Wall Street banks lead return-to-office push

It was standing room only for commuters on the New York-bound train leaving Summit, New Jersey, at 5:38 a.m. Tuesday. Traffic on the Long Island Expressway was at a crawl as rain poured down, while Sweetgreen locations in Manhattan were packed by lunchtime.

Labor Day has long marked a turning point in New York: Finance moguls return from the Hamptons, kids go back to school, and business picks up as the calendar turns to September. But that's not been the case since 2019 with return-to-office plans scuttled by the pandemic, including the delta variant last year.

Now, bosses are expecting workers to finally start showing up more regularly at Manhattan offices that have been sparsely populated for more than two years. And they're counting on the turbulent economy to provide an extra nudge.

"We're going to have a real push back to the office post-Labor Day," said Jeff Blau, chief executive officer of landlord Related Cos., the developer behind Manhattan's Hudson Yards project. "I think that you'll see, certainly if we go into a bit of a recession or whatever we're in now, as the leverage swings back to employers, they'll use that leverage momentum to insist that people be back to the office."

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Big banks including Goldman Sachs and Morgan Stanley have removed the final hurdles for full-time, in-person work, and once again are reminding employees that they're wanted in the office. After a few false starts, there's a sense that this time it's for real.

For Bank of America, the return entails offering more flexibility than prior years, but making efforts to formalize that flexibility, according to Chief Executive Officer Brian Moynihan. His bank will roll out a new plan for the formalized flexibility in six to eight weeks, Moynihan said at the Bank Policy Institute's first in-person annual conference in three years that packed the Pierre Hotel in Midtown.

If employers succeed on bringing more workers back, it would be a long-fought victory. Wall Street banks in particular have been among the most aggressive in trying to lure people back, with many beginning that process more than a year ago. 

While Goldman, Morgan Stanley and JPMorgan Chase have have long been pushing for more employees to come to the office, policies at other prominent financial firms speak to just how tricky it is to push for a full return. Last week, Jefferies Financial Group asked employees to come in on a "more consistent basis," but said it won't check badge swipes and has "no issue" with staffers working from home from time to time. 

Citigroup, meanwhile, allowed employees on a hybrid schedule to work fully remotely for two weeks in August, from anywhere within their country of employment. This month, the bank expects those staffers to resume their previous routines, which usually include three in-person days a week. Since February, the private equity giant Apollo Global Management has embraced similar hybrid schedules for most employees.

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Even as jobs cuts pick up with companies bracing for a downturn, it's unlikely that Labor Day will mark a "great reckoning" for the office return on Wall Street, according to Bhushan Sethi, joint global leader for people and organization at PwC, and an adjunct professor at the New York University Stern School of Business. Companies fighting for talent, he said, need to recognize they have to remain somewhat flexible.

"Banks will be loathe to be too aggressive," Sethi said.

Wall Street isn't alone in lobbying to get people back. Apple and Peloton have told U.S. employees to report to their offices this month, while Comcast is requiring workers to be in several days a week.

The latest push comes after the pandemic fueled a generational shift in attitudes about work. A recent survey from McKinsey found that among those given the chance to work from home at least one day a week, 87% take it. In addition, employees have been empowered by the tight labor market to ask for perks and raises.

The power dynamic between workers and bosses will be key to any success in ordering workers back. During the past year, companies worried about retention have been reluctant to insist. Now, that balance is starting to shift. While the U.S. added a solid number of jobs in August and wages continued to rise, unemployment numbers are ticking higher. News of layoffs and predictions of an impending recession are making workers nervous. Some report feeling less confident negotiating to work from home.  

"That's going to be an incentive for people to get back to work," said Bill Rudin, chief executive officer of Rudin Management, a commercial and residential developer in New York. "As you start seeing some layoffs happening, people will say, 'Woah, I don't want to be laid off, I want to be in the office and have bosses see that I'm working really hard.'"

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The work-from-home culture has put New York's office landlords in a bind. Just 35.3% of workers in the metro area were back at their desks in the week ended Aug. 24, according to card-swipe data from Kastle Systems. That low level of occupancy, coupled with news that technology giants Meta and Amazon were pulling back on planned expansions, has raised concerns about the future of the city's office market.

Now that employees have experienced — and grown accustomed to — the benefits of remote work, it will be nearly impossible to reverse course, according to Dan Cornfield, professor of sociology, political science and American studies at Vanderbilt University. 

"The terms of employment may have permanently changed," he said. "Employers may not be able to leverage the greater bargaining power to have more employees return to the office." 

—With assistance from Allison McNeely, Jennifer Surane, Sally Bakewell and Katherine Doherty