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

The past seven weeks of Massachusetts unemployment claims total 25.8 percent of the civilian workforce.

0 Comments
/
The U.S. Department of Labor released its weekly report on jobless claims Thursday morning at 8:30 a.m., reporting that Massachusetts received 55,448 initial unemployment insurance (UI) claims during the week ended May 2. This brings the total of regular UI claims filed in Massachusetts since March 14, the beginning of the unemployment surge, to 781,110. 

COVID-19 will likely lead to a recession. Can Massachusetts municipal budgets handle one?

0 Comments
/
Using municipalities' experiences during the Great Recession, a new policy brief examines the likely impact of COVID-19 on local property taxes, as well as political implications for state aid. We list the municipal revenues by category among the least tax-reliant communities in Massachusetts, show the trajectory of tax revenue growth rate in Massachusetts state and local governments, and rank stabilization fund assets per capita among Massachusetts Gateway Cities.

The past six weeks of Massachusetts unemployment claims total 24.0 percent of civilian workforce

0 Comments
/
The U.S. Department of Labor released its weekly report on jobless claims this morning at 8:30 a.m., reporting that Massachusetts received 70,714 initial unemployment insurance (UI) claims during the week ended April 25. This brings the total of unemployment claims filed in Massachusetts since March 14, the beginning of the unemployment surge, to 725,018. 

Report Finds “Reopening Day” in the Commonwealth Will Likely Include Phasing in Businesses and Contact Tracing

New study compares the reopening of three European countries – Austria, Denmark, and Germany – to highlight approaches that could inform the Commonwealth’s reopening strategy.

New jobless claims data shows that Massachusetts unemployment has grown from 2.8% to at least 20.4% in five weeks

0 Comments
/
Based on today’s jobless claims report, Pioneer Institute projects that the current unemployment rate in Massachusetts is at least 20.4 percent, with a minimum of 762,299 currently unemployed individuals.

Hospitality, Retail Trade, Healthcare Among ‘Most Vulnerable Industries’ in Terms of Unemployment due to COVID-19

Recent data provided by the Massachusetts Executive Office of Labor and Workforce Development show that hospitality, retail trade, healthcare and social assistance, and construction are the industries that have suffered the most unemployment as a result of the coronavirus outbreak, according to the new Pioneer Institute report, “A Look at the Massachusetts Industries that are Most Vulnerable Due to COVID-19.”

Which industry’s workforce has been hurt the most from the COVID-19 outbreak?

0 Comments
/
Unemployment claims have reached all-time highs in the U.S. recently…

State Ranking: Michigan, Hawaii, Rhode Island, Pennsylvania, and Nevada have been hardest-hit by COVID-19 jobless claims so far. Massachusetts ranks as 9th hardest-hit.

0 Comments
/
The U.S. Department of Labor reported today that in the week ended April 4, the advance number of seasonally-adjusted initial jobless claims was 6,606,000. This follows 6,867,000 initial claims filed in the week ended March 28 and 3,307,000 in the week ended March 21.

Report: MA Likely to See Sharp Spike in Unemployment Rate

The COVID-19 recession could cause Massachusetts’ unemployment rate to skyrocket to 25.4 percent by this June, according to a new policy brief published by Pioneer Institute. The authors recommend that the state join others in lobbying Congress for large block grants to avoid a severe fiscal crisis.

Pioneer Launches Report Series Highlighting Massachusetts Job Growth and Business Trends Since 1998

In “Some Big, Broad Economic Trends in Massachusetts,” Pioneer analysis of two decades of data shows fluctuating employment changes across the state, as well as firm size information and the largest employers. The report is part one of aa series that aims to provide deeper insight into COVID-19's economic impact.

COVID-19 Roundup from Pioneer: When will COVID-19 peak in MA?; Life in the aftermath; Tracking potential treatments; Getting America working again; Taking virtual learning to new heights & more!

0 Comments
/
Pioneer staff (and readers) share their top picks for COVID-19 stories highlighting useful resources, best practices, and questions we should be asking our public and private sector leaders.

New Policy Brief on Federal Relief Act’s Impact on Massachusetts

0 Comments
/
Greg Sullivan and Charlie Chieppo review the impact of the Coronavirus Aid, Relief, and Economic Security Act on Massachusetts' budget.