Tyler Jaggers was already thinking about leaving San Jose, California — the heart of Silicon Valley in northern California — when the COVID-19 pandemic forced him and millions of other Americans to work from home.
But for Jaggers, 40, who works in app development and at a school that teaches coding in Palo Alto, California, home was a small apartment in a city where the average rent for a one-bedroom apartment often exceeds $2,000. He wanted a house.
“If it wasn’t for COVID, I wouldn’t have been looking as aggressively. I was already interested in moving,” Jaggers said. “But once I was in the house all the time, I was much more aggressively looking and saving.”
For millions of Americans, the coronavirus pandemic has turned working from home into the new normal. As many have spent the past year working from home, what was first borne out of necessity is reshaping not just how people work remotely, but where they can do it.
In jobs where remote work is possible and working from home is now a permanent fixture, more employees are taking advantage of the idea that they can now work from anywhere.
And for some midsize cities in the Midwest that have traditionally spent millions in tax incentives to attract businesses, the idea of directly paying remote workers to move there is emerging as a new economic development strategy.
“Rather than compete strictly for the companies, we thought, why not go after talented, interesting, diverse remote workers?” said Grant Bumgarner, a community manager with Tulsa Remote, another local incentive program for remote workers in Oklahoma.
“We could get the workers without necessarily having to attract the company in its entirety.”
In Jaggers’ case, working remotely also meant the ability to relocate to a new city, no strings attached — and getting paid to do so.
Toward the end of last year, he became the first remote worker accepted into the Choose Topeka program, which offers up to $10,000 for employed, remote workers who relocate to Topeka or Shawnee County and purchase a home, with at least a one year commitment.
Most “pay to move” incentive programs are directed toward remote workers like Jaggers, who have the ability to pack up, relocate and still keep their job.
These programs are particularly attractive to workers like Jaggers, who may live in expensive metro areas and are looking for a lifestyle change, like living in a city where housing is more affordable.
“When I found out about Choose Topeka, I’m like, ‘Wow, this is gonna be a major success, I’ll be able to spend more and do more,’” Jaggers said.
Kansas City, Missouri, doesn’t currently have a program in place like that incentivizes remote workers. But it’s something Assistant City Manager Rick Usher, who’s involved in small-business entrepreneurship and digital equity initiatives in the city, has been interested in.
Usher points to factors like a lower cost of living, the ability to travel to other cities through the Kansas City airport and the presence of gigabit, high-speed internet that make Kansas City a hub for remote workers.
“We have the infrastructure,” he said. “Infrastructure being the gigabit speed internet, … which is really significant to remote work and distance learning.”
Paying workers to move to the capital of Kansas
Jaggers found a house last fall in Topeka for $47,000 — less than the total he paid in rent across the five years he lived in San Jose. He applied to Choose Topeka after his first visit to the city in September.
Jaggers moved a month later.
To qualify for the Choose Topeka program, applicants must either intend to rent or purchase a home in Topeka or Shawnee County. Candidates who buy a home qualify for the full amount of $10,000. A candidate who rents can receive up to $5,000.
The idea for the Choose Topeka program grew out of an economic development strategy meeting in 2017, said Barbara Stapleton, vice president of business retention and talent initiatives at GO Topeka, the city’s economic development organization. Out of that meeting, one set of data stood out: 40% of people working in Topeka, who make more than $40,000 annually, do not actually live in Topeka or in the greater Shawnee County area.
The Choose Topeka initiative grew out of that need to attract more workers to Topeka and make it a place where people both work and live. In 2019, its first year, Choose Topeka focused on an employer-match program incentivizing local employers to recruit employees to the city or Shawnee County.
The idea of a remote worker program was up in the air — but the pandemic pushed that idea into reality.
Choose Topeka received more than 4,700 application submissions for its employer-match program, and 25 candidates were accepted, Stapleton said. Since the program expanded to include remote workers, she added, it has received more than 200 applications so far, and 15 candidates are currently in the program.
When Choose Topeka launched, an economist with the program projected that the program would generate $2.5 million in its first year, Stapleton said. Now, an updated economic analysis shows a $3.2 million impact for Topeka.
“It really is that strategic, intentional development of recruiting and retaining those candidates to the community to help grow the community, but on an incremental, intentional basis,” Stapleton said.
