While remote work has been around for a very long time, its popularity has peaked since the COVID-19 pandemic. In the United States alone, approximately 42% of workers were operating from home full-time during the height of the crisis, accounting for more than two-thirds of the country's economic activity. By 2024, remote work had stabilised at levels three to four times higher than pre-pandemic figures.

Beyond the flexibility and convenience it offers, remote work is also reshaping local economies in various ways. It has opened up opportunities for people to perform their jobs from virtually anywhere. High-speed internet, online collaboration tools, and virtual communication platforms mean that physical proximity to an office is no longer essential.

This digital evolution has impacted the economies of small towns, transformed housing markets, and boosted local entrepreneurship. The influx of talent and growth of local talent have led to significant social and economic changes at the local level. However, these impacts are not always positive.

In this article, we will examine the local economic influence of remote workers, including the good, the bad, and the ugly.

The positive impacts of remote workers on local economies

Remote workers help local economies by spending their earnings in their communities, supporting local businesses, creating more job options, and sometimes slowing the movement of people to big cities. Here are some of the ways remote work benefits local economies:

• Stimulation of local businesses: Most remote workers spend their income on local goods and services, like groceries and restaurants. This spending helps boost local sales and supports small businesses.
• Diversification of local economies: In the past, people often had to move to bigger cities for work, which hurt small towns. Now, remote work lets people stay and contribute to their local communities, creating new opportunities and economic growth.
• Reduced urban migration: Similarly, remote work allows professionals to live outside traditional economic centres, relieving the pressure on overloaded city infrastructure and providing economic opportunities in underserved rural or suburban areas.
• Job creation and skill development: As remote work grows, it creates new jobs and increases demand for local services like co-working spaces and cafes. Employers can hire from a larger talent pool, and workers can connect with clients from different countries.
• Increased inclusivity: Remote work provides a pathway for young professionals and other workers to participate in the global workforce without geographic limitations, leading to greater economic participation and skill development.
• Expanding tax bases and government revenues: When remote workers relocate, they contribute to local tax revenues through consumption taxes, property rentals, or business registration. Countries offering digital nomad visas also generate income from application fees and related services. This new tax base can support infrastructure improvements, healthcare, and community development projects.

Also read: Best apps for remote workers and global freelancers

The negative impacts of remote workers on local economies

While the shift to digital jobs has helped local economies, there are also some downsides. Here are a few negative effects of remote work on local communities:

• Competition for local talent: Companies may hire remote workers from other locations instead of local candidates, making it harder for local skilled workers to find employment. Job hunting, which was once a local competition, has now become a global rat race.
• Affects office-dependent roles and businesses: Businesses like restaurants sometimes rely on commercial activities around them for sales. But when many of these potential customers now work from home, it might affect their businesses. In fact, consumer visits to establishments dropped by up to 80% in neighbourhoods with high remote work rates during the pandemic.  Many businesses no longer require physical office spaces or opt for smaller working spaces. While this might have reduced the business’ overhead cost, it has also potentially cost the cleaners, fixers, security personnel, janitors and other unskilled workers their jobs.
• Driving up housing and rental markets: While the influx of remote workers stimulates local economies, it can also strain housing markets. Cities like Lisbon, Mexico City, and Bali have seen sharp increases in rents due to rising demand from international professionals. In some cases, locals are priced out of central neighbourhoods, sparking debates around gentrification and housing policy. This dual effect highlights the need for local governments to strike a balance between welcoming remote workers and protecting affordable housing for residents.

Challenges of remote work

Having explored the good and the bad of remote work for local economies, now let’s look at the tricky side. While significant progress has been made in improving the work experiences of remote workers, many personal and operational challenges still persist that indirectly influence local economies.

One challenge is measuring and keeping up productivity. Many people find it hard to focus or stay organised when working from home, which can slow down innovation in local tech companies or startups that need teamwork. Lower productivity can reduce overall economic growth.

While it sounds great that local talent can work with global clients and earn in foreign currencies, many remote workers still experience challenges managing international payments. Traditional banks are plagued with cumbersome paperwork, delayed payment processing, exorbitant charges, and unfavourable conversion rates. One way many remote workers mitigate this challenge is by opting for a reliable digital payment tool like Grey.

Also read: How to save in USD as a remote worker

Managing payments with ease with Grey

Remote workers now make up a large part of the workforce and are helping to change local economies everywhere. Their spending helps local businesses, their skills drive innovation, and their presence supports new infrastructure. Still, they also bring challenges like higher housing costs, social changes, and payment issues.

Grey offers multi-currency accounts, so users can manage money in USD, GBP, and EUR, and get good exchange rates to local currencies. Transactions are quick, affordable, and have no hidden fees.

Sign up on Grey today to make your international payments easier.

‍