For decades, how Americans worked dictated where Americans lived. While everyone had their own conception of the "good life," our commutes pinned down the radius of our lives. But with the rise of remote work, as much as 40% of the American workforce will continue to have the opportunity to work from home on at least a part-time basis — allowing different folks to truly live out their different strokes.
The rising numbers of footloose WFH Americans will draw the attention of smaller cities and towns who will compete to attract these workers. Some of the winners will be post-industrial cities such as Baltimore and Buffalo or desirable, high-amenity areas including Bozeman, Montana, and Boise, Idaho. But perhaps the most exciting prospect of the work-from-home era will be the chance to build entirely new cities to serve the needs of a new breed of workers.
These brand new "Remotevilles" will emerge at the fringe of major cities, offering new housing at a lower price while still having access to the amenities of traditional urban hubs. As these new residential communities compete for remote workers, they will have strong incentives to figure out new approaches for creating vibrant local communities — from dynamic education to innovative street safety. These edge cities will increase the societal benefits offered by the work-from-home revolution, operating as natural policy "experiments" that will benefit not only their residents but the nation as a whole.
What will Remotevilles look like?
The US population has been suburbanizing for decades, dispersing from the city center for a variety of reasons — from cheaper housing and the Federal Highway System to crime and schools. Researchers have determined, based on data including US Post Office change of address information, that the pandemic only supercharged the shift. This growing migration presents great new opportunities to build new settlements out of whole cloth. What would these new towns look like?
The first thing you need is land. There are millions of acres of fringe farmland located close to existing cities that could become home to remote workers. Consider farmland in Stockton, California. Hundreds of acres are for sale there, for roughly $50,000 per acre. Stockton is 80 miles from the Apple headquarters in Cupertino. Such farmland is ripe to be converted into exurban housing, creating a new community of tech workers desperate to flee the crushing costs of the Bay Area while remaining close enough for occasional visits to the office.
The second necessary ingredient for the creation of a new Remoteville is a big upfront investment. Given this requirement, the "first mover" would likely need to be major real estate development companies rather than a band of intrepid families. Using private and public surveys, the developer could judge the demand for their town and then tailor the community to the family structure, projected income, and age of the people they expect to move in. Depending on the estimated demographics and location, developers would tailor the type of housing: multifamily, single family, or a combination. Recent progress in the development of modular housing would speed up the construction time and lower construction costs. Using modular materials would allow the developer to disassemble the structures in the future if the demand for the community turns out to be low or if unforeseen location risks arise. To complement the housing, developers would bundle different amenities such as walking trails, golf courses, and good schools. A model for this is the communities the Toll Brothers have designed in Scottsdale, Arizona, which incorporate many of these amenities in a community designed around a central town square — fostering community and connection.
This sort of planned city isn't unprecedented in US history. There were, of course, "company towns," where large firms built housing around a factory to shorten workers' commutes and make its operations more efficient. A prime example is the Irvine Company in Irvine, California. In the 1970s, the company converted the Irvine family's longtime farm and ranch into a series of planned communities built around a new branch of the University of California. The city now boasts more than 200,000 residents, families can find a house and neighborhood that match their desires, and workers can access a wide range of jobs in the region via the nearby freeways. Other examples of such communities include the area close to Dulles Airport in Virginia at Tyson's Corner and the Woodlands near Houston, Texas.
The third and final ingredient for a successful Remoteville is a collection of people with similar values and goals. Such individuals are more likely to become friends and to be engaged in civic dialogue. A better local democracy is likely to form, enabling these Remotevilles to teach us valuable policy lessons. In his book "Bowling Alone," Robert Putnam documented that Americans have become less engaged with each other in terms of civic pursuits. The WFH revolution has the potential to reverse this trend. Because remote workers are more intentional about where they settle, many of them will invest more of their time in civic institutions: municipal government, volunteer work, and local sporting events. The governments that emerge in these growing areas will not face legacy issues related to sclerotic public bureaucracy or long-standing infrastructure costs. Such rules inhibit the ability of elected officials in big American cities to experiment with different strategies for delivering street safety and educating children. In a new remote community, civic leaders will have more freedom to experiment with ways to streamline and improve on these services. They will also have more buy-in from a small community of people who actively chose to move there. And the rest of us, even if we don't live in these Remotevilles, will benefit as the ideas are replicated in other parts of the country.
The new geography of Remotevilles
With the exception of some Western cities such as Las Vegas and Phoenix, America's cities have tended to spring up near rivers or natural ports. Proximity to such waterways lowered transportation costs and facilitated trade. But as the economy shifts more toward services and remote work, our new population centers will be more likely to arise in areas that feature great quality of life rather than pure commercial functionality. Workers are happier, healthier, and more productive when they live where they want. Firms should benefit from this as their workforce productivity and retention rise accordingly. Each of us has our own idiosyncratic criteria for ranking locations, and over the course of our lives our preferred destination may change.
