Hitting the Books: What the 'Work from Home' revolution means for those who can't

How we live, how we work, how we get from where we live to where we work, or even if we have to leave where we live to get to where we work were all changed by the COVID-19 Pandemic. Only a fraction of the American workforce have their commute shortened from 45 minutes to 45 feet. In his new book, Going Remote: How the Flexible Work Economy Can Improve Our Lives and Our Cities, Matthew E. Kahn examines how this shift in work-life balance might eventually play out, as well as the increased economic and social stratification it could bring about.

Matthew E Kahn wrote Going Remote: How the Flexible Work Economy Can Improve Our Lives and Our Cities.

Not everyone can work from home. If 35 percent of the workforce is engaged in remote work at least a few days a week, this will affect other workers. Residential areas where remote workers move will see a rise in service jobs demand. As remote workers move farther from city centers, they will create exurban demand for service workers at Starbucks and other stores where they shop. The purchasing power of local service providers will be higher at the suburban fringe because of the low land prices. If more people work from home, service workers can move to remote locations where rents are cheaper. If 35 percent of the workforce begins to work from home three days a week and five days a week, there is a demand for a service sector in areas where they live. There are new jobs for less educated workers in these areas. Housing is cheap in these areas. The quality of life for such service providers is increased. New construction jobs will be created as new homes are built farther from the employment centers. Families who spend more time at home will invest more money. There are new opportunities for those who supply home improvement services. A new office or other features may be added to the home to make it their own.

There are opportunities for less skilled workers to live and work far from the cities in the cheaper parts of metropolitan areas, but one countervailing force is the rising minimum wage. The minimum wage is usually not binding in cities as workers have to be paid higher nominal wages to get work. Demand for workers may be reduced in more suburban and exurban areas where service workers are required to be paid more. Many workers would be willing to work for less than 15 dollars an hour if they could find cheap housing far from the cities. Most people think that a high minimum wage is good for low-skill workers. The law requires employers to pay a higher than competitive market wage to their employees. Firms can use robots or other capital items. A higher minimum wage increases unemployment for less skilled workers, according to economists. The minimum wage is more likely to be a constraint on employers in places with cheaper housing. The net result may be counterintuitive. When less skilled workers live and work in states with less generous minimum wages, they will gain more from the rise of WFH.

I have focused on how the eligible can make the most of this new opportunity. It is important to note that those who are currently not eligible are not locked into this category. Younger workers can be trained to work in fields. Parents of younger children can make investments in their children to raise their chance of being eligible in the future.

Those who work in the service industry and thus earn a living from face-to-face interaction still gain from the rise of WFH because they gain from a larger menu of options of where to live. If a wealthy environmentalist community forms in Montana, it will create new opportunities for those in the service sector to live and work there. The key is to increase the menu of possibilities because this option may not be attractive to everyone. Non-WFH-eligible workers know themselves and their life goals, and they will make the right choices for themselves and gain from having a larger menu of alternatives.

As more people have the opportunity to live and work where they want to be, this increases their physical and mental health, as well as the accountability of our institutions. People are more likely to move away from places that don't meet the desires of local residents. Real estate prices in this setting will be more indicative of local quality of life. People will vote with their feet if the area has a rising crime rate. If local officials don't respond to emerging quality-of-life challenges, the tax base will shrink.

There are a few cautionary notes about concentrated urban poverty in this chapter. The American people are given an incentive to spread out. The benefits from this emerging trend have been sketched out in this chapter. Suburbanization may contribute to the isolation of the urban poor. Poor people live in Baltimore and Detroit because of old, cheap housing and good public transit. If the poor remain in these center city areas and richer people are suburbanizing, there will be less political support for programs that redistribute them because they are out of sight. When violent crime increases in the center city, college graduates are more likely to suburbanize. People who are educated no longer commute to center city jobs five times a week, so this propensity to engage in flight is likely to increase.