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It bears remembering the massive misalignment of incentives here: the funds like Blackrock holding large portions of the stock in these companies also hold sign

It bears remembering the massive misalignment of incentives here: the funds like Blackrock holding large portions of the stock in these companies also hold significant positions in commercial real estate, so if they let WFH become permanently widespread they could suffer a big loss on that, hence the push for companies to enforce work from office. Many companies themselves also have commercial real estate positions (if only in their own office buildings), which they don't want to lose value.

wildrhythms 3y ago
It's also the tax breaks. >Of the billions in tax incentives granted to US companies every year by cities and states, many agreements require workers to come into the office some of the time, or at least live in the region. For companies receiving these incentives, relaxing in-office attendance could be costly. >The state [New Jersey] said it will revoke benefits granted under the multibillion-dollar Enterprise Zone Program to companies whose employees no longer work on site at least half the time. https://www.bloomberg.com/news/features/2023-02-21/another-threat-to-work-from-home-tax-breaks https://www.bloomberg.com/news/features/2023-02-21/another-t... https://archive.is/eOeIv https://archive.is/eOeIv
- logicchains 3y ago
  I wonder why that is? I suppose the governments of states with big cities stand to lose a lot of tax revenue if employees no longer need to go to those big cities to do their jobs, and can instead work from (and pay tax to) states with lower cost of living.
  - tyingq 3y ago
    The "zone" programs are for specific, limited, areas where the government entity wants to see the company employees spend their money. Generally areas that neThe tax break to the business is because their employees are spending money in the area where the office is located...some area in need of renewal/spending. With WFH, the employees stay at home in their upscale suburb areas that don't need artificial incentives to attract money.
    - bombcar 3y ago
      Exactly. The government of an area could spend $3m (say) to try to revitalize an area of town, but that might not even pay for redoing the sidewalks or whatever. So instead they give a $3m tax credit to a largish company to locate in that area, which brings in X number of employees each day; and those employees will eat lunch nearby, etc. And then stores begin to open around that area because the demand is there. If done right, the government gets way more than $3m worth of redevelopment, and more than $3m in increased incidental tax revenue (sales tax, etc). If done wrong it's a horrible flop, but they're usually just out tax money they wound't have received anyway. This is why you see it being done so often. WFH is disrupting this strategy.
  - hn_throwaway_99 3y ago
    The whole point is these states/locales offered big tax incentives to companies to open offices in their states, with the benefit being that companies would bring jobs and tax revenue to those states. With remote work the primary benefit to those states is lost. Perhaps one other benefit to remote work is states will stop with this "race to the bottom", where big, rich companies pit states against each other for bigger handouts. Remember the whole "Amazon HQ2" fiasco from a couple years back where all these states got totally played by Amazon? With increased remote work an "HQ2" makes even less sense.
raverbashing 3y ago
Think of a TV economist explaining this: what has more growth potential? your own innovative portfolio or the incumbent real-estate business? Have they heard of the innovator's dillema? Bueller? Bueller?
FredPret 3y ago
I loved the concept of index funds at first glance. But Blackrock et al convinced me that there must be a better way. It's the responsibility of capital holders to employ their capital intelligently, not to hand it off to some faceless corporation and hope it gets invested well. This means owning shares in companies you understand, and then voting in their annual meetings (this can be done asynchronously). Capital is power, and deferring all of yours to Larry Fink is a horrible idea, even if you agree with him on most things. Owners should always, always act like owners.
- jncfhnb 3y ago
  People don’t have time or expertise to be owners, especially at their irrelevant share of ownership.
  - FredPret 3y ago
    Then they have no business investing in whatever it is they're investing in. Everyone should do a minimum amount of due diligence on the companies that they own and that make up their retirement / house purchase / kid's university fund. If not that, then it's better for most to accumulate capital by paying off their home loan or some other scheme that they understand. The answer cannot be to hand off all power to a single megacorp that owns a significant chunk of the US economy and whose CEO gets to dictate the entire boardroom agenda for the whole country.
    - bombcar 3y ago
      https://johncbogle.com/wordpress/wp-content/uploads/2019/08/niri-6-03.pdf https://johncbogle.com/wordpress/wp-content/uploads/2019/08/... The problem is that most people are too small to have a material impact. The best the smalls can hope for is to invest in companies that are majority owned and run by owners you agree with.
      - FredPret 3y ago
        I take your point. But I don't see how diffusion is a problem; it's simply decentralization. I think the main problem is disengaged owners who think they can buy-and-forget. If every owner paid even a modicum of attention (even just skimming the annual report) and every owner voted their opinion, we'd see a much better corporate America after one single year.
missedthecue 3y ago
Doesn't it make more sense for the rich portfolio holders if the companies just re-direct office lease payments to extra dividends? That would result in higher net returns than arbitrarily trying to keep an entire separate office industry afloat. Far more reasonable to me is the idea that management wants a communal atmosphere when working on team projects. You can disagree with this, and say it's unnecessary, but I am not sure why we need to generate conspiracy theories about Blackrock's real estate holdings. Silliness.
- paulmd 3y ago
  Anecdotally there have been several weird management pushes in my own employer “make sure everyone shows up for meeting X” that felt alarming at first. And when I asked a friend what was going on, the answer was that because they’d just leased this building pre-covid there was leadership push to use the space so it didn’t look like a mistake/waste. And it was just various wires getting crossed by ineptly delivered messages from middle management, not a hint to be sure to show up cause they were dropping layoff notices or something. And likely with the market right now you can’t exit a lease or sell a building without taking massive losses, cause nobody else wants commercial real estate either. So what I’m saying is, there’s often quite a lot of internal push at these companies to avoid realizing losses/making the COO look like an idiot/etc. It’s not just “blackrock wants them to”, although I’m sure that exists at the government levels etc. There is also broad corporate level resistance to the idea of realizing losses and taking blame for real-estate investments that are now underwater. Not that anyone in 2019 could have predicted that the nature of the workplace would fundamentally change 6 months later.
RestlessMind 3y ago
I think it is a far-fetched scenario that Blackrock execs are calling board members to put pressure on CEOs to mandate RTO. So citation needed on your hypothesis. I think it's much simpler - remote work can be awesome but needs complete rewiring of corporate culture, especially how we collaborate and communicate. Biggest obstacle to that is the ingrained habits of decision makers, who have worked for decades and find it easier to mandate RTO rather than changing their habits. On the other hand, I see remote being adopted by startups, typically led by young-ish founders who got used to the flexible lifestyle during COVID.
- logicchains 3y ago
  Well the CEO of Blackrock is publicly calling for people to return to office: https://fortune.com/2022/09/07/blackrock-ceo-larry-fink-remote-work-inflation-labor-productivity/ https://fortune.com/2022/09/07/blackrock-ceo-larry-fink-remo... . You think he'd publicly call for it but then not use any of the massive power he wields to also privately call for it?

