Impact of Remote Work on The National Economy

Impact of Remote Work on The National Economy

Long before the coronavirus hit, many people worked from outside offices. There is a new report that looks at pre-pandemic remote-work data. The result is found that allowing off-site work could be a way to direct wealth away from the 15 most expensive U.S.  metro cities. In big cities most jobs and opportunity have been concentrated in recent years. 

15 Big Cities

Upwork’s report, found that  about half of spending came from businesses in the top 15 big cities in 2018.  72% of earnings went to workers outside the 15 big city areas. Therefore, a significant share of the spending was flowing from larger cities to workers in smaller ones.  

“What that data it shows potential for remote work to spread economic opportunity throughout the country,” said Adam Ozimek, Upwork’s chief economist. “Opportunity has been clustered in a handful of places in this country, and those places are really expensive,” according to him. 

The analysis also found that workers in those big cities make substantially more money. The average marketing worker in one of the top big 15 cities, makes an hourly wage of $46.63. While outside of those 15 big cities, the average marketer makes $31.10 an hour.  

If a company based in San Francisco were to contract an accountant in, Cleveland.  Then, that accountant would make on average roughly 19% more than the average worker in Cleveland, according to the report.  This means firms in bigger cities could be a significant source of investment to smaller city areas. 

Tech Companies

Tech Companies

Several major tech companies including Twitter Inc. and Facebook Inc. have already committed to continued remote work. As a result, those companies citing benefits like a more diverse hiring pool and reduced office space demands. So, many executives have begun to calculate how much money they could save by sizing down office space in big cities. 

“There was a bias among some people regarding what kinds of jobs could be done remotely,” said Prithwiraj Choudhury, a Harvard Business School professor. “The paradigm that only some jobs could be done remotely has been broken,” he said. 

Of course, there are still millions of jobs in the U.S. alone that cannot be done remotely. Those jobs particularly among essential and low-wage workers. An analysis by the National Bureau of Economic Research found that 40% of jobs could be done remotely.  While  others  still  have to do face to face. 

Even with pay cuts, “workers can end up considerably better off thanks to the lower cost of living,” the report by Upwork  said.  Therefore, “If you look at an employer in a high-cost place and a worker in a low-cost place, there’s this huge chunk of benefits up for grabs between the two of them,” according to Ozimek . 
 

Source : https://www.bloomberg.com

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