Remote Work Has Caused City Living To Be Less Affordable For Most Workers, Study Says

A new study suggests that only company's highest paid employees are able to live in expensive cities.

Since 2020, the percentage of remote workers has skyrocketed. One surprising outcome is the difference in where management and frontline employees live.

The ADP Research Institute conducted a study that showed the locations of workgroups pre- and post-pandemic. The data shows that people who work in leadership roles tend to live in larger, more expensive cities, while people who work in support roles migrate to rural areas where housing is more affordable.

The analysis says that “more expensive cities have, on average, become increasingly more specialized in managerial tasks since the onset of the pandemic, while more affordable ones have become increasingly more specialized in individual contributor and frontline work.”

In the concept known as “domestic offshoring,” companies can cut costs by moving support jobs such as customer service and other administrative roles to areas where the cost of living is lower while still being headquartered in larger, pricier cities. Remote work opportunities have made it easier for them to recruit potential employees living in rural areas.

This shift may negatively impact companies headquartered in smaller towns. They are now competing with larger corporations that can offer higher wages and more competitive benefits.

The study also suggests that companies benefit from keeping management roles in larger metropolitan areas like New York and Chicago. Leaders from large companies, universities, competitors, and media professionals can network and exchange ideas in person, which is still preferred over video conferencing.

The shift to remote work is a key factor in driving the $2 trillion gain in the housing market. According to a Redfin study, there has been an uptick in workers ditching metropolitan areas and moving to “secondary cities” where they can secure more affordable housing. Popular secondary cities, such as Charleston, South Carolina, Camden, New Jersey, and Elgin, Illinois, have all seen a 10% increase in the value of their homes.