By Emma Hecker
On June 16th, the Economic Innovation Group (EIG), in partnership with Upwork, hosted our first virtual session in the “Rise of Remote Series,” a new three-part series of virtual events exploring the long-term impacts of remote work for the U.S. economy, workers, and communities. View a recording of the event and key takeaways below for more information.
While businesses and workers have increasingly embraced remote work in recent years, COVID-19 greatly accelerated the trend, forcing millions of Americans out of their physical office spaces and into virtual ones. According to recent surveys, more than half of workers with the ability to do their job from home want to continue doing so after the pandemic. Telework is a privilege, though, with lower-income and non-college educated workers less likely to have the ability to do their job remotely than higher earners and those with at least a four-year degree.¹
The first session, which focused on how the rise in remote work is reshaping America’s economic geography, featured a conversation between Richard Florida (renowned Urbanist, University of Toronto School of Cities and Rotman School of Management Professor, and author of The Rise of the Creative Class) and John Lettieri (EIG President and CEO) on how places can take full advantage of the remote work trend and how we can build remote work “ecosystems.” A panel discussion followed among Arpit Gupta (Assistant Professor at New York University’s Stern School of Business), Julia Pollak (Labor Economist at ZipRecruiter), Matthew Kahn (Bloomberg Distinguished Professor of Economics and Business at Johns Hopkins University), and Adam Ozimek (Chief Economist at Upwork), moderated by Recode’s Rani Molla.
Watch a recording of the event and EIG’s key takeaways below for more information.
How remote work can help struggling geographies
- Richard Florida explained that the rural areas outside of “superstar cities” have the most to gain from remote work. “Those are the kinds of lagging places…that have seen huge gains [from remote work] and there’s more that they can gain,” he emphasized.
- History, norms, and signalling kept many companies, particularly in the finance industry, from expanding to different geographies, explained Julia Pollak. Now we’re realizing that “any productivity benefits from agglomeration…are probably quite a bit smaller than many people chalked them up to be.”
Which geographies—and demographies—stand to benefit most from remote work
- The initial phase of migration was within cities, explained Arpit Gupta. He predicts the next wave of migration will be to more destination areas and places with a lower cost of living.
- “If you think about the country as a whole, and you think about what are the sort of factors that determine how desirable a place is, and you take the jobs part of the equation out, places that were getting a negative effect from job access are going to see an increase in their relative competitiveness,” argued Adam Ozimek. “That will be a positive tailwind for those struggling places.”
- Pollak emphasized that the people who are most likely to report wanting remote work are women and Black Americans—two groups that also tend to be under-represented in the industries where remote work is most prevalent. “Hopefully there will be some movement toward bridging that gap,” she said.
How places can take full advantage of the shift to remote work
- “It’s not [about] the money,” argued Florida. “Remote workers want to know that they’re going to a place where they can have a community of other workers like them.”
- Florida remarked that about a quarter of remote work happens outside of the home. “We need a lot more thought about how to build out the remote work ecosystem,” he added.
- The remote work trend might force places to reevaluate their land-use practices, said Matthew Kahn. “I’m fascinated by which places will welcome [remote workers] and I think that will be a key determinant of the root economic geography.”
- “It’s important to think about the long run versus short run effects of productivity,” said Ozimek. Post-pandemic we should see a natural sorting of firms and businesses that are more productive under a remote model and those that are less productive, he added.
- Pollak highlighted the distinction between individual and team productivity. “Many studies show that individual productivity goes up [with remote work],” she said. Now is the time for companies that are committing to remote work for the long-hall to “do all the organizational work that needs to take place,” she added.
Biggest challenges with remote work
- Florida explained that white professional knowledge workers are much more likely to have the privilege of working remotely than minority essential workers. “The gap between the two [classes] is growing,” he added.
- Gupta emphasized that the lack of demand for physical office space could potentially be a problem. And “it’s not obvious how to redevelop these spaces,” he added.
What remote work will look like post-COVID
- Ozimek said he thinks around 20 percent of the workforce will keep working remotely after the pandemic.
- Pollak said that worker preferences will keep driving the trend in remote work. “There is sustained interest in remote work not just now, but after the pandemic,” she added.
- “Even if we adopt a hybrid model, that still has a huge impact on demand for physical space,” explained Gupta. “A small reduction in the time spent in-office can translate into large impacts on physical office spaces.”