wildrhythms 3y ago

It's also the tax breaks. >Of the billions in tax incentives granted to US companies every year by cities and states, many agreements require workers to come into the office some of the time, or at least live in the region. For companies receiving these incentives, relaxing in-office attendance could be costly. >The state [New Jersey] said it will revoke benefits granted under the multibillion-dollar Enterprise Zone Program to companies whose employees no longer work on site at least half the time. https://www.bloomberg.com/news/features/2023-02-21/another-threat-to-work-from-home-tax-breaks https://www.bloomberg.com/news/features/2023-02-21/another-t... https://archive.is/eOeIv https://archive.is/eOeIv

logicchains 3y ago
I wonder why that is? I suppose the governments of states with big cities stand to lose a lot of tax revenue if employees no longer need to go to those big cities to do their jobs, and can instead work from (and pay tax to) states with lower cost of living.
- tyingq 3y ago
  The "zone" programs are for specific, limited, areas where the government entity wants to see the company employees spend their money. Generally areas that neThe tax break to the business is because their employees are spending money in the area where the office is located...some area in need of renewal/spending. With WFH, the employees stay at home in their upscale suburb areas that don't need artificial incentives to attract money.
  - bombcar 3y ago
    Exactly. The government of an area could spend $3m (say) to try to revitalize an area of town, but that might not even pay for redoing the sidewalks or whatever. So instead they give a $3m tax credit to a largish company to locate in that area, which brings in X number of employees each day; and those employees will eat lunch nearby, etc. And then stores begin to open around that area because the demand is there. If done right, the government gets way more than $3m worth of redevelopment, and more than $3m in increased incidental tax revenue (sales tax, etc). If done wrong it's a horrible flop, but they're usually just out tax money they wound't have received anyway. This is why you see it being done so often. WFH is disrupting this strategy.
- hn_throwaway_99 3y ago
  The whole point is these states/locales offered big tax incentives to companies to open offices in their states, with the benefit being that companies would bring jobs and tax revenue to those states. With remote work the primary benefit to those states is lost. Perhaps one other benefit to remote work is states will stop with this "race to the bottom", where big, rich companies pit states against each other for bigger handouts. Remember the whole "Amazon HQ2" fiasco from a couple years back where all these states got totally played by Amazon? With increased remote work an "HQ2" makes even less sense.

raverbashing 3y ago

Think of a TV economist explaining this: what has more growth potential? your own innovative portfolio or the incumbent real-estate business? Have they heard of the innovator's dillema? Bueller? Bueller?

