Remote work is here to stay, and experts say Philly needs to adapt to compete

When COVID-19 prompted the Great Lockdown of 2020, it hollowed out Philadelphia’s city core. Sidewalks that teemed with commuters were eerily empty. About 115,000 people a day vanished, as nine of every 10 Center City workers stayed home. Retailers serving that foot traffic shriveled.

Citywide, about 120,000 jobs disappeared. SEPTA trains, buses and trolleys ran mostly empty, leaving behind $1 million a day of red ink. Staying home in the suburbs, workers gleefully skipped paying Philadelphia’s wage tax, which siphoned millions of dollars from the city’s chronically stressed budget.

A year later, vaccinations have freed Americans from lockdowns and masks, and life and jobs are returning to Philadelphia. However, COVID-19 proved that widespread work from home actually works, for both employees and employers. Liberated from commutes, workers had more time for life outside of work. Employers discovered that productivity actually rose and overhead costs could be cut as the need for office space shrinks.

For a region that has invested billions of dollars over decades to facilitate commuting, the seismic shift to remote work raises profound questions about the future.

Much of what’s said about the pandemic is overreaction or hype, says urban affairs expert Richard Florida, “but the one thing that’s real is the shift to remote work.” Pre-pandemic, he says, only about 5% of all workdays in the United States were conducted off-site. Florida expects that share to quadruple, to more than 20%.

Signs are pointing that way. Major Center City employer FMC is reopening with an option for at least some workers to apply for a hybrid home-and-office schedule, according to WHYY. Malvern-based asset manager Vanguard Group announced in May that many of its 17,000-plus employees will be able to work from home two days a week.

» READ MORE: Small-business COVID-19 stimulus funds: What’s still available?

“COVID fundamentally changed the DNA of work. It’s no longer a place you go. It’s what you do,” says Callie Yost, CEO of Flex Strategy Group, which advises employers on flexible work arrangements. The pandemic accelerated a generational change that she says was well under way as a wave of young, tech-savvy, “digital natives” entered the workforce. A lot of business leaders have “muscle memory” of work as a physical place, says Yost. “That’s colliding with what employees know they can do.”

A poll for Bloomberg News found that 39% of adults would leave a job that didn’t offer at least some flexibility in remote work. In Prudential’s pulse of the American Worker Survey, 42% shared the same view. Empowered by remote work technology and a tight labor market, many employees are turning that bold talk into action.

Tamiera Harris, CEO of Black Career Coach, herself works remotely from Philadelphia with clients across the country. “Remote work is absolutely a positive for our clients,” she says. “It has opened up endless job opportunities all over the United States.”

After surveying 10,000 knowledge workers in the U.S. and five other countries, the think tank Future Forum reported: “Giving employees flexibility in when and where they work is not a perk; it’s a core principle of how a modern company operates.”

But don’t rush to judgment about the changes that remote work will wreak, says Paul Levy, president and CEO of the Center City District. “Recognize that we’re barely in recovery from trauma,” he says. “Lots of people got very comfortable not going into the office. Things could look very different six months from now.”

There are still a lot of reasons to gather workers in an office: training and orienting new employees, networking, mentoring, and working on group tasks.

In Center City, Levy says, “smaller employers are all back. At bigger ones, all the talk is about a return in September,” with many looking at some kind of hybrid home-and-office schedule.

The urbanist Florida envisions a future where workers no longer commute into what he calls “a cubicle farm.” Going into the office, in Florida’s view, will start to resemble a one-day business trip, including meals that build relationships and perhaps a sampling of evening arts or culture.

Trends on this front are not clear yet, says Katie Martin, senior manager with the Pew Charitable Trusts’ Philadelphia research and policy initiative.

It would be a mistake for civic and government leaders to wait to see how these trends play out, according to Amy Liu, director of the Brookings Metropolitan Policy Program. “The future city is not a prediction game — it’s a choice,” she wrote in a commentary for Bloomberg City Lab.

In her commentary, Liu said, “Cities should structure their economies for the workers they already have — not just to lure new ones.”

Levy would agree. The first priority, he says, is to ensure that the city is safe and clean for residents and workers. Another key, he says, is good transit. SEPTA has big ambitions: revamp the bus network, overhaul the trolley system, and expand regional rail service. However, it doesn’t have the billions needed to do all that and fix its aging infrastructure.

