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2023: The year of the workplace gridlock, where nothing changed and nobody was happy

Westend61—Getty Images

Maybe forecasts were best left to Paul the Octopus or even Punxsutwaney Phil; from the workplace to the economy, experts were full of clashing predictions for 2023—none of which really came to light, bringing everyone to a stalemate.

It was supposed to be the year inflation finally came under control; the year remote work won out and office mandates finally proved futile—or maybe, depending on who you ask, the year office attendance won out and remote workers were shown the door. It was meant to be the year Gen Z showed their bosses who was in charge—or young upstarts were put in their place. The year the work uniform became more forgiving.

But none of that quite happened. An avalanche of fresh data showing that alternate ways of working are possible could have bolstered bold, enduring strides towards a new era of work that many workers have been dreaming of. But many workplaces seemed to dig in their heels on a return to the office, relying on the familiar and waiting for things to return to “normal”—whatever that means.

Expectations may be partly to blame; many experts said an “inevitable recession” was coming as the Fed hiked interest rates to tame inflation, with all the crushing realities therein: widespread layoffs, hiring freezes, and a sharp drop in consumer spending. But the worst of those expectations soured like old milk.

“Many people expected there would be a huge uptick in layoffs, and a recession, and that consumer spending would pull back and hiring would drop off substantially,” Julia Pollak, chief economist at ZipRecruiter, tells Fortune. “That never happened.”

While there were waves of layoffs in the beginning of the year and there are signs that the pandemic spending boom is close to over as we end the year, data points to a pretty healthy workforce. But healthy doesn’t mean forward-thinking—and while the worst predictions for the year didn’t come to pass, neither did the broad workplace transformation that many had hoped for.

Instead of ushering in any of the changes the pandemic equipped workplaces to make—a widespread move to distributed plans, Zoom rooms instead of stale conference rooms—the year was instead marked by keeping things exactly as they are, to predictable effect. After all workers have been through since the pandemic began, we’re ending the year on what might be an unexpected note: We shouldn’t have been so quick to assume things would be different.

Same ol’, same ol’

The pandemic seemed to usher in a new era centered around the employee. The Great Resignation saw many workers quit their jobs for better-paying ones with greater work-life balance. But instead of a revolution for flexible work and better pay, many employees were met with more return to office mandates as the pendulum swiftly swung back this year. “Some of the balance of power has shifted back to employers, and people do feel that,” Pollak says.

Office occupancy rates held steady at just shy of 50% for most of the year, indicative of a stalemate in which neither employee nor employer has won one of the most hotly contested future of work debates Rather, 2023 saw a quiet compromise that neither party was thrilled with.

Part of the reason for this deadlock is good news—workers by and large avoided the most apocalyptic predictions from pundits and economists that opened 2023. To be sure, the fears of an economic downturn, coming on the heels of pandemic overhiring, led to hundreds of thousands of layoffs in the technology and media sectors. Employer skittishness in turn made workers more wary of leaving their jobs, with quitting rates falling from 2.8% in 2022 to the pre-pandemic level of 2.3% this year.

But the recession never materialized and by and large, layoffs didn’t spread. Outside of a few sectors,  there were 15% fewer layoffs than in 2019, Pollak says. That’s because companies haven’t quickly forgotten how difficult it was to hire when employees did have the upper hand, she added, and they know how expensive it can be to replace people.

Job gains remained solid and steady—with the unemployment rate matching a 50-year low of 3.4% several months this year—and where jobs grew, like in healthcare and government, they grew very gradually. “The top-line numbers, in aggregate, looked pretty good,” Pollak says. Though people were prepared for the worst, “we really did get immaculate disinflation.”

In a nod to Stanford economist Nick Bloom, Pollak says that aside from big tech companies insistent on 2023 being the year of efficiency and cost-cutting, employment levels have stayed flat as a pancake. “For the most part, staffing has been remarkably stable and layoffs have been remarkably absent,” she says.

This year also didn’t see overheated pay increases we saw in 2022, nor a ton of signing bonuses. While wage growth has cooled “pretty substantially,” Pollak says, it remains high. Nominal wage (not adjusted for inflation) growth fell but real wage growth (adjusted for inflation) rose thanks to the precipitous drop in inflation. Next year, she adds, companies have said they’re planning for roughly 4% wage growth—against the typical 3%—which she chalks up to the pressure from the enduringly low unemployment rate.

But even rises and falls just bring most workers back to the baseline—which isn’t a bad place to be. “Things were solid, stable, and kind of more normal and pedestrian—which is a good thing when the risk was very much to the downside,” Pollak says. And workers can expect financial pressure to ease up more next year, “thanks to inflation coming down faster than wage growth.”

Decent data; sour mood

While the economic data is relatively optimistic, it doesn’t quite fit with the overarching feeling of 2023. The emotional temperature results are in and they point to a wave of discontent and unhappiness. Job satisfaction scores dropped 10% this year to reach their lowest levels since 2020, per a report from BambooHR.

Public perception can be fickle, Pollak says. “When you lose your job, that’s an immediately appreciable pain,” she explains. “But declining openings, job hoppings, quits—those kinds of hypotheticals—you don’t necessarily really feel.”

The fizzling of our great expectations isn't making the workplace any more cheery. Even though most employees aren’t back in the office full time, many are back in the office at least some of the time, rehearsing the same lines and reprising watercooler talk from the past—a far cry from the “work would never be the same” sentiments that many outlets espoused just a few years ago. But people are more stressed and dissatisfied with their jobs across the board even when they can work from home, according to Gallup, which finds that “unfair treatment at work” is fueling the storm clouds. It’s all left a lingering taste of unrealized potential.

Even so, 2023 was a year of immense progress outside of the office. Many unions in the blue-collar workforce and even the entertainment field secured record-breaking contracts that offered better pay and benefits. But amid a year of strikes, tension simmered in industries that weren’t backed by strong unions and found themselves back at square one.

“This has been a crazy rollercoaster where almost every industry has been up for a period and down for a period,” Pollak says. “The times when they’ve been up, workers attribute to their own hard work and effort. The declines, they attribute to the government, or the other political party.”

Many employees seem to be just trying to make sense of it all as they heal from dropping down from the relative economic and workplace heights less than five years ago. It’s normal to feel like things are negative based on progress lost. “A lot of behavioral economic research shows that losses are more salient to people than equivalent gains,” Pollak explains.

But business-as-usual stability shouldn’t be unexciting so much as comforting. “We’ve lived through something quite unprecedented this year,” she adds. “We’ve never before seen inflation come down this much, or interest rates go up this much, without a typical increase in unemployment.” Even so, Pollak asserts that “vibes will get a bit better in the coming year,” pointing to positive wage growth and the resilience of employees.

Perhaps then, there will be a vibe shift in the workplace next year with a clear winner who turns the stalemate into a checkmate.

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