Over the past year or so, I’ve had variations on the following conversation several times:
Tech worker: My company just went full remote-work for X duration.
Me: Do you have a good home-office setup?
TW: Yeah, but I’m thinking I’ll go to Tahoe/Asheville/Vermont/Hudson River Valley and check that out.
Me: Are you finding good places to stay?
TW: Yeah — Airbnb is really set up well for finding good wi-fi, standing desks, and the other things I need.
Me: What about your current place?
TW: Partner and I really don’t know. Rent is so high, and going up, and it’s not clear we need to pay to live close to work in X city.
Me: I saw Airbnb went full remote, and you don’t take a pay adjustment the way Meta makes you do.
TW: I saw that too. I have a friend who works there, and now she and her partner are wondering where they want to live.
“Wondering where they want to live.” This is obviously an old question, but until recently, only the enormously wealthy and/or Hollywood superstars could separate housing from the locus of wage-earning. To be clear, this does not involve a massive number of people, but it is more than Robert Redford building Sundance, Sissy Spacek moving to Charlottesville, or Harrison Ford’s ranch in Jackson, WY. (Total headcount at Airbnb, Meta, Google: about 225,000. Let’s assume 30% of those are eligible. That’s about 100,000 if you count other small companies, such as HashiCorp, with similar policies. Microsoft, at 180,000 employees, can obviously move the needle as their WFH policy evolves.) What might happen as tech and eventually other kinds of knowledge workers can choose their home independent of choosing their employer?
1) Economic development efforts
Tulsa jumped on the telework trend, offering techies $10,000 cash to move there. Northwest Arkansas followed suit, including a mountain bike, street bike, or cultural membership to sweeten the offer. Topeka and other Kansas counties offer incentive packages, as do Tucson and the state of Utah. The area surrounding Muscle Shoals, AL has a phased $10,000 initiative. Manilla, Iowa gives successful lottery winners a free house lot. It’s too early to tell if the cash will create much demand to live in places that each raise big question marks in the eyes of an urban tech worker, particularly those who might not be white, religious as defined by community norms, or traditionally married. Several of these states have recently passed legislation prohibiting certain kinds of racial discussion in educational institutions. Do San Franciscans or Seattle residents used to the norms there really want to move to a state where the Trail of Tears and the Tulsa Race Massacre cannot even be mentioned in school?
2) Changing the playbook
In the past, economic development focused on luring employers, with auto factories being a huge prize. More recently the Amazon HQ2 competition pitted municipalities against each other in a race to the bottom: lowest taxes, lowest commitments from the company, lowest barriers to absurd concessions such as the Amazon heliport in Brooklyn. Now we have the prospect of cities enticing workers rather than employers, and while $10,000 is a lot of money, the tax incentive plan doesn’t look like it will work as well. Instead, mobile tech workers will want the things that make a city attractive: public safety, quality schools, outdoor recreation, cultural resources, adequate employment options for non-tech spouses and partners. This trend very much harkens to Richard Florida’s argument in Rise of the Creative Class (2002), which looked great on paper — make your city more like Toronto! — but to my knowledge has never been empirically validated. It’s quite possible Florida was 20 years early, awaiting broadband, mobile computing, and lightweight videoconferencing, none of which were available when he wrote.
3) Environmental load
Given that we in central New York, a region blessed with traditionally heavy snowpack and year-round rainfall, have seen wild fire warnings in historically wet May, perhaps no place can get complacent. But in the U.S. West especially, human pressure on ecologically fragile towns, combined with sustained drought, means that the work-from-anywhere movement can create a tragedy of the commons very quickly. Extrapolating recent snowpack levels forward even 10 years, many ski towns will be challenged to maintain that identity. For the resorts that tried to hedge low snowfall with golf, mountain biking, or conferences and music festivals, meanwhile, the trend toward ever-worsening summer fires means that places like Vail and Tahoe could become substantially less attractive given uninsurability of people’s homes, the lack of ground water, and potential loss of access via even more fragile terrain. A few thousand work-from-anywhere transplants could tip the balance as dry ecosystems reset equilibria.
4) What about the locals?
Apart from the ecological fragility, an influx of even a moderate number of people who can work from anywhere can tip the social balance of a mountain town. Lift operators, wait staff, and others already can’t afford housing in places like Jackson, so many commute long distances. Longer term, what will be the social fabric of towns where people import big-city wage scales into an already stratified economic structure? Recreation centers cater to members of a class with time and money for leisure, and now a new kind of wealth could be introduced into the mix: people with money for leisure, and proximity to it, but little time. Leaving aside ski towns, there’s an idealization of small-town U.S.A. that obscures vast variation in school quality, social coexistence, and transportation infrastructure. When we were recruiting faculty into State College for Penn State, the small airport, small-town cultural scene, and mania for football turned off more than a few candidates who weren’t convinced by the presence of a Wegman’s supermarket that the town was a welcoming place for professors and other professionals who weren’t white, Christian, straight, and married. Much like their ecosystems, small towns’ social structures can be fragile and easily threatened by even a few too many newcomers.
5) How long will this last?
Airbnb has gone remote “permanently,” while Apple is seeing wide pushback and high-profile departures in reaction to its return-to-the-office mandate. One theory, which I failed to bookmark, suggested that the hard-line companies were getting pressure from local governments: if Apple was granted major tax incentives to stay in Cupertino, and workers don’t buy lunch and the company doesn’t host vendors and other visitors in nearby hotels, what is the city (and its tax-paying business owners) to do? Further, Apple is not alone in getting tax rebates off the sale of goods. Making the bottom line includes predictability in those revenue flows, which local authorities may be hesitant to fund given budget shortfalls everywhere. Some host communities may be able to muster legislative support for rollbacks or clawbacks in these generous incentives.
Second, what is the future of the team in a knowledge-centric firm? Will Zoom become the norm in some places, or will the social capital built up before the pandemic eventually fail, leaving both managers and workers clamoring for a return to physical co-location? Will productivity, which in most places increased in the absence of face-to-face work, eventually revert to some historical mean for a given company? Will managers whose teams did good work during the pandemic be hesitant to change the regime when they get promoted to higher levels of authority? Will enough people with scarce skills simply refuse to work in person, forcing companies to change?
Third, how long can companies — albeit, currently only a few — afford to pay expensive-market salaries to people living in places with a lower cost of living? Will the pay policy itself lead to a tragedy of the commons, in which new hires take the money and run, while eventually underperforming? Although the hiring bar at most Silicon Valley stalwarts remains high, corporate culture is neither permanent nor predictable, and the unanticipated side effects might turn out to be significant.
Taken all together, the implications of work-from-anywhere — corporate, economic, civic, ecological — are sufficiently significant that the trend bears close watching, regardless of whether the watcher is a corporate competitor, a small-town mayor, a taxation authority, a shareholder, or a prospective employee. It’s also likely that established companies, desperate for talent in analytics and software engineering, will have to respond somehow, creating further ripples in corporate America. For those fortunate enough to be asking the question “where should we live?”, seeing how you answer will also tell us a lot about what this country will look like going forward.
Posts
