The Remote State Workforce Has a Hidden Cost

California’s recent State Auditor report highlights a striking figure: $225 million a year in savings if state employees work remotely three days a week, reducing office space by 30%.

On paper, it looks like a budget win. But measured only in dollars per square foot, it ignores costs that are harder to quantify: slower innovation, weaker mentorship, lost collaboration, and a workforce less prepared for leadership.

“What got you here will not get you there,” Dartmouth professor and management expert Marshall Goldsmith observed. The skills and structures that sustained organizations before COVID are not the same ones needed now. Hybrid work has permanently reshaped how people learn, grow, and connect. Without intentional systems for mentorship and exposure, the state risks leaving its next generation of leaders unprepared.

In person, employees pick up on meaning through tone, body language, and reactions in the room. Hybrid settings strip away that context. When clarity is missing, the brain creates its own version of events, which is rarely accurate. Communication isn't just about delivering a decision but also explaining why and confirming that it was understood. Without this, misinterpretations multiply.

The impact is most noticeable among early and mid-career employees. Learning a profession involves more than just mastering technical skills. It includes observing how leaders handle conflicts, understanding decision-making processes, and learning how to manage up. These lessons are often acquired informally, through hallway encounters, spontaneous conversations, or by observing meetings. Remote work removes many of these opportunities unless leaders intentionally create them.

This is not a call to return to five-day commutes or to dismiss legitimate needs for flexibility and child care. Hybrid work has its place. But when “efficiency” is defined only by real estate savings, the state begins to deplete something far more valuable: its human capital. Once that capital is lost, it is costly and slow to rebuild.

The often-quoted phrase “culture eats strategy for breakfast” is even more relevant today. A state workforce cannot succeed solely on cost-cutting measures. Building culture in a hybrid era demands leaders who focus on connection, mentorship, and context. Otherwise, California will end up with employees who log in each morning but stay disconnected from the mission.

California’s legislative and agency leaders must decide whether they are building a workforce equipped to lead, mentor, and innovate, or one that is merely logging in. The answer will determine more than just financial statements. It will shape the state’s capacity to govern effectively in the future.

It first appeared in the Sacramento Business Journal.

Hector Barajas is the founder of Amplify360 Inc., a public affairs and strategic communications firm with offices in Sacramento and Los Angeles, advising companies and associations on legislative, regulatory, and political issues across California.

Michele Smith is the CEO of Better Possibilities LLC, a national leadership consulting and executive coaching firm serving small to large organizations and individual leaders. She is also the host of Leadership Sound Bites, a leadership podcast.