Bring people back to the office

Like many bosses, Larry Fink wants to get his employees back to the office. But in an interview Tuesday with Fox Business, the BlackRock CEO offered a new argument for why his company was pushing to return to office: helping reduce record U.S. inflation.

On Claman’s Countdown, Fink pointed to telecommuting as one of the reasons for declining labor productivity in the US. “We need to get our employees back to the office,” he said, arguing it would lead to “productivity gains that will offset some of the inflationary pressures.”

On the same day, BlackRock said it would begin requiring employees to come into the office three days a week, according to an internal email seen by Yahoo Finance.. “Time together is how we deliver to our clients,” BlackRock COO Rob Goldstein and chief human resources officer Manish Mehta wrote in an email. Exceptions to the rule “will be rare and require formal approval,” they wrote.

On Fox Business, Fink said BlackRock would “take a harder line on how we bring our employees back.” BlackRock’s effort to get people back to the office “is going to be a key element in reducing inflation: increasing productivity,” Fink said.

BlackRock did not immediately respond to a request for comment.

U.S. nonfarm labor productivity, measured in terms of output per hour worked, fell 4.1 percent year over year in the second quarter, the U.S. Labor Department said on Thursday. This follows a 7.4% drop in productivity in the first quarter of the year. Falling productivity could contribute to inflation as wage growth is not matched by output growth, prompting businesses to raise prices.

The US consumer price index, which measures price changes, was unchanged between June and July, although the July figure was still 8.6% higher than last year.

Returning to the office

BlackRock joins other Wall Street banks in pushing for a return to the office. Both Goldman Sachs and Morgan Stanley have said that after Labor Day they will remove COVID-related restrictions on in-person work, such as requiring vaccinations or regular COVID testing, in an effort to get workers back to the office.

Fink isn’t the only Wall Street CEO trying new arguments to get people back to the office. On an Aug. 9 call with wealthy clients, JPMorgan CEO Jamie Dimon suggested that in-person work fostered diversity, calling the office a “rainbow room” and warning that remote workers lived in homogenous communities.

Does telecommuting affect productivity?

Economists have cautioned against reading too much into recent falls in US labor productivity. The number can change drastically from quarter to quarter due to changes in production or the workforce, and may not necessarily imply anything about how employees are working. The combination of falling GDP and strong job numbers is reflected in reduced productivity as output falls and hours worked increase.

Heidi Shierholz, president of the Economic Policy Institute, suggested that Luck In May, one reason for the drop in productivity may be some people returning to work in “lower productivity” jobs, such as restaurant work, which was eliminated during the COVID pandemic. (“Low productivity” is a technical measure of economic output relative to hours worked and does not mean that a worker’s job is easy.)

Executive surveys, such as one conducted in August by the Federal Reserve Bank of New York, often report lower or flat productivity from telecommuting, while workers surveyed tend to say that telecommuting increases their output.

In July, economists Robert Gordon and Hassan Sayed argued in a working paper for the National Bureau of Economic Research that sectors that allowed remote work saw higher productivity gains during the pandemic than in the previous decade. Sectors that could not accommodate remote work, such as manufacturing, saw productivity stagnate or even decline.

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