FredPret 3y ago

I loved the concept of index funds at first glance. But Blackrock et al convinced me that there must be a better way. It's the responsibility of capital holders to employ their capital intelligently, not to hand it off to some faceless corporation and hope it gets invested well. This means owning shares in companies you understand, and then voting in their annual meetings (this can be done asynchronously). Capital is power, and deferring all of yours to Larry Fink is a horrible idea, even if you agree with him on most things. Owners should always, always act like owners.

jncfhnb 3y ago
People don’t have time or expertise to be owners, especially at their irrelevant share of ownership.
- FredPret 3y ago
  Then they have no business investing in whatever it is they're investing in. Everyone should do a minimum amount of due diligence on the companies that they own and that make up their retirement / house purchase / kid's university fund. If not that, then it's better for most to accumulate capital by paying off their home loan or some other scheme that they understand. The answer cannot be to hand off all power to a single megacorp that owns a significant chunk of the US economy and whose CEO gets to dictate the entire boardroom agenda for the whole country.
  - bombcar 3y ago
    https://johncbogle.com/wordpress/wp-content/uploads/2019/08/niri-6-03.pdf https://johncbogle.com/wordpress/wp-content/uploads/2019/08/... The problem is that most people are too small to have a material impact. The best the smalls can hope for is to invest in companies that are majority owned and run by owners you agree with.
    - FredPret 3y ago
      I take your point. But I don't see how diffusion is a problem; it's simply decentralization. I think the main problem is disengaged owners who think they can buy-and-forget. If every owner paid even a modicum of attention (even just skimming the annual report) and every owner voted their opinion, we'd see a much better corporate America after one single year.

missedthecue 3y ago

Doesn't it make more sense for the rich portfolio holders if the companies just re-direct office lease payments to extra dividends? That would result in higher net returns than arbitrarily trying to keep an entire separate office industry afloat. Far more reasonable to me is the idea that management wants a communal atmosphere when working on team projects. You can disagree with this, and say it's unnecessary, but I am not sure why we need to generate conspiracy theories about Blackrock's real estate holdings. Silliness.

paulmd 3y ago
Anecdotally there have been several weird management pushes in my own employer “make sure everyone shows up for meeting X” that felt alarming at first. And when I asked a friend what was going on, the answer was that because they’d just leased this building pre-covid there was leadership push to use the space so it didn’t look like a mistake/waste. And it was just various wires getting crossed by ineptly delivered messages from middle management, not a hint to be sure to show up cause they were dropping layoff notices or something. And likely with the market right now you can’t exit a lease or sell a building without taking massive losses, cause nobody else wants commercial real estate either. So what I’m saying is, there’s often quite a lot of internal push at these companies to avoid realizing losses/making the COO look like an idiot/etc. It’s not just “blackrock wants them to”, although I’m sure that exists at the government levels etc. There is also broad corporate level resistance to the idea of realizing losses and taking blame for real-estate investments that are now underwater. Not that anyone in 2019 could have predicted that the nature of the workplace would fundamentally change 6 months later.

RestlessMind 3y ago

I think it is a far-fetched scenario that Blackrock execs are calling board members to put pressure on CEOs to mandate RTO. So citation needed on your hypothesis. I think it's much simpler - remote work can be awesome but needs complete rewiring of corporate culture, especially how we collaborate and communicate. Biggest obstacle to that is the ingrained habits of decision makers, who have worked for decades and find it easier to mandate RTO rather than changing their habits. On the other hand, I see remote being adopted by startups, typically led by young-ish founders who got used to the flexible lifestyle during COVID.

logicchains 3y ago
Well the CEO of Blackrock is publicly calling for people to return to office: https://fortune.com/2022/09/07/blackrock-ceo-larry-fink-remote-work-inflation-labor-productivity/ https://fortune.com/2022/09/07/blackrock-ceo-larry-fink-remo... . You think he'd publicly call for it but then not use any of the massive power he wields to also privately call for it?