It’s not just another perk in a benefits package — remote work could fundamentally reshape the urban geography of the United States.
Where we live has been dictated by where we can find a good job. That truism has defined much of where Americans reside — clustered in and around lucrative job markets.
In particular, “superstar cities” have been a defining technological advancement. According to a 2018 article by economist Richard Florida, “the five leading metros account for more than 80 percent of total venture capital investment and 85 percent of its growth over the past decade.” Another economist, Enrico Moretti, recently noted that “the ten largest clusters [cities] in computer science, semiconductors, and biology account for 69 percent, 77 percent, and 59 percent of all US inventors.”
Remote work could change that.
While only 37 percent of jobs could be performed remotely full time (according to two University of Chicago economists), those jobs have outsize purchasing power (accounting for 46 percent of all US wages by the same estimate). When people with these jobs congregate, they provide the necessary demand for a vast array of service sector jobs, from nurses and lawyers to teachers and taxi drivers. This is hugely important — it means that remote work could expand the choices of where to live for millions of Americans, not just those who have the option to work from home full time.
Imagine, for example, that you’re a human resources manager at a tech firm in San Francisco, married to a baker and paying $2,800 a month for a one-bedroom apartment. With remote work, you could instead move to be closer to your family in Nashville or Orlando, and save a bunch of money on rent alone. And when you move, you’ll take your family and your demand for services with you to those locations, opening up opportunities for other workers — including, say, your spouse, who could confidently move with you and open a bakery catering to other new transplants.
To be sure, there’s good reason to believe that very little of this will happen.
Productivity is an open question and perhaps the most important one. Remote work doesn’t have one clear effect on workers’ productivity, evidence from economists Emma Harrington and Natalia Emanuel shows. Productivity losses or gains under remote work are likely to be different industry by industry, firm by firm, and role by role.
But if, on the whole, firms that choose to work in-person outperform those that are remote, it could push the equilibrium back to where we were before the pandemic. That’s what Moretti predicted to me …….