Working More From Home Has Impacts for Economic Development, Site Selection, and Urban Planning

 

Working from home was already becoming more common, but the COVID-19 crisis forced many employers to quickly alter policies to enable more workers to perform their jobs from home.

This forced experimentation with remote work is causing some employers to alter their policies permanently.

Shopify, for example, announced in May that its 5,000 employees would be allowed to work from home indefinitely. Twitter's CEO told workers  in May that they can continue working from home “forever” even once the pandemic is over.

More employers following this example could cause a fundamental shift in demand for office space.

But not all work can be performed remotely.

Which occupations could be performed remotely? The American Time-Use Survey and the Occupational Information Network, or O*NET, the database of occupational information developed under the U.S. Department of Labor, can shed some light.

The Time-Use Survey asks if respondents can work from home, if they actually have worked from home, and the reasons for working from home.

O*NET provides worker characteristics including the need to “…perform job tasks in close physical proximity to other people.” It also has information on other working conditions that would typically preclude working from home, such as working outdoors or in an enclosed vehicle or needing to spend working time standing or wearing safety equipment.

Combining the Time-Use Survey and O*NET data, occupations can be classified into one of three buckets: remote jobs, partial-remote jobs, and non-remote jobs.

About 12% for U.S. employment falls under remote job occupations with 26% in the partial-remote bucket and the remaining 62% in non-remote occupations.

Remote jobs include occupations such as bookkeepers, software developers, lawyers, and financial managers. Office clerks, personal care aids, and general operations managers top the list of partial-remote jobs. Non-remote jobs include retail salespersons, cashiers, and registered nurses.

The 12% for remote job seems like a small number, but it could have significant implications for regions that have a relatively large amount of office space.

To measure the potential impact on metropolitan areas, let's look at the industries with the highest concentrations of remote-work employment as defined by each industry’s component occupations. The top industries included software publishers, computer system design and legal services.

The resulting remote-work index compares the mix of remote-work employment in the region versus the mix in the nation.

An index of 100% means the region has the exact same mix as the nation. An index of 110% means the region has 10% more remote jobs than average for a region of its size and an index of 90% means the region has 10% less remote jobs than average for a region of its size.

Changing remote work conditions have significant implications for economic development, site selection, and urban planning.

Employers shifting to remote work arrangements can drastically change the demand for office space.

Likewise, labor supply questions for some occupations need to be approached differently if commute-to-work time becomes a less important a limiting factor.

If more people are working from home, shifts in daytime population will have ripple effects for both business districts and neighborhoods.

Based on the remote-work index, the top five metro areas with high concentrations of either tech or office employment:

• San Jose-Sunnyvale-Santa Clara, Calif., with 145% index;

• California-Lexington Park, Md., 134%;

• Boulder, Colo., 131%;

• Washington, D.C.-Arlington-Alexandria, 128%;and

• San Francisco-Oakland-Berkeley, Calif., 126%.

Of metro areas with lower ratios of remote work jobs, some have high concentrations of tourism industries, others are heavy with agriculture, while others have large manufacturing sectors.

The bottom five are:

• Elkhart-Goshen, Ind., with a 66% index;

• Visalia, Calif., 66%;

• Kokomo, Ind., 69%;

• Ocean City, N.J., 69%; and

• Madera, Calif., 69%.

The Richmond metro area remote-work index is 107%, ranking it No. 34 in the nation.

The tourism activity in Virginia Beach-Norfolk-Newport News region puts it at a lower 95% with a ranking of No. 115.

The coronavirus pandemic has reshaped our lives over the past few months.

Some analysts are expecting reduced demand for traditional office space in the post-COVID era. Others point out the difficulties of onboarding new employees and creating a culture in a totally remote work environment.

The long-term effects remain to be seen as the direct coronavirus impact plays out and the responses of employers take hold in the post-COVID economy.

 

Christine Chmura is CEO and Chief Economist at Chmura Economics & Analytics.