Work-from-home: poisoned chalice?
WORK FROM HOME :Poisoned chalice?
The Covid-19 pandemic caused many people to make changes to their lives. One such change was to the workplace, the ability to remotely work had been viable in the years before the pandemic but the additional constraint of lock-downs finally drove adoption to many jobs. Jose Barro, Nick Bloom, and Steven Davis paper estimated that 20 percent of full workdays will be provided from home after the pandemic compared to 5 percent before the pandemic. They also estimated that spending in major city centers will decrease 5-10 percent. Some workers will also move from urban Megalopolises to smaller towns and cities with lower costs of living.
That brings me to the article I chose for the first blog assignment.
The article by Bloomberg reporter Charlie Wells interviews a few workers who made the move to lower cost-of living areas hoping to capitalize on their earning higher salaries working for large tech corporations, while saving money living in lower cost-of-living areas. Many were drawn to what Harvard Economics Chair Edward Glaeser calls "commuter cities". One of Glaeser's theories was that people are drawn to cities not only as places of production but places of consumption. So having good restaurants, bars, a lively arts scenes and museums are important to draw talented employees to cities. IMF
This all sounds promising as on the local scale attracting well-educated high earning employees seems like a win for smaller municipalities as they will theoretically increase the demand for housing, raising the price of housing and with it localities tax bases. To zoom out a little to the Nation-State level the competition for talent is not only between smaller cities in the US but throughout the world. A worker in Playa Del Carmen is on the same time zone as a worker in NYC, and so you see Nation-States such as Barbados and Portugal offering "digital nomad" visas to attract workers to their lower cost of living countries. Zooming out further to the world-economy scale, the increased productivity of work-from-home should provide a boost the efficiency of economies across the world, raising GDPs in those countries able to benefit from work from home policies.
While Poisoned Chalice? was meant to be a clickbait title, in my opinion, there is some truth the notion that work-from-home is a pancea for all that ails workers in the modern world. The workers moving to smaller cities have to realize that while smaller towns have lots to offer they will not have all the amenities large megalopolis' posses (the San Francisco Philharmonic is more talented than the Bozeman Symphony Orchestra). Workers also have to realize that jobs are ephemeral, going to rural Alabama as one of the subjects of the article (Shannon Milliman) did to live in a house three times as large on her six-figure Amazon salary sounds great in theory. Unfortunately, Shannon was made redundant (laid-off)(the only ones guaranteed a job in Muscle Shoals are the Swampers) in the big tech cost cutting measures that were implemented this past year. While she has found a local job as a training manager her wage is lower than it was at Amazon and she is more financially strained than she was before she moved. While she most likely would have been laid off either way, living in a large metro area would have exposed her to more job opportunities.
This does not even start to go into the impacts a large population of outsiders "invading and succeeding" lower income native populations have on the local culture and character of the towns. Coming from a rural area myself I feel that the more the merrier and if more digital nomads wanted to move to my hometown, I would be open arms as the greater economic activity would benefit many natives.
Below is a picture of Shannon Milliman in Florence Alabama (Wells 2023 Pic credit Andi Rice)
Below is a table from Smart Asset where ones 100k paycheck goes the furthest.
Wells, C. (2023, March 24). Tech layoffs scramble life in remote-work 'zoom towns'. Bloomberg.com. Retrieved March 24, 2023, from https://www.bloomberg.com/news/articles/2023-03-24/tech-layoffs-scramble-life-in-remote-work-zoom-towns?srnd=premium
Wellisz, C. (2019, December 1). City slicker: Profile of Harvard economist Edward Glaeser – IMF F&D: December 2019. IMF. Retrieved March 24, 2023, from https://www.imf.org/en/Publications/fandd/issues/2019/12/profile-of-harvard-economist-edward-glaeser
