Editorial Staff

New Study Finds Pandemic-Spurred Technologies Lowered Barriers to Exit in High-Cost States

/in , , , , /by Editorial Staff
Share on Facebook
Share on Twitter
Share on
LinkedIn
+

Read coverage of this report in the Boston Herald, The Boston Globe, and State House News Service.

BOSTON – Both employers and households will find it easier to leave major job centers as technologies made commonplace by the COVID-19 pandemic have led to a rethinking of the geography of work, according to a new study published by Pioneer Institute.

“The pandemic has changed the calculus on whether telecommuting is worth it, for both employers and workers,” said Andrew Mikula, author of “Barriers to Exit Lowered in High-Cost States as Pandemic-Related Technologies Changed Outlook.”

The study draws on survey data projecting that a third of workers could be permanent telecommuters by the end of 2021 and discusses implications of these trends for transportation, municipal finance, and wealth migration. While worst-case scenarios could bring a level of disinvestment in places like New York City not seen since the 1970s, even a mid-range scenario suggests a significant relocation of jobs and potentially wealth.

Before COVID-19, many high earners and large companies were already leaving New York and Silicon Valley. Coupled with the role of prominent vacation spots in providing a haven for those of means, more business- and tax-friendly areas like Florida, Texas, and Arizona are the clear winners of these trends. As demonstrated in a recent Pioneer study, “Do the Wealthy Migrate Away From High-Tax States?”, relocation of jobs and wealth from Massachusetts has been largely to Florida and New Hampshire.

“These trends are not new, but the pandemic has served as an accelerant,” said Pioneer Institute Executive Director Jim Stergios. “Policymakers who care about recovering the pandemic’s lost jobs will need to create a more business-friendly environment. That means a focus on policies related to taxes, regulation, and the additional costs we are imposing on small employers.”

Policymakers face risks on both sides of the employment equation. Both employees and employers see benefits from remote work. Polls show that a quarter of workers would be willing to take a 10-percent pay cut for the opportunity to work remotely, perhaps a small price to pay to be able to escape the exorbitant cost of living in Boston or New York. Research shows that remote work also reduces the direct costs associated with working in an office environment, such as parking, food, and travel for employees, by an average of $4,000 annually.

For employers, savings average $11,000 per worker, largely because of productivity gains and less need for real estate.

Some argue that the attraction of urban amenities and the productivity advantage of large cities will outweigh the added expenses and short-term public health concerns. Still, surveys suggest that a sizable segment of business executives, office workers, and other professionals will choose to operate remotely for the foreseeable future.

The response from policymakers will be telling and likely determine a set of winners and losers in the new post-pandemic economic reality. Some policymakers will double down on the burdensome tax and regulatory environments that started the taxpayer exodus in the first place; others will take action to offset the obvious financial and quality-of-life benefits of remote work. Based on the policy path taken, employers and employees will make their own decisions about job location and investments.

About the Author

Andrew Mikula is a Research Assistant at Pioneer Institute. Mr. Mikula was pre­viously a Lovett & Ruth Peters Economic Opportunity Fellow at Pioneer Institute and studied economics at Bates College.

About Pioneer

Pioneer’s mission is to develop and communicate dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond.

Pioneer’s vision of success is a state and nation where our people can prosper and our society thrive because we enjoy world-class options in education, healthcare, transportation, and economic opportunity, and where our government is limited, accountable and transparent.

Pioneer values an America where our citizenry is well-educated and willing to test our beliefs based on facts and the free exchange of ideas, and committed to liberty, personal responsibility, and free enterprise.

Get Updates on Our Economic Opportunity Research

Related Research

Hong Tran Goes from Refugee to Realtor

This week on JobMakers, host Denzil Mohammed talks with Hong Tran, a Worcester, Massachusetts-based realtor and small business owner who emigrated to America as an orphaned refugee from Vietnam.

Sandro Catanzaro Takes His American Dream to Mars and Back

This week on JobMakers, host Denzil Mohammed talks with Sandro Catanzaro, who started several businesses in his native Peru but had no idea he’d end up helping NASA go to Mars, or that he’d use that same technology to plan and buy video ad campaigns. Now Head of Publisher Services Strategy for Roku, which acquired the company he founded, dataxu, in 2019, Mr. Catanzaro is an emblem of ingenuity and inventiveness. His demand-side platform, device graph technology and analytics platform help accelerate Roku’s ad tech roadmap and ability to serve a wide array of advertisers. But he’s not done yet!

