California is falling in line behind big companies and the federal government with Governor Gavin Newsom ordering state workers to return to the office at least four days a week starting this summer.
Newsom’s executive order issued Monday aims to shift the government of the nation’s largest state away from a hybrid set-up that since the COVID-19 pandemic, has allowed around 95,000 workers to clock in from home most days of the week.
“In-person work makes us all stronger — period,” Newsom said in a statement. “When we work together, collaboration improves, innovation thrives, and accountability increases. That means better service, better solutions, and better results for Californians, while still allowing flexibility.”
California has more than 224,000 full-time state employees, and more than half of them work in jobs that require them to show up in person daily — such as law enforcement officers, janitors, health care workers and highway maintenance people. The vast majority of those with hybrid work schedules already come into the office at least two days per week, according to Newsom’s order. It added that exceptions would be considered on a case-by-case basis.
The change, scheduled take effect July 1, follows in the footsteps of a growing number of corporations across the country demanding more in-person face time from their workers. Firms including Amazon, JPMorgan Chase, Starbucks, AT&T, Southwest Airlines and Walmart have stepped up their in-person requirements, with many employers now demanding workers commute to an office all five days of the workweek.
Across the United States, the debate over flexible work policies has remained a sticking point between employers and their workers as well as the broader office market. Hybrid work mandates have largely been blamed for the national office vacancy rate rising to a record high of about 14%, according to CoStar data.
Embracing the turning tide
In San Francisco, where the office vacancy rate is much higher than the national average at nearly 24%, the turning tide has been embraced by local officials, who have long blamed remote work policies, particularly among the tech sector, for contributing to the hollowing out of the city’s downtown.
Newly elected San Francisco Mayor Daniel Lurie issued a similar directive last month ordering about 10,000 city workers still working on a hybrid schedule back to the office at least four days a week starting in late April. Public employees got the same edict in early February in Oakland, across the bay, where the office vacancy rate has soared past 20%, according to CoStar.
Property valuations have plummeted in both markets, with the Bay Area hit particularly hard by the effects of flexible work, according to a CoStar analysis. Tech companies such as Meta, Salesforce, Dropbox and Pinterest that fueled the region’s booming office market in the pre-pandemic years have collectively dumped millions of square feet over the past half decade.
President Trump told federal government workers in January to return to in-person work or be fired. But in California, the governor’s order put him instantly at odds with the state’s powerful public sector labor unions.
SEIU Local 1000, the largest public-sector union in the nation, called Newsom’s decision “out of touch, unnecessary and a step backward” and accused the governor of “political posturing at workers’ expense.”
“State employees kept this state running through the pandemic, proving that remote and hybrid work increase productivity, improve work-life balance, and make state jobs more competitive,” said President Anica Walls in a scathing statement warning that the move would raise costs for working families at a moment when they are already being squeezed.
“California is the tech capital of the world, yet our own state government is clinging to outdated policies instead of embracing the modern workplace,” she said.
In the Bay Area, though, the reaction to the recent city back-to-work orders has been muted, as residents root for foot traffic and an end to business closures and urban blight in San Francisco and Oakland’s downtown business districts. The local companies that have called employees back to the office have already fueled a sense of optimism that the city is on the cusp of a rebound.
In San Francisco, leasing activity has been incrementally rising over the past six months, according to CoStar data, hitting its highest volume since 2022.