Incentivizing businesses vs. incentivizing workers
Remote worker incentive programs are also emerging as an alternative solution to the age-old question facing city officials: How can they attract businesses to boost economic activity and growth?
For most cities, the traditional answer has come in the form of using tax incentives, through cuts or abatements, to lure businesses to set up shop in the area. As Kansas City considers its practice of providing tax exemptions to attract big businesses, other cities in the Midwest are proving that offering tax incentives to employers is not the only way to boost economic development — directly paying remote employees can work, too.
Kansas City, Missouri, has relied on tax breaks and incentives to attract business developers in the name of economic development. The “border wars” between Kansas and Missouri over economic development often led Kansas City to offer generous tax abatements to companies who cross state lines — the states came to a truce in 2019, and soon after Kansas City passed legislation curbing the city’s power to use abatements.
But the city’s economic development strategy has continued to garner criticism from people who say the use of tax incentives for developers and businesses pulls money away from more essential entities.
According to annual reports from the Economic Development Corporation in Kansas City, total investments from business development projects authorized by the city in the 2019-2020 fiscal year totaled over $212 million.
Two ways Kansas City uses abatements to bring businesses to the region is through “enhanced enterprise zones,” which provide property tax abatements to new or expanding businesses that make improvements to properties located in designated areas, and Missouri’s Chapter 100 program allowing localities to offer exemptions on sales tax or personal property to companies.
Dan Moye, executive director of enterprise zones 1, 2 and 3 in Kansas City, said the city leverages local incentives to attract outside companies to Kansas City or get companies currently in Kansas City to expand locally.
“We’ve used these programs historically to try to maintain competitive advantages in different industries that we target,” Moye said.
A study on the impact of economic incentives in Kansas City found that between 2006 and 2015, over 23,000 jobs were created and per capita income rose by an average of $3,906. The study found that economic development incentives in those nine years generated nearly $478 million in additional revenue for the city.
Pay to move programs not ‘one-size-fits all’
Mathew Forstater, economics professor at the University of Missouri-Kansas City, cautions that remote worker incentives alone do not increase employment.
“They want people who are already working to spend their money there and spend their taxes there,” he said. “That alone does not increase employment, it just moves people around. It’s the old rearranging the deck chairs on the Titanic.”
Remote worker programs are also not one-size-fits-all — that’s why it’s important for talent-attraction programs to reflect a city’s needs.
“When you’re developing any talent-attraction program, it’s critical to customize it to the needs of your city, both at the business and the individual level,” said Stapleton with GO Topeka.
In Kansas City, Usher sees an opportunity for the city to develop a marketing campaign around attracting remote workers. But he’s not sure if the city would offer a financial incentive like Choose Topeka. The money someone would save by moving from a coastal metropolis to Kansas City might be enough of an incentive.
If the city did have that kind of funding, Usher said, he’d rather use it to support workers already living here.
“We need to be making these same opportunities available to our lower-income residents and small businesses that are here in Kansas City right now,” he said.
‘Pay to move’ in other cities
Pay to move programs are popular in midsize cities hoping to revitalize their local economy and attract talented workers. Other cities that currently have some version of a remote worker incentive program include Tulsa, Oklahoma; the Shoals area in northwest Alabama; Natchez, Mississippi; and Savannah, Georgia.
Tulsa Remote launched in late 2018 and is funded with private dollars through the George Kaiser Family Foundation, a philanthropic organization in Tulsa dedicated to city improvement. Remote workers accepted into Tulsa Remote are offered $10,000 over the course of one year and receive a one-year membership to a local coworking space.
Bumgarner with Tulsa Remote said the goal of the program was to attract professional remote workers who might not otherwise move to Tulsa. He said the program has seen a 90% retention rate of people staying beyond their first year. In its second year, 25,000 people applied, with 360 remote workers accepted, he added.
“You get a lot of really talented folks who otherwise might not be in your community, coming to your community and bringing fresh perspectives and fresh ideas,” he said. “It’s a great way to diversify your professional talent pool. I think it’s an excellent idea for midsize cities.”
Just this year, over 100 people have already moved to Tulsa, Bumgarner said. The program receives applicants from more populous states like California and Texas, with employees in industries ranging from tech to music to telehealth.
“More often than not, people are moving from a bigger city to Tulsa and are tired of the expense and stress and just the general hectic lifestyle that they’ve had in those larger cities,” Bumgarner said.