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Thursday, February 28, 2019

Government and Amazon Can’t Save the Rural Job Market, but Remote Work Just Might

This a sustainable way to build up struggling cities—looking to the government for handouts is not.

Image Credit: Pixabay

It’s no secret that many small towns in America are facing an economic crisis where there simply aren’t enough jobs to go around. As a result, many states are losing young talent to major metropolitan cities that offer better career opportunities—and rural America is being hit the hardest. Add in the reality that the millennial generation is saddled with record levels of student debt, and the chances of young professionals staying in their small cities and rural towns to pursue a career are lower than ever. Clearly, something needs to be done to keep local economies going, and that doesn’t mean government handouts.

Tax incentives and handouts are bad, crony approaches to fixing the problem, and ones that simply don’t work. In fact, the Institute on Taxation and Economic Policy estimated that states and localities across the country devote up to $50 billion to tax incentives every year hoping to bring in new business and create jobs. The results are often dismal, leaving struggling cities in worse condition.

There’s another, better solution: Companies and private organizations should offer more opportunities for remote work to stay competitive among young workers and help struggling cities thrive. Since the cost of living is much lower when compared to cities, this would give young professionals the opportunity to live in rural areas and have greater economic opportunities.

Remote Work Can Help Revive Rural Areas

Thankfully, remote work is no longer as uncommon as it was decades ago. More companies are embracing telecommuting and remote work to attract and retain top talent. In fact, telecommuting rose 79 percent between 2005 and 2012, and by 2014, it made up 2.6 percent of the American workforce. This is a low-cost solution that could positively impact struggling towns.In a hyper-competitive market where hopping from job to job is now the norm, companies are forced to make their benefits more attractive and flexible—lest their employees leave them behind. Implementing remote work not only helps companies stay competitive, but it also saves money. When American Express adopted telecommuting as an option for workers, they saved between $10 to $15 million in real estate costs alone.

So the results are clear: Remote work works. But can it solve the talent crisis in our nation’s most vulnerable communities? It certainly can’t hurt.

There are many complex issues that must be addressed before the job crisis in rural America and other small cities can be completely fixed, but implementing remote work on a larger scale is a step in the right direction. Increasing jobs’ accessibility will keep top talent in the towns that need them the most, especially since most Americans would prefer to live in rural areas, anyway. If people are leaving these towns in search of jobs, remote work could bring the jobs to them. This is a low-cost solution that could positively impact struggling towns.

This a sustainable way to build up struggling cities—looking to the government for handouts is not.

Crony Capitalism Hasn’t Solved the Problem

Relying on government to solve these issues almost always does more harm than good. There have been countless examples of state governments promising to create jobs by giving companies tax breaks. The idea is that tax breaks and incentives will bring companies to struggling states, but the results disprove this thinking. Take, for example, New Jersey. After offering $11 billion in tax incentives to multiple businesses since 2005, the state is now struggling to prove those jobs were added. Out of the 15,000 jobs promised, 3,000 cannot even be verified.

Time and time again these promises are made, taxpayers front the money, and nothing changes.

Unfortunately, these types of crony deals have become the norm. Wisconsin bought into the lie that tax incentives would create jobs to boost their economy when they made a deal with the electronics manufacturer Foxconn. Wisconsin politicians offered $150 million in sales tax exemptions and $2.9 billion in tax credits to Foxconn thinking it would provide 13,000 jobs as early as 2020. As of January 2019, Foxconn reported only having hired 178 full-time employees in Wisconsin, missing its first-year hiring projections by 82 percent.

Time and time again these promises are made, taxpayers front the money, and nothing changes. Rural towns in vulnerable economic conditions cannot afford this kind of crony capitalism.

Despite this reality, politicians sing the same tune to struggling cities, promising jobs and economic prosperity by way of corporate saviors—and it’s the everyday citizens who are left worse off. Companies make their deals and get their tax breaks only to leave these towns behind.

Instead of the government making false promises to create jobs by giving companies tax breaks to move into these towns, companies should instead offer more remote work opportunities to cut their own costs, remain competitive, and practice conscious capitalism to offer their employees a higher quality of life.

The private sector has an opportunity to step up. Remote work presents a mutually beneficial solution for businesses focused on their bottom line and struggling cities looking to retain young talent. If businesses embrace remote work instead of shady deals with the government, everybody wins.

  • Ashley Keimach is a contributing writer at Young Voices. She is most interested in tech policy and the impact it has on economic mobility. Follow her on Twitter: @KeimachAshley.