The Trouble With RTO

2024 Workplace Trends: AI, RTO and More

by Anni Coonan

at Bradley Arant Boult Cummings LLP

It has been almost four years since the COVID-19 pandemic sent the American labor market and workplace into a tailspin, revolutionizing work overnight. In 2024, change remains the constant: As the domestic labor market continues to boom, employers and employees will continue to grapple with new trends, new competition, and new skills. Changing attitudes around hybrid work, pay transparency, a four-day workweek, and AI will be among the top trends, all set against the backdrop of a persistently, historically tight labor market.

The RTO Wars Continue

The years following the COVID-19 pandemic have been marked by standoffs between workers, who prize the flexibility gained from remote or hybrid work arrangements, and employers, who continue to value the in-person connection and collaboration that in-office work can bring. Hybrid roles now comprise the majority of remote-capable jobs, with 52% hybrid in May of 2023, 29% fully remote, and just 20% fully on-site. About 20%-25% of all U.S. workers work from home at least part of the week, according to Goldman Sachs economists. Nearly three years after the first companies announced the beginning of their return to office (RTO) process, the KPMG CEO Outlook survey found that 64% of leaders globally still predict a full return to in-office working by 2026. Meanwhile, a Harvard Business Review study found that 48% of employees say RTO mandates prioritize what leaders want over what employees need to do good work, and 60% say the cost of going into the office outweighs the benefits.

Hybrid work remains popular, especially among younger talent. McKinsey found that when workers are offered flexibility in a new role, 87% of them will take the offer. Remote-capable employees cite hybrid options as a key consideration in their job satisfaction: A 2023 Gallup poll found that 30% of hybrid employees would job search if their employers decided not to offer hybrid flexibility, and 61% of exclusively remote employees would. Interestingly, the same study found that while employee engagement has declined as a whole since before the pandemic, it is highest for exclusively remote employees at 38%. Hybrid workers sat at 37%, while 33% of remote-capable on-site employees reported being engaged at work.

Nonetheless, on-site work has obvious value. In 2024, employers will continue to attempt to entice workers on-site by offering clearer messaging around the benefits of on-site work, as well as additional incentives and flexibility to ease the transition. While 2023 was dubbed by some the “perkcession” as some companies scaled back in-office perks to save costs, the Harvard Business Review argues that leading companies are exploring more impactful benefits to incentivize on-site work, like housing subsidies to allow employees to afford nearby housing, caregiver benefits like on-site childcare or childcare stipends, or catered meals at the office. The World Economic Forum recently posited that “the office will be in competition with working from home,” a competition that will ultimately be good for the office. Employers can use this tension – which it appears will be evergreen – to hone the purpose and design of the office, intentionally fostering meaningful collaboration and a pleasant environment.

Salary Transparency

Pay transparency took the U.S. by storm in 2023, when California, Washington and New York state joined Colorado and New York City in requiring employers to include precise pay ranges in job postings. A ZipRecruiter survey from October – before New York state’s transparency law went into effect – found that 72% of employers included pay information on job listings on the site, and an Indeed survey found that every state increased its disclosure rate over the past year, not just those with pay transparency laws.

The trend is driven by a desire to limit pay inequity but it is popular among younger job searchers and increasingly seen as beneficial for employers as well. On the other hand, employers initially opposed the laws over worries that they would reduce negotiating power during interviews and limit their ability to reward truly exceptional candidates and employees with higher salaries. Additionally, there is some evidence that employers have stopped increasing pay bands at the same time that posting them transparently became common, due in part to candidates habitually requesting the top end of a range, even if it is out of step with their skills.

However, a survey by job board Indeed found that 75% of U.S. job seekers would be more likely to apply for a job that includes a pay range, and a report by student experience company Symplicity found that 87% of surveyed college students think that pay transparency is the most important element of diversity, equity and inclusion (DEI) efforts. SHRM Research found that salary disclosure increased the number and quality of applications for posted jobs, while Payscale found that having a clear, standardized compensation strategy increased employee retention by 30%. In the long term, economists think that salary disclosure can help narrow persistent gender and racial wage gaps.

