MainStreet Macro: Location, location, location (and jobs)

Ask any real estate pro and they’ll tell you there are three essentials to selling a property – location, location, location.

Well, that may be changing. Location trends long in the making accelerated over the past year due to the pandemic and the newfound mobility of the workforce will have an impact on the housing market.

Last month, the economy recovered 916,000 jobs, winnowing away our deficit of 8.4 million jobs, with the bulk of them in services.  As we look forward to more hiring in coming months, let’s dig into how the geography of work–and life–is changing.

1. Where we live

A hallmark of the U.S. labor market historically has been the mobility of its workforce. Americans have always been willing to pick up and move to where the work was, which kept the jobs market dynamic and productive.

However, that willingness to move changed after the Great Recession. Places that were creating high-paying jobs–think Silicon Valley and New York City–became too expensive for many families to live in.

Lately, a lot fewer people have been willing to pack up the moving truck. In 2020, 28.9 million people reported living at a residence different from the one they occupied a year earlier, down from 31.4 million people in 2019. That’s a mover rate of about 9.3%, a record low in data going back to 1948.

Notably, this data was gathered in March last year, before the pandemic hit. With many employers embracing remote work and virtual work environments, people now might be even more unwilling to move to take a new job.

Source: U.S. Census Bureau Current Population Survey, 2020 Annual Social and Economic Supplement

2. Where we work

A lot of work can’t be done remotely. But roughly 40% of jobs can be done completely from home (or from the beach, depending on your preference) and some industries, like business services and finance, were able to make a near-seamless transition to remote work.  These employers and their workers have survived the pandemic relatively unscathed professionally.

But there are trends within these industries that deserve special attention. Office support workers were hit hard by the widespread closure of physical office buildings. This segment likely will improve as companies get back to normal, but the need for office space has been permanently altered and could curtail a full recovery for support staff.

One in five U.S. workers currently stills works from home, according to the Bureau of Labor Statistics.. Though several big companies have taken tentative steps to reopen offices, they’ve done so with a greater latitude for remote work. Fewer of us will be going back to the office full-time even after the recession recedes.

3. Where we shop

The shift to e-commerce and online sales also was well under way before the pandemic.  Concerns about the virus accelerated the shift as covid-wary consumers took to their laptops to shop. Retail has been hard-hit, but companies that swung to online sales were able to adapt and even thrive. Retail sales was the first economic indicator to rebound after the pandemic’s initial hit, driven in large part by ecommerce. While nothing can replace the joy of going into a store and making a purchase in real life (at least in my opinion), consumer comfort with buying online likely is here to stay.

My take

Last week, the White House released its eagerly anticipated $2 trillion “infrastructure plan”.

Why the quotes?  Because this plan, for all its girth, is also a tacit acknowledgement that “infrastructure” in the post-Covid economy is not about just roads and bridges. It’s also about digital connectivity and other services.

The administration wants everyone in the country to have access to high-speed internet. That means whether your Main Street is in a rural town or an urban center, you shouldn’t have to ask “can you hear me now?” ever again. It’s an acknowledgement that remote work and remote shopping are central to the way we live now.

The past three presidents have endorsed infrastructure spending as a way to expand the economy. At its best, infrastructure spending not only provides a near-term boost to jobs, it also has the potential to increase the productive capacity of the economy and raise living standards for a great number of households over the long term. 

The fly in the ointment is how to pay for it. Plans to deliver future infrastructure stimulus paid for with today’s money – such as higher corporate tax rates and taxes on global earnings – tend to unsettle bipartisan support.

For Main Street, that means staying alert to political compromises on both the spending and paying fronts as the bill moves through Congress.

With even the government on the digital bandwagon, you might be asking if we’ll ever leave the house again. Yes, of course. I’m going to my local mall soon to test my retail theories on a particular handbag this weekend. 

But the real takeaway might be that, in the new normal, Main Street economic activity will be far less confined by location.