But there are some commonalities that unite us. Studies have found that people gravitate to areas with appealing, predictable environments: warm winters, safety from natural disasters, clean air and water. As more Americans are concerned about climate change, they may rank quality of life on these factors (or other risks such as flood or fire damage), pushing them to cleaner and less vulnerable places.
But just because work from home opens up the possibilities for living, that doesn't mean Americans will abandon urban centers entirely. Many WFH workers will be expected to visit the corporate headquarters on a semi-regular basis, so they will want to be in the general vicinity of the HQ. Transportation infrastructure plays a crucial role here. For WFH workers to avoid being "second-class citizens who are out of the loop," they must be able to use local transport infrastructure and
to connect with their HQ. This means areas in the so-called "donuts" around major metros — places with enough space to foster new and cheap housing while also providing reasonable access to good rail transit or easy, direct flights — will be more likely to foster Remotevilles.
What problems could Remotevilles face?
In the 1991 movie "City Slickers," Billy Crystal's character is a "fish out of water" as he explores the rural American West. Moviegoers were charmed. In real life, many incumbents in WFH destination areas may not be as delighted. How these longtime locals will adapt to the "new blood" will be one of the biggest challenges facing these projects.
The first fight that could erupt in new remote work towns is over housing. In my own academic work, I have documented how home prices in desirable areas have risen as work from home has increased housing demand. When a real-estate developer attempts to erect a new town, or build more housing in a place such as Bozeman, local people can either support the development or try to block it. In the latter scenario, home prices will soar, benefiting a few existing homeowners but displacing local renters and driving up costs for new residents. These rising costs will then cause these areas to become more elitist as they gentrify.
As WFH residents enter an area, purchasing power will increase and the local area will change as upscale shops, restaurants, and Starbucks arrive. How this changes the area's character is a subjective issue, but there will surely be some local pushback. As we've seen in California, land-use lawsuits are often filed using environmental protection and ecological conservation as reasons to block development. Remotevilles will also need basic infrastructure connecting them to the surrounding area. If land-use lawsuits block new road or power-plant construction, or limit where power lines can be placed, these are all "barriers to entry" that will limit population growth. While these lawsuits are well intended, they often have the unintended consequence of accelerating gentrification in the area.
But this sort of nightmare scenario is not inevitable. When an area attracts well paid WFH professionals, this creates more local, middle-class jobs in other industries and can help improve the services available to longtime residents. Building housing for new WFH residents will increase demand for construction workers, service sector workers, teachers, dentists, and others. Local hospitals will increase their capacity to manage expected demand. Urban economists call this the "local multiplier effect" — a virtuous cycle where increased investment begets more spending and more jobs.
Revitalizing old cities
Cities actively compete against each other to attract people and jobs. In recent decades Rust Belt cities have been losing this competition. Post-industrial cities such as Buffalo, Cleveland, and Detroit have seen populations decline as residents searched for jobs and better weather elsewhere.
Baltimore, to cite another example, has seen its population shrink from nearly 950,000 to 600,000 as people moved to the suburbs and more vibrant metro areas with more job opportunities. But the rise of remote work creates the possibility that Baltimore and cities of its ilk could enjoy a revitalization. These cities already boast culture, proximity to pretty waterways, and aging but affordable housing stock. Baltimore's location, long cultural roots, and good transport options along the Northeast corridor will allow WFH residents to live in the city while working for a company based in New York City, Philadelphia, or Washington, DC. Baltimore's central location could even offer married couples pulled between two careers an attractive way to balance their family and work responsibilities — one can work in Washington, DC, and the other can work for a New York City firm and be within close enough distance to occasionally visit their headquarters. As more remote workers move to Baltimore, the local housing market will stabilize and grow. The positive effects will then spread, as new entrants engage with longtime residents, increase civic engagement, and help local governance improve.
Another city that could see a revival is Buffalo, New York. The city's population has been halved over the past 70 years, from 580,000 in 1950 to just 256,000 today. But Buffalo has recently marketed itself as a climate change resilient city that features access to fresh water and less extreme climate risk. This selling point will only become more salient as workers move to avoid disasters such as hurricanes and wildfires. Add in affordable housing and proximity to New York City, and Buffalo could soon make a comeback that benefits new and longtime residents alike.
The rise of remote work is a chance to think big
Before March 2020, the geography of economic opportunity in America was limited. Our superstar firms tended to locate in a handful of superstar cities, forcing many people to live in places they did not necessarily want to be. Our failure to construct adequate housing in these places also meant that millions of Americans faced high rents and long commutes.
A major "silver lining" of the COVID pandemic has been our collective discovery of what we gain from work from home. In my new book, "Going Remote," I argue that these gains will only grow over time as workers and firms collectively figure out how to obtain the full gains from this new way of structuring work.
And as more and more people go remote, America's economic geography will change. The rise of new Remotevilles will increase our menu of locational choices and improve our well-being. These new cities will provide lower-cost housing, ease the burden on services in other cities, and function as laboratories for democracy that offer us a strategy to figure out how to improve our quality of life going forward.
By: Matthew E. Kahn I Business Insider I June 15, 2022