Study: Graduated Income Tax Proposal Fails to Protect Taxpayers from Bracket Creep

The state constitutional amendment proposed by the Service Employees International Union and the Massachusetts Teachers Association to add a 4 percent surtax to all annual income above $1 million purports to use cost-of-living-based bracket adjustments as a safeguard that will ensure only millionaires will pay. But historic income growth trends suggest that bracket creep will cause many non-millionaires to be subject to the surtax over time, according to a new study published by Pioneer Institute.

Christina Qi Goes From Welfare to Wall Street 

This week on JobMakers, Host Denzil Mohammed talks with Christina (Chi) Qi, who started a hedge fund at just 22. They discuss her background and journey, moving with her family from China to Utah, being on welfare, and then attending MIT. She went on to co-found Domeyard, a quantitative trading firm, in 2013, among the longest running high-frequency trading hedge funds in the world, and was trading up to $7 billion dollars a day. In 2019, she founded Databento, an on-demand data platform for asset managers and quantitative analysts. They discuss how being an immigrant, Asian, and a woman in the cutthroat, male-dominated world of Wall Street didn’t deter her from success.

New Study Warns Graduated Income Tax Will Harm Many Massachusetts Retirees

If passed, a constitutional amendment to impose a graduated income tax would raid the retirement plans of Massachusetts residents by pushing their owners into higher tax brackets on the sales of homes and businesses, according to a new study published by Pioneer Institute. The study, entitled “The Graduated Income Tax Trap: A retirement tax on small business owners,” aims to help the public fully understand the impact of the proposed new tax.

Herby Duverné Keeps Americans Safe & Gives Back

Welcome to JobMakers, a new, weekly podcast, produced by Pioneer Institute and The Immigrant Learning Center. Host Denzil Mohammed explores the world of risk-taking immigrants, who create new products, services and jobs in New England and across the United States. In the debut episode, Denzil talks with Herby Duverné, CEO at Windwalker Group, an award-winning small business with more than 25 years of experience in physical and cybersecurity solutions that protect and prepare companies through custom learning and training solutions.

Study: Graduated Income Tax Proponents Rely on Analyses That Exclude the Vast Majority Of “Millionaires” to Argue Their Case

Advocates for a state constitutional amendment that would apply a 4 percent surtax to households with annual earnings of more than $1 million rely heavily on the assumption that these proposed taxes will have little impact on the mobility of high earners. They cite analyses by Cornell University Associate Professor Cristobal Young, which exclude the vast majority of millionaires, according to a new study published by Pioneer Institute.

Hoover Institution’s Dr. Eric Hanushek on COVID-19, K-12 Learning Loss, & Economic Impact

0 Comments
/
This week on “The Learning Curve," Gerard and Cara talk with Dr. Eric Hanushek, the Paul and Jean Hanna Senior Fellow at Stanford University’s Hoover Institution. They discuss his research, cited by The Wall Street Journal, on learning loss due to the pandemic, especially among poor, minority, and rural students, and its impact on skills and earnings.

Report Contrasts State Government and Private Sector Employment Changes During Pandemic

Massachusetts state government employment has been virtually flat during COVID-19 even as employment in the state’s private sector workforce remains nearly 10 percent below pre-pandemic levels, according to a new study published by Pioneer Institute. The study, “Public vs. Private Employment in Massachusetts: A Tale of Two Pandemics,” questions whether it makes sense to shield public agencies from last year’s recession at the expense of taxpayers.

A wealth tax, a SCOTUS case, and a likely Mass. exodus

0 Comments
/
Op-ed in The Boston Globe: A case New Hampshire filed with the US Supreme Court last October against the Commonwealth of Massachusetts could have a huge impact on state finances nationwide. It also raises the stakes as the Massachusetts Legislature considers amending the state constitution to eliminate the state’s prohibition against a graduated income tax and to hike taxes on high earners.

Study Finds Massachusetts Graduated Income Tax May Be a “Blank Check” and Not Increase Funding for Designated Priorities

Advocates claim a proposed 4 percent surtax on high earners will raise nearly $2 billion per year for education and transportation, but similar tax hikes in other states resulted in highly discretionary rather than targeted spending, according to a new policy brief published by Pioneer Institute. That same result or worse is possible in Massachusetts because during the 2019 constitutional convention state legislators rejected — not just one, but two — proposed amendments requiring that the new revenues be directed to these purposes.

Post-Pandemic Prospects: Tech Leaders’ Prescription for Preserving a Healthy Economy

0 Comments
/
Host Joe Selvaggi talks with Chris Anderson, President of the Massachusetts High Technology Council, about the reasons why Massachusetts has a thriving tech sector, what challenges his members have faced in the pandemic, and what he sees as the most prudent path toward future prosperity in the commonwealth.