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Expanded Incentives Support the Growth in Remote Work

Local economies are benefitting from adding new jobs — whether those jobs are performed on-site or remotely — and they are incentivizing them, too.

Q4 2020
So much about life has changed dramatically since the onset of the coronavirus pandemic. We’ve upped our game with hand hygiene and gotten used to wearing a mask in public. We’ve learned a lot about food carryout and delivery. And for millions of Americans, we’ve had a crash course in remote work.

Indeed, as of an October 2020 Gallup survey, fully a third of the American workforce was “always” working remotely, and another quarter said they were working remotely “sometimes.” The share of remote workers in October was down a fair amount from what it was earlier in the pandemic, but still huge. And of those still working remotely, two thirds said they’re happy to keep it that way, at least for now. Some are content to work at home in order to stay safe, but according to Gallup, quite a few have found they just like it this way.

Meanwhile, many employers have found they like it this way, too. A growing number of major companies are saying their workers can stay home indefinitely, maybe permanently. Overhead is down; risk is lower. And perhaps to the surprise of some previously skeptical executives, employees are figuring out how to make it work and stay productive, even as they alternate dog walks and loads of laundry with their Zoom meetings.

“With major companies such as Twitter, Nationwide Insurance, Nielsen, Shopify, Slack, and Zillow saying their workers can stay remote forever, it is projected that although the current percentage of remote workers will decline post-COVID, there will still be a major increase in remote workers,” says Tracy King Sharp, chief operating officer at Boyette Strategic Advisors. “Some are estimating that an approximately 25 to 30 percent of the workforce will be working from home multiple days per week once the crisis is over,” and that certainly matches what Gallup has found.

Telework Positions Taken into Account
It’s a remarkable shift in work practices and attitudes, and it upends some of what had been a standard way of thinking on the part of local and state officials in charge of building the job base. Economic development has pretty much forever been about facilitating new or expanded workplaces where people physically go to work. But it’s now clearer than ever that the local economy benefits from adding new jobs one way or another, regardless of whether those workers get dressed and drive to the office or put on their slippers and walk to the den.

Of those still working remotely, two thirds said they’re happy to keep it that way, at least for now. The state of Virginia had already figured this out well before we learned the new word “COVID.” Stephen Moret, the president and CEO of the Virginia Economic Development Partnership, says the state has adopted new statutory language that lets his organization take telework positions into account when offering performance-based economic development incentives. In other words, if a company is due some sort of incentive benefit tied to creating new jobs, it doesn’t matter where that work occurs, as long as those jobs are held by Virginia residents.

“The important thing to know is that this predated the pandemic, in our regular legislative session in 2019,” Moret says. “Remote work had been growing rapidly, and it occurred to us that most incentives presuppose a single geographic location for an economic development project.”

Not anymore. Now, all that matters is that the beneficiaries of these new jobs live and work in Virginia. The change, he says, covers all state agencies and the benefits they provide. For any state program that has something to do with encouraging new jobs, remote workers are just as good as on-site workers.

There’s been quite a bit of interest from employers, Moret says, notably in the technology sector. Tech companies already had learned the value of remote work even before the idea was forced upon them this past March.

But there’s a lot of interest, as well, in regions that might not have been first in line to land tech jobs in the past. “We have a strong desire to position rural regions and small metropolitan areas for growth,” Moret says. The extension of incentives means high-paying jobs can now land in a lot more places, and that is great for economies that may have been left behind before.

The Michigan Economic Development Corp. is onboard with the idea, too. Its Michigan Business Development Program offers the flexibility of counting remote-working jobs, as long as all program and job requirements are met. The MEDC can count jobs created on a statewide basis, not just at a particular physical location, provided that the jobs are created as a result of an expansion or location of business. If it encourages business and job growth in the state, why not?

Tech companies already had learned the value of remote work even before the idea was forced upon them this past March. For example, auto insurer Clearcover recently announced it would open a new virtual office in Detroit and create 300 jobs. Needless to say, now’s not the ideal time to open up a brand-new office and pack it with 300 people. But MEDC helped move the project forward with assistance supporting the creation of the 300 future hires under the stipulation that they must reside in Michigan, even if they’re working remotely for the foreseeable future.

Attracting New Residents
Meanwhile, Sharp says that quite a few jurisdictions have figured out just how valuable remote work can be to local economies, pandemic or not. And in fact, some communities are using the benefit of remote work to attract new gainfully employed taxpayer residents. Here are some examples of programs aimed at promoting remote work at specific locations:
  • The Tulsa Remote program enhances the Oklahoma city’s existing workforce by bringing in new talent. The program pays qualifying remote workers $10,000 to move to the city, some of it upfront, some in monthly stipends, and some after living in Tulsa for a year. Participants can even get help finding housing, plus free desk space at a downtown coworking facility. About 100 people took advantage of the program in 2019, and the hope was to bring in 250 more for 2020.
  • The Remote Shoals program aims to lure remote workers to The Shoals area of Alabama. The program looks for people with remote gigs or self-employment who have a minimum annual income of $52,000. If they move to the area, they can get an incentive of up to $10,000. This program also launched in 2019 and has drawn interest from across two thirds of the states.
  • The Savannah Remote Technology Worker Incentive offers a relocation reimbursement of $2,000 to qualified remote technology workers who make the move to the Georgia community. The Savannah Economic Development Authority had already offered a relocation reimbursement to qualifying companies moving to Chatham County. Back in May, the incentive was extended to individual workers, in hopes of attracting employees of large companies across the country to live in Savannah while working for a company based elsewhere.
New Layouts for Existing Workspaces
Clearly, remote work is not just a necessary response to the pandemic, but potentially a new way of doing business that can be beneficial to some jurisdictions that could really stand to attract high-paying remote jobs and the well-paid people who fill them. But what does it mean for the places where some of these jobs used to be planted in-person, such as downtown areas?

(Remote work) doesn’t necessarily mean downtown markets will be flooded with vacant space. It’s a mixed bag, according to Moret. It doesn’t necessarily mean downtown markets will be flooded with vacant space. “There’s an increase in remote working, but there also will be an increase in social distancing in terms of how offices are laid out,” he points out. That said, having fewer employees spaced out across more square feet per employee may be acceptable to landlords, but from the perspective of downtown retailers, fewer employees means fewer cups of coffee and lunches sold. Economic shifts and rumbles will continue, for sure, as the picture sorts itself out.

In the meantime, says Sharp, “there is also the prediction that the longer people work from home, a greater adoption of remote working will be seen. Before COVID, surveys repeatedly showed that around 80 percent of employees want to work from home at least some of the time.” And the October 2020 Gallup survey confirms that a lot of people are liking what they have been experiencing.

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