One of Philadelphia’s biggest draws for mobile talent is that it’s still possible to buy a nice house at an affordable price. But last year, home sale prices hit record levels despite the pandemic. The scheduled phaseout of the 10-year tax abatement on new residences prompted a boom in residential building permits last year; what happens next is unclear. More than half of renters struggle to afford their housing, as it costs more than 30% of their income, according to Pew’s research.

Philadelphia has some “extraordinary advantages” in the quality of life, according to a recent report from the Center City District. Among them are “an accessible international airport, strong transit, diverse, affordable and walkable neighborhoods, and an abundance of parks” along with widespread opportunities in the arts, education, and culture.

Unfortunately, it appears that report’s upbeat view is not widely shared. Philadelphia has fallen to No. 118 on the latest U.S. News and World Report’s list of 150 “Best Places to Live.” Philadelphia’s ability to recruit millennials seems to have peaked about 2011 and has fallen since then, according to urbanist Florida’s 2019 report.

In a world where so many high-skilled, highly paid workers are geographically mobile, there’s intense competition for talent. And it can come from unlikely places.

In Montana, the pandemic turned the vibrant small cities of Butte and Bozeman into “Zoom boomtowns,” and drove housing prices painfully high. In Oklahoma, Tulsa Remote uses private foundation funds to lure remote workers with offers of $10,000 and a network of social and professional support.

Feekpah Kerkula, 29, who has a master’s degrees in cybersecurity and public health, is the kind of young, up-and-coming talent Philadelphia would be glad to have. But the city lost her to Tulsa.

A friend of hers was applying to Tulsa Remote and kept encouraging Kerkula to do the same. When Tulsa Remote accepted Kerkula in late 2020, she decided to go for it. As an aspiring entrepreneur, “I really didn’t see opportunities in Philadelphia,” Kerkula says. She especially appreciates the resources and mentorship that come with Tulsa Remote. “I sought those resources in Philadelphia but I really didn’t see them.”

Although some do leave Philadelphia in search of better schools or a quieter setting, the No. 1 reason for moving, according to a 2019 report from the Pew Charitable Trusts, is jobs. When these high-paid, high-skill workers go, they take substantial wage tax payments and disposable income with them.

Richard Florida urges Philadelphia and other cities to keep investing in a stimulating, livable downtown, so it is more than just a funnel for commuters, he told Business Insider. Levy’s group notes that Philadelphia has made great strides on that front — the Center City region’s population has grown 29%, almost six times faster than the city as a whole, since 2000.

Philadelphia needs to attract businesses that thrive on face-to-face contact, Levy says. He also thinks Philadelphia has a huge opportunity to host satellite locations for businesses based in more expensive cities. Given the remote work boom, though, Florida emphasizes that cities need to compete to attract talented people, more so than trying to lure the companies.

How will Philadelphia know it’s keeping up in that competition? Pay attention to the percentage of residents who are college graduates. In the early 2000s, it was only 17%, according to Campus Philly, a nonprofit that introduces the region’s college students to the city and job opportunities with employers.

By 2019, the share of Philadelphians with at least a college degree had grown to 31% — better than the Rust Belt cities of Detroit and Cleveland and the Sunbelt boom town of Phoenix, but far lower than Boston, Washington, Pittsburgh, and even Baltimore.

Attracting highly mobile, high-skilled workers will not bring prosperity for all. Many residents still endure deep poverty; gun violence; unaffordable, substandard housing; and the fallout from opioid abuse.

“The pandemic is really accentuating a lot of the inequality we’ve seen,” Florida says.

Philadelphia’s Black and Hispanic residents were far more likely than whites to lose jobs and income during the pandemic, according to Pew’s 2021 State of the City report. Many will face eviction as the national moratorium protecting tenants expires July 31.

In her Bloomberg commentary, Liu wrote that tackling these kinds of challenges is “not charity or social policy,” it’s fundamental economic sense. “There is market demand,” she noted, “to rebuild better and promote density, walkability, reimagined office districts, easier commutes, and new retail and commercial corridors across all neighborhoods.”

Pew’s 2021 State of the City report asked, “Will Philadelphia be a beneficiary or a victim of the trend toward remote work?”

Answer: That’s to be determined , but the future is there to grasp.

The Future of Work is produced with support from the William Penn Foundation and the Lenfest Institute for Journalism. Editorial content is created independently of the project’s donors.