Posted by: Josh Lehner | January 16, 2019

Working from Home

As an economist, I’m fascinated and intrigued by start-ups and entrepreneurship. In part because they’re so vital to productivity and economic growth. In part because they’re at or near historic lows. And in part because we do not fully understand the motivations and drivers of these trends. I also tend to lump the self-employed and those working from home into this same general discussion. In my mind, from a big picture perspective, they all kinda, sorta do the same thing. They’re on their own. They’ve identified an opportunity to better serve customers and clients, or find a better work-life balance for themselves, and the like.

However this is not entirely true. There is overlap among these groups, but it is not perfect. For instance, here in Oregon only about one-third of the self-employed work from home, while about half of those working from home are self-employed. There is a wider and more diverse swath of such workers than I thought when it comes to workplace arrangements. The rest of this post will specifically focus on those working from home.

It turns out that significantly more Oregonians work from home than in the typical state. In fact, Oregon ranks #2 behind Colorado when looking across the country. Vermont, Utah, and Montana round out the Top 5, with our northern neighbor Washington ranking sixth. Furthermore, such work arrangements are rising somewhat over time, with much of the increase occurring in the past couple of years.

If we dig down and look across the nation’s metro areas, we find that Bend is the Work from Home Capitol of America. Bend ranks first among the 288 MSAs from which I pulled published Census data. Not far behind, Medford ranks #4 in the country. All of Oregon’s metro areas rank in the top quarter nationwide. (Both the published Census tables and the microdata missed some smaller metros, including Albany and Grants Pass.) The rest of the Top 10 include: Boulder, Lawton, Asheville, Fort Collins, Raleigh, Santa Cruz, Denver, and Austin.

The questions then become, who are these workers, what do they do, and why do they work from home? We have some partial answers here that I find pretty interesting.

First, those who work from home are about 6 years older than the workforce overall (median age is late 40s). Their earnings are also bimodal in that they have a larger share earning more than $75,000 per year, but also more with low or negative incomes (I assume due to business losses). Such workers are seen across all major occupational groups. Again, they represent a wide and diverse swath of the economy.

Why these folks work from home is a bit more complicated. Using an updated Housing Trilemma dataset, I was able to look at the nation’s 100 largest metro areas and see which variables influenced the patterns of working from home. What I found in a basic model is that job growth, start-ups, and quality of life all are positively correlated with working from home and statistically significant. I also found that home prices were negatively correlated and statistically significant; that is, the higher home prices are, the lower the share of working from home. What I also found was that the cost of living in general, commute times, and software jobs were not statistically significant. They were all correlated with working from home and had the expected sign, but offered no explanatory power in the model.

My takeaway is that economic vitality and quality of life drive the working from home patterns see among large metros, with housing costs offering an assist.

Lastly, I want to highlight two key aspects seen in the data. One is that among high work from home regions of the country, these higher shares are seen across all occupational groups. And just like Portland leads the typical metro area — see chart below — Portland similarly trails across the board when stacked up against Austin and Denver. Note that Art/Design/Entertainment is driven by higher work from home concentrations among designers, writers, photographers, and artists.

The second major item I found was that when looking at Bend, Eugene, and Medford specifically, these individuals who work from home are diversifying their regional economies. I feel like I’m burying the lede here because this is, in my mind, the most important finding from an economic perspective. That is, the occupations that have high local concentrations in those working from home, are also underrepresented occupations when looking at the regional economy.

In Bend we can see this among Architecture and Engineering, Business, Finance, Legal, and Arts, Design, and Entertainment occupations. These are individuals who most likely want to live in a place like Bend and either brought their job with them or set out on their own to make it work, which we have discussed before with Bend. These types of jobs are also more portable than janitors, teachers, chefs, and the like. They also tend to require a college degree. See here for a similar Eugene chart and here for a Medford version.

Bottom Line: Working from home is on the rise, but remains a small component of a regional economy. Importantly, these folks working from home are diversifying their regional economies, even more so than the payroll survey (employment report) may indicate. Remember about half of all Oregonians who work from home are self-employed and thus not generally counted in the payroll survey. One potential risk is that working from home (remote work) may be more susceptible during a downturn when companies tend to cut the spokes and consolidate at the hub. This is our office’s long-standing concern for the outlook of Oregon’s software sector. However this is just a risk and not a foregone conclusion. Some businesses do not even have physical space any more, for instance. These trends will be interesting to watch in general and over the next business cycle. Now if we could just get more start-ups and better productivity growth…


Responses

  1. […] Analysis put out some interesting research this morning that concludes that Bend is the “Work from Home Capital of America.” According to economist Joshua Lehner, 12.1% of people living in Bend report that they work […]

  2. […] the case, it should come as no surprise that a lot of Oregonians work from home. So many, in fact, that our fair state is ranked second among states for people who work from […]

  3. […] Source: Working from Home | Oregon Office of Economic Analysis […]

  4. […] Analysis, the Bend Metropolitan Statistical Area (which is all of Deschutes County) is the “work from home capitol of America,” with the highest rate of working from home of any MSA in the […]

  5. […] said he decided to dig into data after reading an Oregonian article on Portland’s ranking among large metro areas for people […]

  6. […] personally and professionally by working remotely in our mid-sized, mountain town. According to a new report by the Oregon Office of Economic Analysis, Bend now leads the nation in telecommuting careers, […]


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