The post-COVID world fosters high-quality communities
We are now one year after the darkest days of the COVID recession.
As the economy slowly begins to recover, we must recognize that Indiana has lost another six years of job creation. Total employment in Indiana is back to April 2015 levels, and there are only 1,500 more people working than we had in the summer of 2000. That should be some pretty disappointing news. . Yet as we reflect on the pace and shape of the recovery, it’s heartening to wonder what good this disaster could have done.
There are a lot of little things we can point out. Household savings have skyrocketed and tens of millions of families have invested in their housing stock.
As with any recession, there is what economist Joseph Schumpeter has called “creative destruction”. It is about shutting down failed businesses and reallocating their assets to more productive purposes. There are glimmers of hope for business productivity growth, which has languished over the past decade. But one of the biggest changes is a big step forward in our use of communication technologies in business, government and education.
It is difficult to overestimate this latter effect. A year ago, I didn’t know what Zoom was. Today I have mastered several types of video conferencing software and pre-recorded an entire graduate class on Open Broadcaster Software. Even old dogs can learn new tricks.
Today, around 1 in 5 workers continue to work remotely, and 75% of office workers do so. A significant portion of these workers – according to some studies, one in four, but at least one in six nationwide – will continue to work from home after the pandemic. It will have all kinds of effects, from reducing demand for downtown restaurants to reducing commuting congestion. The substantial shift to working online will also change where workers and their families choose to live.
Between 23 million and 35 million households will once again find themselves freed from the need to live within an easy daily commute to work. It will not result in a complete loss of geographic attachment. Most of these workers will still have to live near the same metropolitan area, so travel within metropolitan areas will be more common than travel between cities. Nonetheless, it will change the choices families can make and accelerate the already growing tendency of residents to choose communities with better quality of life.
Of course, that means picking winners and losers when families choose to live in different places. But, this is a clear example where the winners will be places that have invested in neighborhoods and schools.
The losers will be those who stuck to the community development models of the 1960s or who addressed the symptoms of population loss rather than the cause. As painful as it can be for some places, it is better that good policies receive a big reward and bad policies suffer.
Significantly reduced commuting requirements leave workers free to think longer term about their residency decisions. Sure, they’ll always want to be near the thick labor market regions big cities offer, but now they can look for homes further away than a daily commute requires. This can reduce population growth to a number of places outside the formal metropolitan borders.
Here in Indiana, I think there is a list of likely winners. These are places that have made substantial community improvements over the past decades and continue to provide good for great public schools. Let me focus on central Indiana as an example.
A family that moves to the Indianapolis area for office work that can be done remotely maybe 80% of the time can cast a wide net. Places like Kokomo, Shelbyville, Rushville or dozens of places in western Hancock County with good schools and great neighborhoods will see growth. North to Daleville and Yorktown, northwest to Lafayette and south to Columbus and Bloomington are certain to see busier real estate markets and new families looking around.
Many other places, too many to mention, will fare badly. Newly mobile families aren’t interested in “ worker housing, ” a fancy new business park, or unsubstantiated claims on schools and neighborhoods. The newly released office workers are possibly the most savvy group of Americans to ever undertake a large-scale migration. They will do their homework.
The formula for success is pretty clear. Communities need good schools, safe and livable communities, and some public amenities. I have written this often, but I need to be more specific. Population growth in Indiana now occurs almost only in places with good schools. This change will accelerate this dynamic.
In the last year for which we have data, school corporations rated “A” saw their enrollment increase by 1.3%. “B” companies were down 0.06% and “C” companies lost 0.11%. The “D” suffered a loss of 0.79% and the “F” lost 9.75% of the students.
To be clear, it’s not the fault of a bad scoring system. This story is the result of families voting with their feet in an exodus that began long before anyone thought of evaluating schools.
It’s hard to overestimate the magnitude this could have.
Indiana’s current share of this newly mobile workforce is between 450,000 and 700,000 families.
It will take a few years for these decisions to be made. Workers and businesses have yet to explore the full scope of remote working. Families will take time to research where they want to live, and housing markets will have to adapt. It will take over a year or two, and there is some uncertainty about how many new families might find Indiana of interest.
There is always also a lot of certainty. I’m sure for much of Indiana this is a once in a lifetime opportunity. This opportunity will reward those who have prepared. For those who haven’t, this is a lost chance for growth.
Michael J. Hicks is Director of the Center for Business and Economic Research and Associate Professor of Economics at Miller College of Business at Ball State University. Send your comments to [email protected]