How Migration Patterns of Remote Workers Shape New Economies
MyEListings' markets and economics editor and creates content about global macro events and their impact on US commercial real estate.
The world economy has, for millennia, witnessed defining moments that shaped the course of its progress. More recent milestones, such as the post-World War II baby boom, the GI bill, and the inception of the federal highway system, have made indelible impacts.
Today, we're witnessing a nascent surge that could rival these historical junctures: The rise of remote workers as an economic driver.
An Economic Tsunami in the Making
The economic impulse that remote workers are generating is setting the stage for a revolution in how we perceive and experience global economic dynamics.
Post-World War II saw the emergence of the US middle class, largely an inadvertent-yet-fortuitous byproduct accelerated by the GI Bill. This, in conjunction with the interstate highway system, gave birth to a mobile, educated professional class and changed migration patterns.
Who Has the Initiative?
As history reveals, the economic initiative invariably lies with those possessing optionality. Such entities exert influence, prompting reactions from their counterparts. The modern counterpart to this middle-class emergence is the increasing dominance of remote workers.
Migration Patterns: From Concentrated Hubs to Sun Belts
Recent IRS data sheds light on intriguing migration patterns between 2020 and 2021. Analyzing this through the lens of net income, a prominent trend surfaces: Migrants with loftier incomes largely gravitated towards select Sunbelt locations.
We can discern that a significant proportion of these migrants, about 22%, were remote workers during the pandemic. A disproportionate near-quarter of those who moved were remote workers.
Historically, professionals flocked to major economic hubs, be it the Bay Area, New York, or LA, a phenomenon governed by the necessity of physical presence at offices. The year 2020, however, ushered in a transformative phase.
The Economic Impulse Kicks Off
With the pandemic-induced remote work trial-by-fire, the shackles of geographical constraints were obliterated. This newfound freedom enabled higher-earning remote professionals to migrate, catalyzing a seismic shift in local residential real estate markets.
Demand skyrocketed, but supply lagged, causing an inevitable spike in prices.
Remote Workers' Influence: The Economic Domino Effect
But the impact of remote workers isn't limited to migration and real estate dynamics. Unlike cohesive groups that migrate when a company moves, remote workers seamlessly integrate into their chosen communities one person or family at a time, acting as catalysts to invigorate local, often somewhat-rural economies.
The preferences of remote workers are discernible: sunny locales, favorable tax structures, ease of business operations, and expansive spaces. These preferences translate into tangible economic activities.
Economic Impulses Expand Concentrically
As the influx of remote workers into these areas increases, it's evident that their demands aren't just professional. Yes, there's a burgeoning requirement for coworking/coliving spaces, high-speed internet, and efficient transportation, like high-speed rail links in certain locations.
However, it's the auxiliary demands that paint a comprehensive picture of this economic impulse.
New state-of-the-art grocery stores mushrooming, the inception of closer distribution warehouses, the establishment of cold chain storage facilities, and the appearance of recreational centers, like Top Golf locations and fitness centers, underscore remote workers' influence on the broader economic fabric.
The Sheer Scale of the Thing
While the past has seen the profound economic impulses of events like the baby boom and the GI Bill, today's economic impulse is being shaped by remote workers. Their influence is profound, from dictating migration patterns to reshaping local economies.
And just as few foresaw the monumental impact the confluence of a baby boom, free college, and ease of transport would have on the future after World War II, few today likely appreciate the sheer magnitude or scale of the current economic impulse or its ability to rewire the economy in its image.
As the world moves toward an increasingly digital era and boomers bequeath their wealth to subsequent generations, the economic clout of remote workers will only magnify, potentially establishing them as one of the most potent economic drivers the world has ever witnessed.
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