Economic Disruption from New Tech Could Deflate Cities
Remote work will accelerate a national demographic realignment
Technology is again showing its tendency towards economic disruption. In our lifetimes, it has enhanced and fragmented our relationships and promised to upend entire industries.
New technologies are empowering people to vote, not only with a ballot but with their feet. In the way recent high-school graduates leave their families to embrace the freedom of independent college living, so too, the COVID-19 pandemic-induced acceleration of remote work is triggering working adults’ departure from counties and states that surpass their tax, regulatory, and administrative tolerance levels.
This exodus from the nanny state was already occurring before the COVID-19 pandemic. Now, barely a news cycle concludes without a mention of Elon Musk’s plan to move Tesla out of California or a media personality’s state-hopping. Zoom, Google, Microsoft, and a little nudge from state and federal governments, via stay-at-home orders, are making this possible.
Now that work from home can be both technologically seamless and socially acceptable, how long will it be before people realize and act upon the incentive to move from high-tax, high regulatory states to their low-tax, less-regulated neighbors?
Further, what will be the pros and cons of America as a whole? Immediate implications include the free-market impact on public policy, greater disposable income, deepened tribalism, and accelerated economic disparity.
Free Market Impact on Public Policies
Remote work will empower individuals to leave states whose public policies irk them and undermine their values. If an overbearing local government passes a new tax bill or imposes a regulatory hurdle that is unjustified in the resident’s mind, U-Haul can be at their front door the next day. A citizen can typically register their political disapproval by voting, only every two to four years. But moving, especially for America’s newest entries into the job market, is easier now than it has ever been.
The popularity of a new policy or regulation can now be gauged, in almost real-time, by state-to-state migration. With this free market effect incentivizing relocation, Americans will now have greater options to prioritize individual freedom and liberty instead of relying so heavily on the availability of jobs in a given region.
Cost of Living and Disposable Income
As location becomes a less pertinent economic consideration, many more Americans can weigh cost-of-living considerations more heavily in the calculus of life.
An untethered workforce currently located in Washington, D.C. can move 200 miles west to West Virginia if they choose to want to enjoy a rural way of living with 44 percent less in expenses. Such an increase in a family’s disposable income could be felt for generations. Like “white flight” in the 50s and 60s, however, this “rights flight” will likely have challenging socioeconomic ramifications as well.
Exacerbating Economic Disparity
One consequence of white flight was the economic and social toll on inner cities. The service industry suffered major contractions and the tax base dwindled, leading to the decline in quality of schools and other government services.
As those with means move and those without remain, economic activity will decrease in the current city centers of our nation. As various groups and like-minded individuals now have the option to relocate at will, they will do so where they are comfortable and have their preferences met—socially, culturally, and politically.
In her recent book, Primal Screams Mary Eberstadt writes “Legions of people—especially the young—have become unmoored from a firm sense of self. To compensate, they join the ranks of ideological tribes spawned by identity politics and react with frenzy against any perceived threat to their group.” Tribalism has indeed led to increased vitriol, partisanship, and passionate, uncivil engagement. This division will likely be more concentrated as Democrats move to California, Republicans to Texas, and Libertarians to New Hampshire.
Even as I wrote this article, Twitter announced that some of their employees can work from home permanently.
The opportunity for and the trend toward totally remote work is already present and available for much of the knowledge economy. Exactly how many people are willing to walk away from their current social norms for the opportunity to reduce their cost of living and gain greater freedoms? How many people will, through an intentional love of place or unintentional lack of opportunity, persist in their current locale? Only time will tell.