Digital age requires a new kind of economic development — remote work

March 9, 2023 7:00 am

About two dozen Indiana cities are already working with the Indiana Economic Development Corporation to take advantage of recruiting remote workers — people rather than factories. The effort, funded with a budget of $2.5 million, is expected to bring in hundreds of new residents to the state this year. That would result in tens of millions in annual economic impact. (Getty Images)

Mayors are some of my very favorite people. They are public servants, and problem-solvers of the highest order. And the pressing problem on most of their minds is economic development. Specifically, “How can I help my town grow?”

For small and mid-size cities, attracting new businesses that can provide their citizens meaningful jobs and the community the tax base it needs to provide basic services can feel like an impossible task. Add a declining population, retiring Baby Boomers and the age-old struggle to keep younger generations from ditching their hometowns for adventure across state lines, and it can be overwhelming.

Negotiating over tax incentives, zoning and the myriad issues that comes with enticing companies large and small is lengthy and often contentious. It can take 18-36 months for a company to relocate and 3-5 years before that company reaches scale. Worse, Brookings research suggests that at least 75% of the time, typical incentives do not affect a business’s decision on where to locate and create jobs—they’re all cost and limited benefit.

But too many mayors and economic development groups still approach economic development with a single-focus like Charlie Brown, always thinking today will be the day they send Lucy’s football soaring across the field.

There’s a new game in town, though. About two dozen Indiana cities are already working with the Indiana Economic Development Corporation to take advantage of recruiting remote workers — people rather than factories. The effort, funded with a budget of $2.5 million, is expected to bring in hundreds of new residents to the state this year. That would result in tens of millions in annual economic impact.

Remote work is the future

More than 40 million Americans are expected to be fully remote in the next five years. And an estimated 15 million people with remote work capability actively want to move to communities where they can live their best lives.

Some of these people want rural areas or college towns. Some want larger cities. Some want mountains; some want water; some want a place where they can afford a bigger house and yard and better schools for their kids. They all want a better life. And thanks to remote work, they can have it.

Rather than give away tax revenue to corporations that may or may not deliver on all of their ambitions, why not incentivize these remote workers who actively want to relocate, and who, incidentally, bring a lot more than their tax dollars with them?

The beauty of recruiting people rather than bricks-and-mortar is that in addition to their jobs and tax base, they bring their families with them. They buy houses, go out to eat, buy all things they need to start their new life. They put their kids in school and extracurricular activities. They’re  eager to invest in the community.

Remote workers also bring guaranteed net new income compared to employers who promise thousands of new jobs when on average, only 10-30% of those go to state residents who are not already employed, per Brookings.

Rather than the months, or even years, it might take to land a computer chip manufacturing plant, or the zoning and environmental issues involved in building a massive, multi-billion dollar research and industrial park on farmland, remote workers make relocation decisions in three months, and tend to bring higher incomes according to data.

Our experience with this approach is that it’s a much less laborious process. It can even be fun. It requires that the community take time to really think about what it has to offer.  What makes them unique?

Muncie, led by an innovative mayor, has recruited more than two dozen households and $1.6M in local economic impact in their first year. The play is working.

Local efforts

Across Indiana, 23 communities are participating in the state-supported program to recruit remote workers thanks to legislation enacted April 2022. That year’s Senate Enrolled Act 361 allowed city leaders to secure funding for talent attraction and retention activities through local tax increment financing dollars. The IEDC provided $1.5 million in matching funds for Indiana mayors and economic development corporations to use to bolster their talent recruitment and retention initiatives. The program proved so popular, the IEDC added another $1 million to the matching fund element.

Last year, Indiana brought in more than  $12 million in economic impact by luring remote workers to its communities. A 2022 TECNA report showed Indiana’s growth in remote workers was second in the nation.

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Remote worker recruitment isn’t a fad, and it’s not something that any state should hoard like some kind of golden goose. There are 40 million geographic free agents in the U.S.  And many more globally. Indiana isn’t going to be the dream state for all of them. But towns like Greenfield, New Haven and Muncie, and regions like Evansville offer unique and wonderful opportunities at a cost of living that essentially gives remote workers from expensive areas a pay raise just by moving.

Move to New Haven with your remote job and you’ll get $5500 cash, passes to local events and enjoy bourbon and burgers with the mayor. Move to Muncie with your remote job and get $5000 cash, access to the Ball State University library and join a local nonprofit board. In Huntington, you’ll get $4500 in relocation costs, free 6-week summer camp for your kids and money to help pay for your family to visit. The incentives are as unique as the communities and don’t end at what I’ve just listed. They’re doing what we’ve been failing at for years: growing the population base.

Don’t take my word for it. I’ve got a vested interest in remote recruitment. Last spring, Matthew Kahn, provost professor of economics and spatial sciences at the University of Southern California Dornsife, published a book titled “Going Remote” and talked to Cardinal News about it.

“A debate in modern urban economics, related to improving quality of life in a distressed area is, do you invest in the place, like building a light rail system or building a new sports system? Or do you invest in people, having a pre-kindergarten program, having a job retraining program, or trying to lure talented people from other areas to move in? I’m a fan of investing in both.”

Mayors are problem solvers, and they care deeply about growing their economies.  While they wait on the next massive computer chip production facility, battery manufacturer or pharmaceutical complex, remote worker recruitment could be a more efficient and reliable option for growth. And it’s not going to be snatched away from them at the last moment

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Evan Hock
Evan Hock

Evan Hock is Co-Founder and Chief Operating Officer at MakeMyMove. Prior to MakeMyMove, he served as Vice President of Innovation at OurHealth and worked for nearly a decade at Angie’s List, holding key roles in Operations, Marketing and Product. He holds a BA in Religion from Anderson University.