The pandemic brought about an economic shift in Spokane and the nation that has left those who track labor trends unable to predict the future.
Not since the Great Depression has the U.S. economic landscape presented a challenge for economists to immediately find ways to track labor changes, said Grant Forsyth, chief economist for Avista Corp.
“The Great Depression really highlighted the need for better data measures for the economy so we could understand, from a policy point of view, what was happening and we could react to it,” Forsyth said.
The pandemic created a new environment where workers all of the sudden are no longer bound by a central office. More are either working from home or using hybrid schedule that includes a little home and office.
“If you look at hybrid versus centrally located workers, what are the pay differentials? Those are the kinds of things that we would like to know the answer to, but we don’t have a good way of measuring and collecting that data on a regular basis,” Forsyth said.
Human resource directors are forced, on the fly, to figure out pay for in-office employees who work in high-cost communities versus remote workers who may live states away in locales with a more affordable cost of living, he said.
“Given the fact that we believe there are going to be some significant changes about where we live and we work … we probably will have to think of new data measures going forward,” he said. “If not, maybe you make bigger policy mistakes because you don’t have the right data about what is happening in the labor market.”
Race for information
Forsyth said he’s seen some changes in questionnaires sent out by the U.S. Census. He said officials with the state of Washington’s Bureau of Labor Statistics must now rethink how the surveys gather information to get a clearer picture.
In that same vein, as researchers at U.S. statistical agencies are still grappling with how to measure this astonishing transformation, a host of academics and other experts has rushed to fill the data gap.
They’ve found that remote work has ebbed significantly since the height of pandemic shutdowns in 2020, when almost two-thirds of work was done remotely.
But it has since stabilized at an extraordinarily high level: Around a third of work was done remotely in the United States in 2021 and 2022, according to economists José María Barrero (Autonomous Technological Institute of Mexico), Nicholas Bloom (Stanford University) and Steven Davis (University of Chicago).
Other data points suggest remote workers are switching to a hybrid schedule.
A new poll shared with the Washington Post by Gallup found 29% of remote-capable workers working from home full time in June – down from 39% in February – while the share working hybrid schedules increased a comparable amount.
While it’s difficult to say whether those numbers will continue, Davis said: “There’s no doubt that it’s increased dramatically compared to 2019 and that it will remain much higher than prepandemic levels.”
In particular, the remote-work wave has reshaped so-called knowledge industries such as finance and information, a category that includes everything from journalists to search-engine developers.
There, some three of every five workdays are now done from home, according to Barrero, Bloom and Davis.
Within each industry, certain classes of jobs are more likely to be done remotely. For example, managers in most industries work from home more often than the people who report to them.
The highest rates of remote work appear among technology, communications, professional services, and finance and insurance workers, according to data from more than 200,000 businesses using the payroll and benefits provider Gusto.
Those data also shows remote work growing across the board.
“There is different exposure of industries to remote work, but the exposure to remote work writ large is universal,” said Liz Wilke, Gusto’s principal economist. “Every single industry experienced an increase.”
Who needs an office?
Forsyth, the Avista economist, said the shift to remote workers has suddenly expanded the universe for Spokane companies to hire employees from anywhere in the country.
“We now have a labor market where locating a headquarters of a business may not be required any more,” he said. “When I talk to firms … they are now hiring people from all over the U.S. and they are not requiring that person to come to Spokane.”
That raises a new series of questions that didn’t apply as late as 2020.
“When they have a person doing the same job in Spokane, but you hired someone to do the same job in New York, you have to think about pay differential,” he said. “In the old days, the expectation was if I hire you, you are going to be working in a central-work location and the pay will be based on” that area’s cost of living.
If an employee works for a tech company that’s based in the Silicon Valley but moves to Nebraska, “We are going to adjust your pay because we had to pay you more to live in the Silicon Valley,” Forsyth said. “It requires you to think and track where your remote employees are, and what is an appropriate wage for that area.”
While the remote revolution has shifted the labor dynamic, not all jobs, such as manufacturing, can be done at home.
The remote-work landscape looks different for food-service or warehouse workers.
In those industries, workers are averaging one day of remote work out of every five, but that probably reflects those people in sales, office and management positions.
Available data limits how deeply researchers can dive into specific industries and geographies.
But they can estimate the geographic effects of remote work by assuming that industries and occupations present in each county have adopted remote work at the national rate.
The places with the highest remote-work rates in the country include the dense urban cores of Washington, D.C., Manhattan and San Francisco, along with much of Northern Virginia’s suburban heartland, including Arlington, Falls Church, Alexandria, and Loudoun and Fairfax counties.
Also in the top 10 are the federal science hub of Los Alamos County, New Mexico, and the wealthy lakeside enclave of Forsyth County, Georgia, northeast of Atlanta.
“Many workers in urban areas are continuing to experience the benefit of not being tied to a certain ZIP code and moving to more affordable exurbs, whether to be closer to family and support structures or to ‘get more for their money’ and experience a different standard of living on their same paycheck,” said Yvette Cameron, an Oracle senior vice president who specializes in human-resource management software.
The latest population estimates by the Census Bureau reveal seismic disruptions as Americans spread into rural, exurban and suburban areas at rates we haven’t seen in at least a decade, according to Economic Innovation Group’s August Benzow.
White people are leading the exodus from the country’s large, urban cores, but they’re not the only ones who are leaving.
Notably, two of the counties with the most remote-eligible jobs, Manhattan (New York County) and San Francisco, experienced the fastest population loss of any county with more than 10,000 residents from 2020 to 2021.
Each saw their prime working-age population shrink by almost 10%.
“What we’re definitely seeing is a shift away from these top 10 cities and toward both medium-sized and smaller metro areas – and actually a pretty big jump for rural employment,” Gusto’s Wilke said.
Maps show a similar pattern across urban America, with the core hollowing out as growth soars in long-range telecommuter enclaves a couple of hours away.
Home prices and rents show similar patterns.
“Population losses were biggest in large urban counties that before the pandemic had a high share of jobs that could be done remotely, high housing costs and lots of people commuting in,” said Adam Ozimek, Economic Innovation Group chief economist and remote-work expert.
“This is all very consistent with remote work being a significant driver of pandemic population changes, and the effect extends beyond San Francisco and New York City.”
Forsyth said he believes Spokane’s housing market boom of 2021 came from workers who learned they could work remotely and chose to live in a more affordable community.
“The Federal Reserve did some research and found a lot of evidence that working from home … greatly increase the demand for housing in the U.S.,” he said.
Workers all the sudden needed a home that was suitable to double as their office, he said.
“So the demand for housing and surge in housing reflected that fundamental shift for … working from home,” he said.
Now geography means less to both those looking for work and employers seeking the best employees, he said.
“Remote work is sort of separating the choice from the job,” he said. “That has the potential to change migration patterns.”
The Washington Post and Seattle Times contributed to this report.
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