Jun 23, 2020 - Economy & Business

Second-tier cities vie for telecommuters

Illustration of paper coffee cup with city travel stamps (Detroit, Nashville, Austin, and Pittsburgh)

Illustration: Eniola Odetunde/Axios

Lingering post-pandemic remote work could redistribute some New York City and Silicon Valley jobs to the American heartland, and smaller cities are already competing to attract talent — but it won't be so easy.

The big picture: Although U.S. workers will have the option to scatter and get out of the crowded and expensive metros, the pull of those places may be too strong for the second-tier cities to win out.

Driving the news: We're living the age of winner-take-all cities, with just the top metros vacuuming up all of the wealth and job growth. "It has become very clear that a very short list of places have extreme economic magnetism," said Mark Muro of the Brookings Institution.

  • But now, as companies like Facebook, Twitter, Google and Coinbase say they'll let some portion of their employees work from anywhere, smaller cities are offering incentives for those workers to come to town.
  • Savannah, Georgia, has announced a new $2,000 per remote worker relocation benefit as an incentive. "[W]hether or not the company is headquartered here, we want the high wage earners that can be remote to move here," Jennifer Bonnett of the Savannah Economic Development Authority told Fast Company.
  • There are similar incentives offered by Tulsa, Oklahoma; Topeka, Kansas; and Vermont, per Fast Company.

And there's some evidence that the efforts of smaller cities might be working. "Zillow and Redfin are both reporting spikes in single-family home searches in smaller cities," the Wall Street Journal reports.

Yes, but: Such incentives might not be enough.

  • Workers may be unwilling to leave the major metros if they know their compensation may go down. (For example, Facebook has said it would adjust pay to local cost of living for remote workers.)
  • And there can be a real fear of becoming marginalized once you're no longer seen in the office each day, the Journal notes.
  • On top of that, there's an allure to living in the big coastal cities that's impossible for smaller metros to replicate. Many young people choose New York or San Francisco or Los Angeles precisely because of the bustling crowds and nightlife.

The bottom line: For second-tier cities, "the starting viewpoint should be a skepticism about massive change and decentralization," Muro said. "But announcements like those of Facebook and Twitter do suggest that the current status quo might not be immutable."

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