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

Roger Magalhaes Goes from Truck Driver to Industry Leader

This week on JobMakers, host Denzil Mohammed talks with Roger Magalhaes, immigrant from Brazil and founder of the firms Shades in Place window treatment installation and Trading Up Consulting, in Franklin, Massachusetts.

Rent Control Redux: Mayor’s Committee Likely to Provide Astroturf Over Expertise

Hubwonk host Joe Selvaggi talks with Doug Quatrocchi, executive director of Masslandlords.net about the historical effects of rent control in Boston and Cambridge in the past and discuss the gap between the stated goals and the likely outcome of Boston Mayor Wu’s 25 member Rent Stabilization Advisory Committee.

Avak Kahvejian on How Immigrants Drive Innovation

This week on JobMakers, host Denzil Mohammed talks with Dr. Avak Kahvejian, an inventor, entrepreneur and CEO as well as general partner at Flagship Pioneering, a life sciences venture capital company in Cambridge, Massachusetts.

Dr. Celina Miranda on Immigrant Entrepreneurs & Community Uplift

This week on JobMakers, host Denzil Mohammed talks with Dr. Celina Miranda, executive director of the Hyde Square Task Force in Jamaica Plain’s Latin Quarter, today one of the most diverse neighborhoods in Massachusetts.

Study: Legislature Likely to Reduce Spending on Education and Transportation from Other Revenue Sources, Replace Cuts with Surtax Money

Revenue from a ballot initiative to amend the state Constitution and raise income taxes on households and businesses by adopting a graduated income tax structure would supposedly provide resources for transportation and public education, but a new study published by Pioneer Institute finds that, were the tax amendment to pass, the money would be fungible and much of it likely spent on general budget measures.   

Theresa Park on How Immigrants Revitalize U.S. Cities

This week on JobMakers, host Denzil Mohammed talks with Theresa Park, Deputy Director and Senior Executive Vice President at MassDevelopment, a group that offers financing and real estate solutions to drive economic growth across Massachusetts. An immigrant from Korea who moved to Lawrence, Massachusetts, Theresa saw first-hand how immigrants built their lives from the ground up, and in so doing brought economic and cultural vibrancy to their new home cities.

Reinier Moquete on the Audacity of Immigrant Entrepreneurship

This week on JobMakers, host Denzil Mohammed talks with Reinier Moquete, son of immigrants from the Dominican Republic and founder of CyberWarrior, a cyber security services provider in Boston, Massachusetts.

Dinesh Wadhwani Clears the Air with Light Technology

This week on JobMakers, host Denzil Mohammed talks with Dinesh Wadhwani, founder and CEO of ThinkLite, LLC in Natick, Massachusetts, and immigrant from Ghana.

Transit Innovation Explored: A Bus As Fast As A Train?

Hubwonk host Joe Selvaggi talks with transportation expert Ian Ollis about the findings of his new research paper, "Bus Rapid Transit: Costs and Benefits of a Transit Alternative," which examines the benefits of building Bus Rapid Transit to serve communities looking for faster transit alternatives to a car.

Study Finds Bus Rapid Transit Can Offer Cost-Effective Benefits

Bus rapid transit (BRT) incorporates unique features such as dedicated lanes to provide reliable and cost-effective service while reducing congestion and its detrimental environmental impacts, according to a new study published by Pioneer Institute.

Anuradha Sajjanhar, PhD on Immigrants’ Role in Pandemic Recovery

This week on JobMakers, host Denzil Mohammed talks with Dr. Anuradha Sajjanhar, lead researcher for the report Immigrant Essential Workers During the COVID-19 Pandemic published by The Immigrant Learning Center, co-producer of this podcast. She found that immigrants, despite playing an outsized role in industries deemed essential such as healthcare, food and agriculture, and the supply chain, were largely left out of federal and state support during the pandemic, which negatively affected their safety and their efforts to help Americans weather this crisis. The report offers a path forward, as you’ll learn in this week’s JobMakers.

Fair Share Flimflam: Misleading Ballot Summary Could Distort Voter Choice

Joe Selvaggi talks with Attorney Kevin Martin, appellate litigator at Goodwin Proctor, about the complaint filed with the Massachusetts Supreme Judicial Court regarding the summary language on the 2022 "Fair Share Tax” ballot initiative. Kevin explains how the language misleads the public about the impact of their vote on revenue, spending, and our state’s constitution.