removed the mask mandate inside its buildings in March. Jefferies Financial Group, a Wall Street investment banking firm, sent a message to all employees on the 1st, maintaining a hybrid work model but expressing a preference for working together with colleagues in the office rather than working alone at home. Overall, Wall Street is fostering a similar atmosphere of 'come to the office.'

◆ "This Time It's Real" Last Hurdle Removed

Bloomberg recently reported on this Wall Street trend, stating, "Large banks have removed the last barriers to regular in-person work. They sent a message that they want employees to be seen in the office," adding, "After several false starts, this time it seems real." As recession fears grow this year and the balance of power in employment gradually shifts toward employers, Bloomberg noted that employees' demands to work remotely are becoming harder to sustain.

Wall Street's stronger focus on returning to the office compared to other industries is attributed to the competitive nature of the U.S. financial sector. There is a strong perception that banking is fundamentally a face-to-face business, and if information sharing and communication among employees do not happen immediately, there is a significant fear of falling behind in competition. CNN reported last year on Wall Street's return-to-office movement, noting, "Culturally, face-to-face relationships and training cannot be replaced, and given the nature of the financial industry where billions of dollars in transactions occur, there are concerns about vulnerabilities in security and risk management."

Given this situation, Wall Street financial firms are currently focusing on improving work environments to encourage employees to return to the office. Especially as inflation surges, increasing commuting fuel and meal costs, foreign media report that companies are exploring various measures such as providing free food or creating social spaces like ping-pong rooms.

Despite these active efforts, office occupancy rates in New York remain below 50%. The NYT cited data from Castle Systems, a building security company monitoring U.S. workers' return, reporting that during the week from late August to early September, New York's office occupancy averaged 35.3%, below the national average of 45.3%. The question remains whether Wall Street's return-to-office policies, initiated around Labor Day, will succeed.

◆ "Talent Acquisition Challenges..." Financial Firms Embrace Flexibility

Some Wall Street firms are considering the demand for work flexibility. Given that the U.S. labor market remains hot and competition for talent is intensifying, Wall Street must also strive to attract young talent. Remote work is often included among the preferred working conditions for talent. In a talent war where remote work becomes a 'weapon,' Wall Street cannot avoid this trend and faces challenges.

Brian Moynihan, CEO of Bank of America (BoA), stated at a New York industry conference on the 6th that flexible work standards would be established within the next 6 to 8 weeks. This is interpreted as setting standards to allow flexible work while maintaining manageability. Moynihan said, "We have 210,000 employees, and literally 210,000 different desires. It is true that more flexibility is needed compared to before. However, there will be more structure to that flexibility."

[Image source=AP Yonhap News]

Additionally, Citigroup allowed employees last month to work fully remotely anywhere within their country of employment for two weeks. This month, they returned to a hybrid model requiring three days a week in the office, but this was seen as a concession for the summer vacation period. Dan Konfeld, a professor at Vanderbilt University, told Bloomberg that it is practically impossible to revert employees who have experienced the benefits of remote work back to the past, analyzing that "the conditions of employment have completely changed."

Last month, Business Insider reported that six first-year bankers in Goldman Sachs' New York investment banking healthcare team resigned simultaneously. According to the report, they were frustrated by harsh working conditions, working until 5 a.m., and numerous demands amid lower-than-expected bonuses during the August bonus season on Wall Street. Ultimately, they submitted resignations. With young employees protesting through successive resignations, attention is focused on whether Wall Street's return-to-office efforts can continue, whether other global companies will follow Wall Street's lead, or whether companies and employees can find a compromise going forward.

Editor's Note[Jjinbit] is short for 'Hyunjin Jung's Business Trend' and 'Real Business Trend,' a segment showcasing trends in corporate management such as organizational culture and HR systems. Based on analyses from foreign media and major overseas institutions that have not received much attention, we aim to deliver fresh and differentiated information and perspectives.