The Economic Dark Side of the Global Remote Work Movement


Skift Take

A new study from the USC Marshall School of Business is probably not what most people want to hear, especially those travel and hospitality businesses investing for permanent change.
Falling wages and deteriorating public transportation — this isn’t the utopia most people expected following the shift to remote work. But new economic modeling from the University of Southern California Marshall School of Business is painting a less rosy future, and comes as more anthropological and sociological studies discover other negative effects. Is now a good time for travel companies to rethink their strategies, which range from co-working pushes to embracing subscription packages? Should hotel groups spend so much time and effort promoting longer-stay packages? Adapting new business models has been a natural, if not essential, strategy in the face of such widespread travel disruption. And there has been a short-term economic boost after the sudden shift to remote work, according to one urban economist; but in the long run it could lead to a net loss in economic activity. USC Marshall School of Business professor Andrii Parkhomenko explains it this way: less centralized working means wages will inevitably drop over time based on how remote working is less efficient. Parkhomenko has been running the numbers as part of his "Spatial Implications of Telecommuting" study. "If you look at a standard economic model, you see it’s based on the assumption that everybody commutes to work every day. That assumption wasn’t questioned before Covid," he said. "If you assume workers don’t commute every day, or at all, then the way cities will