Many employees have returned to in-person daily grind more than two years after the Pandemic, but economic impacts will be significant if even a fraction of the workforce continues to embrace hybrid or remote models.

In his latest pitch for the passage of a series of spending packages he said would help Massachusetts navigate a changing employment landscape, the governor linked an evolution in work patterns to the future of downtown spaces and to the “existential threat” posed by a broken housing market.

Baker said at the New England Council event that the state has done a good job bouncing back from the worst stretches of unemployment during the public health crisis.

Baker said that soaring inflation and churn in the labor market will pose challenges for employers. He argued that a small subset of employees would represent a critical mass if they decided to work from home.

Baker said that they don’t have to be half what everybody does. The consequences of that being 25 percent of what everybody does are pretty significant.

Employees who have access to remote options may see significant upsides, such as more flexibility for family care, or reduced travel expenses.

Fear for Urban Centers

The trend could cut into the flow of workday patrons at restaurants, shops and other establishments in downtown spaces that were once highly traveled.

They schedule breakfasts, they go out to lunch, they pick up their dry cleaning, and they go out to dinner. Baker told reporters after the event that they were a big part of downtowns. If most people are going to move to a hybrid environment where they work two or three days a week remotely and then two or three days a week in the office, that is a lot of foot traffic.

The issue has been top of mind for many people. Next week, the Greater Boston Chamber of Commerce will host its third “Future of Work” discussion of the year, this time focused on revitalizing downtown Boston.

A new Boston Business Journal and Seven Letter Insight poll of 209 Boston-area professionals found that many employees expect their offices to shrink in the near future, even though that trend hasn’t come to pass.

Over the past two years, 45 percent of respondents said their company has increased in space or size, 43 percent said their company has stayed the same, and 12 percent said their company shrunk.

43 percent of people think that their company will downsize office space when their lease is up, compared to 42 percent who think they’ll stay in the same amount of space and 15 percent who think they’ll grow.

Doug Banks said that the results of the poll have significant implications for the commercial real estate market. If businesses pursue smaller office spaces as their current leases end, we could see a drop in real estate costs.

Baker Pushes Housing

In April, Baker and his team filed a $3.5 billion economic development bill that they said would spur new investments in downtown spaces and steer hundreds of millions of dollars toward housing production, transit oriented development and public housing needs.

In Massachusetts, where production has been slow for decades despite population growth and the boom of new industries, the housing crisis is probably more acute now than it was before the Pandemic.

With seven months left before he leaves office, Baker said he thinks of housing as his number one worry, warning that swaths of young adults are at risk of being priced out of a future in the Bay State if they have not been already.

A push to make it easier to detain some criminal defendants deemed to be a risk to the community was one of the priorities highlighted by Baker at Thursday’s event.