Elon Musk and Vivek Ramaswamy’s dream to eliminate work-from-home options for 94% of federal employees — in hopes of encouraging workers to quit and thus shave trillions from the federal budget — could backfire, new University research suggests of Pittsburgh.
A working paper by associate professor of business administration Mark Ma and colleagues found that leading technology and financial companies that implemented return-to-office (RTO) mandates lost their most skilled and senior employees. When they tried to fill these workers’ vacancies, they had a harder time.
From a universe of 54 S&P 500 companies that implemented RTO mandates between April 2020 and June 2023, et al. looked at 3 million LinkedIn profiles to determine who left their company after office repression. Not only did these companies see a 14% increase in departures after an RTO implementation compared to their pre-RTO baselines, but the people who left the company were more likely to be women, mid- and top-level managers, and those with more skills listed on their LinkedIn profiles.
For workers who already have an extensive resume — and female workers with childcare responsibilities on top of their jobs — there are simply other, more flexible positions available, Ma said.
“Who will leave? It’s just the people who have other opportunities,” he said Fortune. “And these are the people with a lot of skills, with a lot of experience that companies want.”
The headache for employers increases as they try to find replacements for lost talent. The time it took companies to fill vacancies increased by about 23% on average compared to pre-RTO baselines, according to Ma’s analysis of more than 2 million vacancies. These companies also saw a 17% drop in rental prices.
These findings are relevant to Musk and Ramaswamy’s goal for the new Department of Government Efficiency (DOGE) to reduce “government waste” by $2 trillion. One of their first proposals is to thin the ranks of government employees by introducing unpopular employee surveillance and personal work rules. Experienced executives will likely be the first to leave, possibly heading to the private sector, Ma warns.
Increasing employee turnover is also expensive, Ma said. “If there is significant employee turnover within the company, it will certainly disrupt the company’s operations and also the new costs of hiring new employees, including the costs of training,” Ma said.
To attract competitive candidates, employers often offer to pay new hires more than existing employees in the same positions. Once these new hires are on board, the training they need means an initial waste of time and money. According to data from the Association for Talent Development, employee training takes an average of 33 hours and costs more than $1,250.
Amazon and Sam’s Club, a unit of Walmart, are among those that recently required their employees to stop working from home.
Amazon CEO Andy Jassy denied that the company’s RTO policy was intended to push out workers. The change is a way to improve company culture, he said, and Amazon has no plans to reduce its workforce. “This was not a cost to us,” he said at an all-hands meeting in November. “This is very much about our culture and strengthening our culture.”
More than 70% of Amazon workers said they would consider quitting after Amazon announced they would have to work in the office for five days, according to anonymous job rating site Blind, which found 2,585 verified Amazon employees the day after Jassy’s RTO memo questioned.
RTO can also discourage the most senior employees. Sam’s Club Chief Technology Officer Cheryl Ainoa reportedly resigned after refusing to move to parent company Walmart’s headquarters in Bentonville, Arkansas, following an RTO push. Ainoa cited “personal reasons” for why she left.
Walmart did not respond Fortune‘s request for comment.
Ainoa’s departure was typical, Ma said. “We also observed increased turnover among top management team members.”
This story originally appeared on Fortune.com
