Sara Corcoran was offered a job at a Dallas construction firm as an assistant manager. She worked remotely from her home in May 2021. She and her husband purchased a mobile home with three bedrooms in Wylie in November, which is about 30 miles north of Dallas. She loved the affordability of Wylie, where they paid $500 a month, less than half of what they had paid to rent a two-bedroom apartment in North Dallas, and that she could “smell the lake and see the stars.”
But eight months later, her company suddenly called everyone back to the office and told her she wasn’t remote any more, she says. “They said, ‘We’re going to have everyone come back to the offices, we want to see your smiling faces,’” she says. The offices of the company are located southwest of Dallas and can be reached by an easy 80-mile one-way commute. The woman went into the company for two days and then left at eight o’clock in the evening. She also paid $15 per day tolls. A new job was offered to her two days later.
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Last week, when President Biden called on Americans to “get back to work and fill our great downtowns again,” he joined a cadre of politicians and businesses across the country calling for employees to return to their offices. Corcoran workers, who witnessed their rents and home prices increase by roughly 16% each over the past 2 years, may not realise how outof touch they are.
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More than a third of jobs—often but not always ones performed by people with a college degree—can be performed from home, according to a Analysis by University of Chicago What these workers hear when their employers call them back to the office is that they’re expected to either pay a big chunk of their paychecks to live close to the office or save money on rent and weather longer—and more expensive—commutes, as if the last two years of work-from-home hadn’t happened at all. Around 46% of companies had workers back in their offices in January or February of this year, compared to 29% at the end of 2021, according to a Challenger, Gray & Christmas survey.
According to companies, they desire workers to come back in order to promote collaboration and revive the downtown businesses which have been declining due to lack of staff. Google, Apple and many other companies are offering hybrid work arrangements that allow employees to come in the office only two or three times a week. However, workers who are used to eating breakfast with their families for the last two years must either commute three hours each day or pay a lot to live near the office. The median Mountain View home price in January was $1.9million. This is where Google’s headquarters are located. Even a family with two workers who make the average annual salary at Google—$134,386—would have to pay more than a third of their income each month to afford such a house.
The most costly real estate in the world was found near jobs, such as New York City and San Francisco before the epidemic. However, exurbs and suburbs are also experiencing a boom in real estate. Exurbs refer to areas that are further from the city center than suburban ones and are smaller than half the American zip codes. There’s more competition from workers who only have to go into the office a few days a week, and are moving their families further out in an effort to get more space. In short, it’s expensive everywhere.
According to Nicholas Bloom (an economics professor at Stanford and a researcher on remote work), home values in the exurbs have increased by 30% since February 2020. They’re up only about 5% in city centers. There are some exurbs located in the popular metropolitan areas such as San Francisco Bay Area. More than 80 miless from the city center, meaning people in search of affordable housing may be facing a two-hour—or more—commute each way.
Housing is severely lacking in the United States.
The problem stems from the years-long housing shortage in the U.S. The U.S. Short 3.8 Million UnitsAccording to Sam Khater (chief economist at Freddie Mac), this shortage of units would have increased by 50% by 2020. You can also add to this a boom in investors Purchase single-family homesRent out families to further limit supply. Add to that a Boomer generation who chooses to live in their home rather than move, and the perfect storm is created for housing affordability.
Data from the Census showed that median home prices increased by more than 10% between the prior quarter and the current three-months of 2021 in over two thirds of metro areas. National Association of Realtors. In the past one year, the median home for a single family has gone up 15%. Median earnings were however up by just 1%. 2.6% lower than a previous yearThis was despite the fact that consumer prices for food and gas continued to rise.
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Bloom, the economist, argues that allowing hybrid work is actually a “win-win,” because workers can double the distance they live from the office. They can now live for two hours from the office instead of one, allowing them to have more space. He gives the example of the Central Valley in California, which is around a two hour drive from Silicon Valley, and where homes cost much less than they do closer to offices like Google’s. “You have a horrible day one day a week, but the trade off is that you get to live somewhere far away with reasonable housing and good schools,” he says. Professional workers want to work in the office. 2.5% of the week.He said.