Four-Day Workweek

Once a pipe dream for office workers, the four-day workweek is gaining steam. Four Day Work Week Global, which advocates for the program and facilitates pilots at companies worldwide, touts multiple benefits of the shorter schedule: Productivity, employee engagement, employee feelings of well-being, and work-life balance increased, burnout decreased, and 95% of companies that try the schedule stick with it. In 2022, 61 UK-based companies piloted the four-day schedule: Average organizational revenue rose by 1.4%, participating companies reported a 57% decline in the likelihood that an employee would quit and a 65% reduction in sick days, and 92% continued it beyond the end of the trial. Some of these companies transitioned to a four-day, 40-hour workweek, but the majority trialed a shorter four-day, 32-hour week. In 2022, Belgium became the first country to legislate the four-day workweek, making it the norm for all Belgian workers.

The idea is a popular one. A 2023 Bankrate survey found that 83% of Gen Z and millennial workers support a four-day workweek, and 82% of workers surveyed by Morning Consult say its widespread adoption in the U.S. would be successful. Nonetheless, the actual prevalence of these jobs remains low: Indeed estimates that just 0.3% of total job postings advertise a four-day workweek (a threefold increase in the last few years), most of these in traditionally hard-to-fill, on-site jobs in healthcare and construction. Additionally, experts caution that it can take significant effort to implement a four-day workweek: Employees must understand that they are being asked to produce the same amount of work with one fewer day, and leaders have to streamline operations, remove administrative burdens, and prioritize high-impact work. However, in a tight labor market wherein workers and leaders are now constantly adjusting to changing attitudes and expectations around work, four-day workweeks could be a competitive way for employers to attract and retain the most skilled workers, increase broader well-being, and boost productivity.

AI Boosting Productivity

Adoption of AI technology will become even more widespread in 2024. Last year, three quarters of CEOs in a survey by KPMG called generative AI a “top investing priority,” and Gartner predicted that GenAI will be used in 70% of all text- and data-heavy tasks in the workplace by 2025, up from 10% in 2023. Generative AI has the potential to significantly boost productivity, increase profitability, and change the job market significantly. This shift has the potential to benefit both employers and employees: A CNBC study found that workers who say they rely on AI for their jobs have a Workforce Happiness Index (a measure that comprises elements including pay, autonomy, engagement, and meaningfulness) of 78, seven points higher than among those who don’t use AI at all at their jobs.

However, there remains a skill gap between desires for AI hiring and the actual talent pool. Online education platform edX reports that 87% of CEOs say they are struggling to find candidates with AI skills strong enough to fill new roles, and a survey of new college graduates by Cengage found that over half do not feel prepared to utilize AI in their first jobs out of college. Employers will need to focus on upskilling their current employee base to foster AI skills, in addition to seeking out outside AI experts, in order to utilize AI as much as most companies say they hope to.

Finally, worker anxiety around AI is high: A Gartner survey found that 22% of employees expect AI to replace their job in the next five years, and according to the 2024 Edelman Trust Barometer Global Report, 79% of respondents believe that companies should explain the ethical use of this new technology prior to implementing it. Companies will have to balance planned investments in AI with clear and proactive communication to their employees and user bases, and pair new strategies with robust training programs, reskilling efforts, and other initiatives to calm worker anxiety and talent.

Booming Labor Market

The background against which every 2024 workplace development is set, of course, is the domestic labor market. According to labor data from the first month of 2024, the U.S. economy added 353,000 jobs, double what forecasters expected and a signal that low unemployment and a tight labor market will not be a passing trend. In the words of the chair of the White House Council of Economic Advisers, the U.S. is seeing “a reliably and persistently tight labor market.” This effect is uneven across sectors: Skilled and high-paid sectors like tech have seen high-profile layoffs (although the impact in tech is complicated, as the sector continues to add workers in areas of greater investment), and hiring in the professional and business servicers category is now below 2019 numbers. High job numbers have been driven by sectors that are still recovering from the pandemic, such as hospitality and local government, or have outsized demand due to structural factors, like an aging population or housing demand. Construction, for example, will continue scrambling for workers.

The booming labor market has had myriad impacts on the workplace in the last three years and will continue to influence employment trends and employee attitudes. In recent years, low unemployment has driven wages up and increased strike activity and unionization, all trends that are likely to continue. In addition, competition for workers – while uneven across different sectors – will continue. Higher pay, salary transparency, and other competitive benefits will continue to be a part of the equation for many employers for the foreseeable future.