When it Comes to WFH, Researchers Say There’s a Growing Divide Between Big and Small Cities

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To work remotely or not work remotely, that is the question – unless you happen to live in smaller cities outside the coastal, Lululemon-wearing urban beltway.

According to a team of economist researchers at Stanford and other institutions, workers in pint-sized cities are much less likely to receive work-from-home flexibility than their big city counterparts. At least they can commiserate at the water cooler.

Office Space: The Final Frontier

More than a year into the post-vaccine endemic, remote work remains remarkably popular. When given the option, 87% of employees choose to work from the cozy confines of their home office/sofa/bed, a recent McKinsey survey found. And Gen Z workers, in particular, prefer the option. According to a recent ADP Research Institute report, over 70% of workers between the ages of 18 and 24 say they would consider looking for another job if their employer insisted on a full-time return to the cubicle.

Alas, all is not equal. The bigger the city, the less likely employees will have to step foot outside their correspondingly smaller and smaller apartments:

  • In cities with populations under 300,000 — think St. Louis, Reno, Fort Wayne, and Lincoln, Nebraska — the share of fully remote days has fallen to 27% this past spring from 42% in October 2020, the Stanford and Co. researchers found. In the 10 largest US cities, however, the dip has been from 50% to just 38%.
  • In San Francisco, more than a quarter of job postings advertise remote work, while in New York City 19% do, according to researchers from Harvard Business School. Meanwhile, just 13% of Columbus job listings permit remote work, and around 10% in Birmingham, Alabama.

Pay to Stay: Nearly 20% of employees say the ability to work remotely two to three days a week has the same value as a 5 to 10% raise, and another 10% say it’s the equivalent of a 15 to 25% raise, according to a presentation from University of Chicago economist Steven J. Davis last month at the Annual World Bank Conference on Development Economics.

Realty Check: One industry that probably won’t be handing out either pay raises or extra work from home days to employees is commercial real estate, which has been body-slammed by the remote trend as well as rising interest rates. A recent SSRN study projects US office real estate value could plummet 28% long-term — or a value of nearly $500 billion. Whether they’re working remotely or not, property managers could surely use a round of post-work happy hour drinks.

Investing in the Gateway Cities to the American Dream

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