Because office workers still come in only a few days a week, the hybrid model is less disruptive to downtowns. Many downtown restaurants and bars will continue to exist. Commercial real estate is at greater risk. This is likely why WeWork and other companies that make large investments in office spaces are ignoring the possibility of people working remotely. “Those who are least engaged are very comfortable working from home,” said WeWork’s CEO Last year, Sandeep Mathrani.
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But a transition to more permanent remote work won’t kill downtowns. This will only change their lives. Places with a high concentration of office workers, like Manhattan’s Midtown, or San Francisco’s Financial District, have become so office-centric that they’re dominated by offices and chain restaurants where people stand in long lines for salads. With fewer office workers, central business districts could add more affordable housing, arts and cultural spaces, and other so-called “third spaces” where people spend time away from home, argues urbanist Richard Florida.This will increase their appeal as people can easily walk/bike within 15 minutes to any amenities that they want.
As for the service workers who catered to office workers, their jobs won’t just disappear, but they may move. People who are financially secure and work remotely still enjoy the same opportunities to meet new friends, eat out, or see live music, as when they were living in cities. Bloom, the Stanford economist, says the migrations to suburbs and exurbs will have a “donut” effect on cities, in that more people will be concentrated on the edges rather than in the center. Services for remote workers will start to move to the donut edges, too—and indeed, jobs on the periphery of metro areas have recovered much more quickly than those in city centers. Service workers may find it easier to live in affordable cities and rural areas, which could make them more cost-friendly.
Matthew Delventhal (a labor market economist who was formerly from Claremont McKenna College) found that home prices would drop 6% if 33% more Los Angeles workers telecommuted. This is an increase of about 3% since before the pandemic. Life becomes easier for almost everyone— because fewer workers are commuting, commutes become easier for people who are still going into a workplace. Certain service jobs were moved out of the city to be closer to their workers.
“There are a lot of benefits to having people less tied-down geographically,” he says.
Workers want to have the ability to spend time with their families
Ryan Pollard, a perfect example of these welfare benefits. Pollard used to commute 3 hours per day between his Portland, Ore. suburb home and his job in another Portland suburb. His wife and he worked together at the same software firm. Because of this, Pollard’s youngest child, who is now nine years old, would often be attending daycare for 12 hours per day.
During the pandemic, their employer switched to fully remote, and the family went from renting a house to being able to buy one in Vancouver, Washington—about a 6 hour drive from their office.
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“I look back at the hours that I spent in my car or away from my kids and it kind of makes me cringe a little bit, especially with the little one, not seeing her for 12 hours a day,” he says. “Now, we’re walking her to and from school and that’s incredible. I’m not going to trade that for anyone.”
Pollard is still employed by the same company, but his wife has a job with a company that offers remote working. Neither wants to consider any job that doesn’t let them work remotely.
Many other people agree and they are not alone.Esearch indicates that remote workers could be a way to get more people into the labour market. More than half of unemployed survey respondents said they’d prefer a work from home job, and 17% said they’d only consider a work-from-home job, according to Bloom, the Stanford professor.
Employers looking to return to work in an increasingly tight labor market with 11 million jobs available may not have the right kind of workers that they desire. They’ll also lose the many workers who reevaluated what was important to them during the pandemic, and decided to put family first. According to recent research, 61% of remote workers are not working because they are closed. Pew studyHowever, 36% worked at home prior to the pandemic.
Scott McDonald, 45 years old, is an executive who creates flooring estimates for the construction sector. He had lived in the same North Carolina town where his employer was located because he wanted a short commute, but it wasn’t very close to his three kids, who split time between divorced parents. His job was no longer available so he moved to a house with three bedrooms that would be able to accommodate him and his family.
He heard President Biden call workers back to the office in the State of the Union, but scoffed—he never has to go back to an office again. “The pay would have to be astronomical to convince me to give up time with my family and replace it with a commute,” he wrote on Twitter.
McDonald knows this may limit his job options in the future, especially since he doesn’t have a college degree. But he gets to sit down with his family for meals, and talk with his kids about their days—he doesn’t want to trade that in.
“I’m not super-skilled,” he says. “But they say it’s a worker’s market.”
