Remote Companies Grow Twice as Fast

The case for rethinking RTO

• Workforce growth in companies offering remote and hybrid work arrangements has outpaced that of in-person firms. When accounting for industry-specific effects, remote and hybrid companies have grown twice as fast as their in-person counterparts.
• In most industries, companies embracing remote and hybrid work are better positioned to grow faster. The largest difference in workforce growth between remote and in-person companies is in the Digital Commerce and the Architectural Design industries.
• Remote and hybrid job openings are correlated with faster times to fill open positions, indicating that firms that embrace remote and hybrid work are better positioned to attract the talent they need.

One of the last big pieces of corporate news in 2024 was AT&T mandating a return-to-office (RTO), requiring all office employees to work from the office five days a week starting in January 2025. AT&T’s announcement comes a few months after Amazon made a similar announcement in September 2024. Since mid-2022, executives have been pushing for RTO policies, citing reasons like building stronger company culture, fostering collaboration, and boosting productivity. However, research has consistently shown that the expected benefits of RTO policies are not always realized. In fact, numerous studies, including our own work at Revelio Labs, have found that remote work is often correlated with higher employee satisfaction, better work-life balance, and even lower attrition rates. We have also shown the benefits of remote work for sub-groups of the labor force, most importantly women. Similarly, other research has highlighted the high turnover for female employees, more senior employees, and more skilled employees as a result of mandating RTO.

This week, in collaboration with the Washington Post, we highlight an additional factor that companies should consider when implementing RTO policies: the impact on workforce growth. We focus on public companies in the US and categorize them as "remote and hybrid" or "in-person" using data from job postings. Companies where over 70% of job postings since mid-2022 have been advertised as remote or hybrid are classified as "remote and hybrid".

Our analysis shows that workforce growth in companies offering remote or hybrid work arrangements has consistently outpaced that of firms requiring employees to work in-person, even when accounting for differences across industries. Since mid-2022, companies requiring employees to work five days a week in the office have grown by an average of 0.3%, while those offering flexible work arrangements have grown at an average rate of 0.6%, or twice as quickly. These findings suggest that embracing remote work provides a competitive advantage in retaining and attracting talent, positioning such companies for stronger workforce growth.

Read the full story here.

Happy Belated New Year!

Loujaina Abdelwahed, PhD | Senior Economist at Revelio Labs