The great rebalancing: working from home fuels rise of the 'secondary city'

Amy Kaper has never met her colleagues. Though her employer is based in Washington DC, she works from her apartment in Arizona. Kaper’s chronic health issues made an office job difficult, and working remotely – in IT in the healthcare industry – gives her more autonomy, and more time. “It was a huge adjustment – but I feel really lucky,” she says.

This year, the proportion of Americans working from home like Kaper has skyrocketed – from 8% in February to 35% in May. Most countries have experienced a similar jump during the pandemic, as remote working has gone from a fringe benefit to a necessity. Analysis suggests roughly 28% of jobs in Italy, France, Germany, Spain, Sweden and the UK can be carried out remotely, and as many as 37% in the US.

The global trial forced by coronavirus suggests concerns about “shirking from home” were baseless. A recruitment company’s survey of 5,220 professionals in 31 countries working remotely during lockdown found 77% reported being equally or more effective, while 86% of employers said they intended to continue with it in some form post-pandemic.

If it proves a permanent change, however, it will have far-reaching repercussions – for the communities now accommodating workers midweek, and for the inner cities they have abruptly vacated.

Two groups of remote workers will emerge post-pandemic, predicts Michel Serafinelli, an economics lecturer at the University of Essex: those who commute into the office once or twice a week, and those who do so for one week each month for intensive brainstorming or conference-style meet-ups.

This latter group in particular may decide to move further away from cities, in search of cheaper housing, more space or proximity to nature. A recent survey of 7,000 Japanese adults found that nearly 50% would prefer not to live in Tokyo if they were given the choice. In Switzerland, where teleworking is widely accepted, remote workers live on average 25km away from their workplace.

Serafinelli says the shift could mean an eventual reduction of 40-60% in workers in Munich, Seattle, Amsterdam and other “innovation clusters”. Private rents in London have already started falling as renters flee the inner city for more space. But, in contrast to the British business lobby’s stark warning of “ghost towns”, Serafinelli says: “This could be win-win.”

He argues that cities will become less congested, falling commercial rents might encourage innovation and wealth and human capital could spread further afield. According to the “local multiplier effect” studied by the economist Enrico Moretti, one skilled job generates 2.5 more jobs in goods and services in a local area. The effect is even greater for tech workers, meaning there could be far-reaching benefits to Facebook and Twitter’s plans to make remote working permanent.

The result could be a “rebalancing” between major cities and other areas, Serafinelli says. “It’s a way to level out the differences.”

So-called “secondary cities” – towns and rural areas accustomed to being runners-up against big urban centres – may indeed spy an opportunity. In the US, the state of Minnesota has been pouring investment into broadband to make remote workers a cornerstone of its economy.

This month, it declared 23 towns as “telecommuter-friendly”, creating a network to track and improve broadband speeds, and to compare notes on how to attract and support remote workers. “Ultimately we want to get to a place where the whole state is telecommuter-friendly,” says Steve Grove, commissioner for the Department of Employment and Economic Development.

He sees huge potential for rural areas offering quality of life but not much potential for employment; teleworking, Grove says, is the “sweet spot”. Some countries such as Estonia, Georgia, Barbados and Bermuda have special visas to attract the “digital nomads” rendered rootless by the pandemic.

Cutler J Cleveland, a professor of Earth and environment at Boston University, says the teleworking boom amounts to a “fundamental restructuring” of how we live and work – but without policy to underpin it, winners and losers could soon emerge. “We need to be aware of how it ripples through society.”

Pre-pandemic, Cleveland points out, remote working was offered as an employee benefit, and it remains overwhelmingly an option in well-paid professional industries, dominated by educated white people. Left alone, the switch to remote working will exacerbate inequality in the US. For example, one-fifth of Black and Hispanic men work in the service sector, where just one in 100 jobs can be done from home. “During the pandemic, there’s the double whammy of being more exposed to a deadly virus,” Cleveland adds.

The exodus of wealthy, often white professionals from major cities could also lead to gentrification and displacement in the places they move to, making those communities more expensive and unequal. (The oft-stated climate benefits of telecommuting are likely to be negligible once offset against increasing car trips.)

There are already signs of emerging disparity. Weekday footfall in big urban centres, which plummeted during lockdown, has not bounced back – the latest figures suggest less than one-fifth of UK workers have returned to their physical workplaces – which has led to reductions in public transport. This disadvantages low-income workers and people of colour, and has led to job losses at global chains such as Pret a Manger and major coffee franchises. Meanwhile, house prices in the Hamptons have reached record highs as wealthy New Yorkers have opted to weather the pandemic at the beach.

Companies have also started capitalising on reduced occupancy costs – potentially passing them on to workers. The US outdoors retailer REI plans to sell its brand-new Seattle campus, two years in the making, in favour of smaller satellite sites. In the UK, government contractor Capita is to close more than a third of its 250 offices after concluding its 45,000 staff work just as efficiently at home.

Not every community will be able to take advantage of the remote working boom, agrees Serafinelli. Those best placed to do so already have – or are prepared to invest in – good-quality schools, healthcare and transport links.

Cutler further argues that strong urban policies – improving infrastructure, housing quality and affordability, and climate resilience – will not just support remote working but also reduce social inequity. Around the world, the chief obstacle to working from home is that fast, reliable internet is still not a given, even in urban centres.

“This was a concern before the pandemic, now it is a top priority,” says Serafinelli.