The pandemic has been a grand global experiment in the costs and benefits of a remote workforce. But long before the coronavirus hit, many people worked from outside offices. A new report that looks at pre-pandemic remote-work data found that allowing off-site work could be a way to direct wealth away from the 15 most expensive U.S. metros, where jobs and opportunity have been concentrated in recent years. The report by Upwork, an online platform that connects businesses and freelancers, found that while about half of spending came from businesses based in the top 15 metros in 2018, a much larger 72% of earnings went to workers located outside the 15 metro areas, meaning a significant share of the spending was flowing from larger cities to workers in smaller ones. Upwork is not exactly a neutral party, and the new report’s stated purpose is to highlight the economic benefits of remote work. The data nonetheless offers potentially important insights at a time when both small cities and workers are in even greater need of an economic boost than they were prior to the pandemic. While some reports of an impending urban exodus have probably been overstated, the disparate economic conditions between smaller and larger cities are real. Smaller cities have had a harder time recovering from downturns, and they are disproportionately affected by trends of globalization like foreign trade and automation. According to a Brookings Institution study published in 2017, private employment grew nearly twice as fast in bigger areas as it did in smaller ones between 2009 and 2015. The full economic toll of the coronavirus has yet to be felt, but the situation for small cities is undoubtedly dire: Only 36 cities met the 500,000 population threshold to qualify for federal CARES Act money. “What that shows is the potential for remote work to spread economic opportunity throughout the country,” said Adam Ozimek, Upwork’s chief economist and the author of the report. “Opportunity has been clustered in a handful of places in this country, and those places are really expensive.”
The analysis also found that workers in those more expensive metros make substantially more money: Skilled professionals in the 15 most expensive metros made on average more than 40% more than those in the same occupations in smaller cities. The average marketing worker in one of the top 15 cities, for example, makes an hourly wage of $46.63. Outside of those 15 metros, the average marketer makes $31.10 an hour. Despite that sizable difference, freelancers in smaller cities contracted by Upwork clients in the 15 most expensive metros made more than their local peers, according to a comparison with Bureau of Labor Statistics data. If a company based in San Francisco were to contract an accountant in, say, Cleveland, that accountant would make on average roughly 19% more than the average worker in Cleveland as a whole, according to the report. This means firms in bigger cities could be a significant source of investment to smaller metro areas. One notable limitation of the Upwork data is that it looks only at self-employed individuals, whose compensation is not directly comparable to full-time employees who work remotely. In another recent paper, Ozimek conducted surveys of hiring managers to gauge their reactions to remote work during coronavirus and found that 32% saw an increase in productivity among their workers during Covid-19 shutdowns, compared with about 23% who saw a decline. Other companies have likewise reported high productivity during coronavirus, but some including Microsoft Corp. have worried that productivity would go down over time. And in other surveys, some workers and employers have said an ideal arrangement would be part-time remote, which means workers might still have to live near an office. source
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