The National Bureau of Economic Research’s working paper “The Geography of Remote Work” finds that those who were able to transition to remote work positions left major cities during the pandemic, while workers in the service industry faced the brunt of economic insecurity.
The paper, which was co-authored by researchers from Columbia Universities, Georgetown, Princeton, and the University of California, San Diego, revealed that high-skilled employees fled cities like New York and San Francisco during the pandemic to escape the less-than-ideal density of these areas.
As a result, surrounding businesses and their employees that were supported by these workers took a financial hit.
Neighborhoods with the largest number of highly skilled workers saw the most significant dip in visits to consumer service businesses, as well as the biggest drops in spending at these businesses. These establishments include restaurants, coffee shops, hair salons, and others.
“High-skill service workers’ flight into their homes and to locations outside big, dense cities had adverse consequences for the urban economies they left behind,” the authors wrote. “The low-skill service workers in these neighborhoods suffered from this change in consumption behavior: Low-skill consumer service workers in big cities lost more hours per worker than their rural counterparts and have been most affected by the pandemic’s economic fallout.”