Only a few years ago, remote work was something only a small percentage of the global workforce experienced. Because of the COVID-19 pandemic, it has now become the norm. As companies send millions of employees to work at home, how remote working helps the economy becomes more important.
In many ways, the pandemic has pushed the workforce to experiment with the advantages and drawbacks of non-traditional work setups. But even before the coronavirus disrupted traditional workplaces, the use of remote working arrangements had already been increasing.
The Boom of Remote Work During the Pandemic
Before discussing how remote working helps the economy, it is integral to understand that remote work has been around for a long time. However, its collective impact is felt more today.
The reason why the remote economy has boomed following the onset of the pandemic is not just because of technological developments. Skype, Zoom, and other remote apps have been around for a long time. However, people did not realize that they had all the tools at their disposal that would enable remote working to become more common. The need to work from home kickstarted the increase in telecommuting we experience today.
Spreading Work from Bigger Cities to More Rural Areas
Remote work helps the economy, especially in rural areas, at a time when all workers from big and small cities are in need of economic help.
The difference in the economic status of workers from small and big cities remains huge. Those who work in smaller cities have been more likely to be left behind during economic downturns. This is a big deal considering that between 2009 and 2015, private employment in the metro grew twice as fast as smaller areas. And while the economic toll of the virus has been felt by everyone, the situation of workers in smaller cities remains dire, especially because most of them do not meet the threshold of the federal CARES Act funds.
When professional opportunities are spread throughout the country instead of being clustered in a handful of big and expensive cities, an economy is more resilient to negative events. The wages of workers in the top 15 most expensive metropolitan areas is $40.54 per hour. This high wage is shocking when compared to the $28.36 average wage in other places. Thanks to remote work, professionals living in smaller cities can increase their earnings by capitalizing on greater opportunities for higher-paying work.
The Effect of Remote Working on Cities
The rise of remote work has led to a decline in large metropolitan areas as companies say goodbye to their physical offices and move away from the traditional work setup. This drastic shift to remote work is evident in different industries, especially in the tech industry.
During the last 15 years, the majority of new hires in the high-tech sector were centered in San Jose, California, San Francisco, Seattle, and Boston. But because of the high cost of living in these areas and the opportunity to work remotely, more professionals are moving to smaller cities.
With that said, it would be an exaggeration to say that the urban flight rate will be the death of big cities. One way to look at this situation is that the outflow from large metropolitan areas will foster an economic boom across a wider geographical area.
Saves Money on Commuting
One of the most discussed aspects of how remote working helps the economy is the savings it can give to workers who do not have to worry about their commute every day.
The decreasing need to commute is evident in the operating hours and passenger load of buses and trains. For example, the load of New York City’s subway is now less than half of what it was prior to the onset of the pandemic.
Before the work from home revolution brought about by COVID-19, 20 percent of the workforce in New York, which is around 1 million people, came from the suburbs. Naturally, these people commuted to and from work. But even as lockdown mandates loosen up and vaccines roll out, a lot of these professionals still have not returned to offices. According to a paper by the Federal Reserve Bank of New York, a quarter of the city’s white-collar workers will still work from home even after the pandemic ends. And many Fortune 500 companies have committed to remaining predominantly online for work tasks for an indefinite period.
With fewer people commuting, there will be fewer cars on the road, which is good news for the climate since it lessens carbon emissions. And with people driving less, it also means they save money on gasoline.
An extra bonus with eliminating the drive to and from work every day is that workers are more satisfied with their jobs. The degree of dissatisfaction of 20 minutes in traffic has been reported to be the same as a 19 percent reduction in pay. So eliminating the daily commute also has a powerful effect on worker satisfaction and loyalty toward their job.
Access to a Global Talent Pool
When companies remove the restrictions related to location, it means that their workers can come from anywhere across the globe. Companies that hire remote workers also help to lower the unemployment rates of smaller cities that would otherwise have a hard time keeping up with challenges posed by the coronavirus.
Just as companies save money by decreasing their expenses, so do employees. Aside from travel expenses, workers can also save on food. For example, an employee working in New York may spend $5 on lunch every day when working at the office. And then there are the other expenses like coffee, car repairs, and others that also add up. It has been estimated that working from home saves the average worker $4,000 annually.
When a remote worker stays at home for most of the time, they will have extra money to support the local economy through buying local products or even dining out in local restaurants. This increased economic activity will further help these local economies.
While workers in almost all industries have expressed their desire to work from home, the ones that will have better chances of doing so will be high earners and highly educated people. In a study by We Forum, only 10 percent of remote workers did not have high school degrees, and 50 percent had graduate degrees.
With remote workers in various time zones, companies can maximize their workdays. According to 32 percent of hiring managers, productivity has increased thanks to remote work. And research supports this claim. In fact, remote workers are an estimated 20-25 percent more productive than workers in an office setting.
There are many factors that play a role in the productivity of remote workers. For instance, these professionals are more in control of their work hours, and they can easily block out distractions and interruptions around them. This is hard to do in an office environment with many potential interruptions. So time saved in commuting can lead to more time spent working, and fewer distractions at the workplace can increase productivity.
Smaller Utility Costs for Companies
Physical offices cost money. And normally, office space is expensive. Businesses spend thousands of dollars to cover rent, office supplies, and utilities every month. Remote teams eliminate these expenses. This allows companies to save on costs that they can re-invest these funds in many ways.
Even if companies do not completely let go of their offices, they can move to areas with lower rent costs. And decreased activity at the office further lowers costs to businesses that retain a traditional office presence.
Impact on City Development
The money saved from commutes and food will not disappear. People will demand products in new areas. So developers will help service this increased want for products and services. This is called the “donut effect.”
If remote workers, especially Gen Z and Millennials, move to smaller cities, the aesthetic of those cities would change. Most remote workers do not dislike urban life but just want a cheaper space to live. With this in mind, all those exposed brick shops, boutique gyms, and vegan restaurants, among other features of modern cities, will become more common in suburban areas. Soon, there will be a steady rise of “15-minute cities,” where residents have whatever they need just a short walk away. These needs include food, entertainment, fitness, drinks, and beauty, among many others.
Without question, big cities like New York or San Francisco will likely go through a tough transition period. Restaurants and establishments will inevitably close and apartments will go empty. But soon, new people will be moving into these cities. Soon, prices that have decreased will rise again.
With this happening, people are also going to notice that the number of mega-cities will expand. The bright and talented professionals clustered in big cities will be more spread out across the country. This will help make all cities richer thanks to tax contributions, investments, and the development of local markets.
Welcoming the Changes Caused by Remote Working
The work setups that worked in the past are rapidly changing. Although change is hard, it also has rewards. Now that you know how remote working helps the economy, you can be more at ease. For those that are still struggling to adapt to remote working, remember one thing. The trick is to put the right tools in place and learn from the success of others.
Remote working provides many incredible benefits that past generations could only dream of. Contact Bunny Studio to find out how we can help your business capitalize on the benefits of remote work today.