The Impact of a Work-at-Home Economy

Analysts at the Federal Reserve Bank of Atlanta looked at the long-term impact of working from home on the economy and ranked different parts of the economy on two factors related to working at home – the likelihood that an area will generate a lot of work at home opportunities, and the ability of an area to support a work-at-home economy.

The premise behind the study was that we are likely to see much higher levels of people working home after the end of the pandemic. The pandemic has allowed employers of all types and sizes to see the impact on their business of having people work from home. It’s been widely reported that many businesses have seen no negative effects of having employees working from home, and many have reported increased productivity. Employers that are able to continue with work at home policies have been sharpening their pencils and have realized the amount of money they can save by downsizing or eliminating costly office space.

Businesses have also found that many employees like working from home. Workers are enjoying the savings from eliminating costly commutes, from not having to dress for work, and from not spending money on lunches. People love the gained freedom to take care of home tasks during the day while still working, and the relief from being near to family and kids instead of at a job site.

The study began by looking at what it called the impacted employment share. Researchers looked at the sectors that are being most negatively impacted by the pandemic, such as tourism, hospitality, travel, manufacturing, and agriculture. The sector impacts were then layered onto states to see which states are having the biggest negative job impact from the pandemic. The states with the biggest percentage employment impact are Wyoming and Nevada, with 62% of employees in sectors that are affected negatively by the pandemic. At the other end of the scale was New York where only 42% of jobs are in sectors that are negatively impacted by the pandemic.

The study then looked at the percentage of jobs that might reasonably be moved home in each part of the country. This was also done by sector, and sectors of the economy that can most easily accommodate moving workers home include financial services, information technology, and knowledge-based businesses. This sector analysis was also layered onto states and individual markets. The analysis showed the areas that were least able to migrate jobs to the home include Yakima, WA, and Salinas CA, where only 20% of existing jobs can be done from home. The highest places include San Jose – Sunnyvale – Santa Clara CA, Bloomington, IL, and the Washington DC metropolitan area where 32% of jobs could be transitioned to working from home.

Finally, the study combined the analysis to identify states that are the best and worst positioned to handle a work-at-home economy. This final analysis brought in data such like the availability of good broadband that can support working from home. The researches judged states not only by the availability of broadband but also by broadband subscription rates. Markets around the US vary between 12% and 23% in terms of homes without a broadband subscription, and that tracks well with income and poverty levels. The researchers reasoned that local economies with low broadband subscription rates are less likely to support a work-from-home economy.

The study also considered the percentage of homes that only connect to the Internet by cellphone, which ranged from a low of 7% in New Hampshire to a high of over 20% in Mississippi. They reasoned that people using cellular as the only source of broadband are not positioned to work from home. Finally, the study recognized that there are many rural communities without access to good broadband.

The bottom-line conclusion of the report is that states differ significantly by the ability to move jobs home to help weather the pandemic. A second conclusion is that no state is fully ready to handle the pandemic. For example, New York has over 41% of jobs negatively impacted by the pandemic but has less than 30% of jobs that could be transitioned to home. But New York is still far better off than states like Wyoming and Nevada where over 62% of jobs are negatively impacted by the pandemic and less than 25% of the jobs in the state could be transitioned to working from home.

The study doesn’t draw any conclusion beyond compiling the facts. It’s study has clearly identified states that are going to have the hardest time coping if the pandemic continues. What we know from past economic upheavals is that people follow jobs. If the US economy is going to have a larger percentage of people working from home in the future, it stands to reason that people are going to want to live in places where they can be hired for the work-at-home economy and where there is sufficient and affordable broadband to allow them to do so.

A trend towards working from home is going to change migration patterns within the country. We’ve seen decades of people migrating south to find manufacturing jobs as factories in the north went under and new jobs were created in the south. People may not have to contemplate such long-distance migration in the future, but the work at home trend presages increased short-distance migration from areas with poor broadband to areas with good broadband. A community without good broadband has to view the work-at-home trend with dread because the data in this report hints at a continued outflow of workers, a continued brain drain of young people, lower housing values, and all of the other negative aspects of an area in economic decline. We no longer need a strong economic argument for improving rural broadband – it’s staring us right in the face.

3 thoughts on “The Impact of a Work-at-Home Economy

  1. Sorry, I’m probably at risk of repeating myself, but these utopian wfh studies usually don’t / can’t factor in:
    . impact on promotion
    . impact on bonuses
    . impact on finding a new job for career improvement or due to layoff
    . impact on worker productivity and the resultant impact on company productivity / profit

    Let’s say you work from home but the company returns to having a central office. Which employees will be in a stronger position, the ones working in Jackson Hole or the ones working next to the boss?

    Most of the commentary I see about wfh is made by (a) people who haven’t done it, or (b) writers who basically have always worked alone. Everyone is acting like the exodus from NYC or Silicon Valley is a new thing, but it’s not. It happens every time there’s an economic downturn. Ask anyone in Utah. And, then it reverses every time the economy recovers because the (social) network effects are too valuable and strong to resist.

    I’m not saying there won’t be more wfh after this is over, and sleep-away academia is probably over, with the exception of a few elite institutions. But, there’s a whole lot of kool-aid drinking going on with the general discussion.

    The force that holds the universe together is measured in units of people’s careers.

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