What if, instead of adding new housing to accommodate the employees in an area, the state helped employees go to where housing is more affordable? Decoupling housing choices from jobs offers an immediate opportunity for workers to reduce their housing costs. In the process, it may also offer the greatest opportunity to reduce the state’s carbon footprint, by reducing daily commuting.
The experience of responding to the coronavirus has caused companies to introduce or expand remote work in their operations. One estimate found that during the pandemic approximately 42 percent of the American labor force was working from home full time. As a consequence, there has been a big impact on many rental markets: Since March 2020, the median rent in San Francisco fell nearly 25 percent, while Oakland, Los Angeles, and San Diego also saw rents drop or at least finally flatten.
In a sense, for the companies affected by stay-at-home orders, the pandemic was a coerced pilot program to evaluate different networking and communications technologies. The result of the experience is that companies, such as Facebook, Google, Twitter, and Morgan Stanley, will expand their earlier program to permanently implement a remote working arrangement for some employees. They are doing it because, in general, the new telecommuting technologies can offer companies opportunities to save money. As such, we can expect to see companies continue an expanded use of remote access work and to decentralize their company structure, even after the pandemic resides and it is safe to fully return to the office.
Moreover, one other reason companies will likely extend tele-employment arrangements is because they are popular with employees. One survey showed that three quarters of workers would like to continue to work from home at least several days a week, with a third indicating they would like to work from home every day. Moreover, in the same survey, around 28 percent of workers indicated that it was at least somewhat likely they would move to a new city or state if they were able to work remotely indefinitely.
Employees living in communities with high housing can solve the housing problem by voting with their feet. More distant communities with lower housing costs could become alternatives for employees who didn’t have to daily commute. For example, according to Trulia, in 2019, median housing costs for Santa Maria and Lompoc are $388,000 and $350,000, respectively. In contrast, the cost of a home in Santa Barbara is $1,105,000 and $779,500 in Goleta. These communities are about 1 hour or so apart (55-65 miles). More separated is New Cuyama, which lies on the other side of the Santa Ynez Mountains from Santa Barbara, with travel times of about two hours apart or 120 miles apart. There, median house costs are $156,500, or almost $1 million less than the costs of a home in Santa Barbara. To the extent that employees do not have to regularly compute to an office but can work from home and only occasionally visit the main office or a smaller satellite office, they can live farther from the company, avoid commuting costs, and have a wider range of communities in which to live.
Is this a solution to the housing crisis that the state would want to promote? The state can start by assisting companies to evaluate the benefits and challenges of remote work to them. The state can offer companies tax credits or deductions to cover costs of a restructuring plan for decentralizing its employees and office space. The state might also offer tax breaks for those employees relocating within California, potentially favoring some counties or cities more than others where the benefits to the region — improving jobs-housing imbalance — are great.
However, while the state’s goal may be to guide the impacts of this communications technological force motivating companies’ management decisions, it does not want to underwrite the destruction of its cities. Invariably, cities are going to be significantly affected by the outmigration of employees. School districts are built to support a target number of children, so reduced student numbers may cause the district to shut down schools. Cities plan for expected levels of water, road, and sewage use based on assumed numbers of residents. In addition, in allowing its employees to work from home, some firms may then find it profitable to reduce their office space. These decisions can have big consequences for local economies: undermining city tax revenues, reducing office construction, and decreasing the viability of nearby restaurants and shops.
The state can support the cities in a number of ways. It can help cities develop mitigation plans to make a transition less painful. While some outmigration may be beneficial for a city in reducing high rents and overcrowding, cities may evaluate repurposing empty office spaces and vacated shopping malls and reimagining its downtown. These new mitigation plans could form the basis for a new partnership between the cities and the state. Finally, the state should adjust the cities’ obligation under state housing laws, which requires cities and counties to plan for increased housing numbers.
Expanding remote employment offers the possibility that the state can reduce housing costs and expand housing options, without adding massive levels of high-density housing to neighborhoods that significantly change community character. In the process, it can contribute to reduced carbon emissions.
Stuart Kasdin is a member of the Goleta City Council and teaches Political Science at Santa Barbara City College. This article is part 5 of an ongoing series on way to achieve affordable housing.