The widespread adoption of remote work across the U.S. has left local employers learning to compete with out-of-state companies offering big-city salaries.
The magnitude of the change over the last two years is staggering. In January 2020, fewer than 3% of applications for U.S. job postings on LinkedIn were for remote work. Now, small and mid-sized cities such as Wilmington, North Carolina, and Sarasota, Florida, have seen that share rise to over half.
It’s been a boon for white-collar workers who live in these cities. They can now apply to offers nationwide and often get higher pay.
But it’s strained firms that could once count on local professionals to fill open positions in fields like technology, accounting or marketing without having to worry about corporate giants like Facebook or Airbnb Inc. Remote work is affecting all sorts of industries: Regional grid operators from Arkansas to Indiana report that engineers are being poached by rivals amid the rush to electrify everything.
“There’s more competition for workers in local markets and in ways that local employers have not had to deal with before,” said Daniel Zhao, senior economist at Glassdoor, a website that collects pay information submitted by employees. “This absolutely puts upward pressure on wages for these local markets.”
In Madison, Wisconsin, where the networking platform LinkedIn found about 42% of applications were for remote jobs, Planet Propaganda has been feeling the effects of that competition.
Before the pandemic, the advertising firm would receive as many as 50 applications for new positions and could typically fill them within six weeks. Now, even with the help of recruiters, higher pay and perks, it’s taking months, said Emily Steele, a managing director at the company.
“When you take standard of living into account, the salary that we’re giving is comparable to New York,” Steele said. “But it’s different if someone is living here and gets to pay Madison costs of goods, costs of services — but then has a New York salary.”
For perspective, the average hourly wage in Madison is roughly 16% below the New York City area, and home values are about half.
To remain competitive, Planet Propaganda offers a tight-knit company culture and more reasonable hours than large companies based on the east and west coasts typically do, Steele said.
Ripple effects
There’s a domino effect from the work-from-anywhere revolution.
Those able to get a big-city salary spend the extra cash at stores, restaurants and gyms, a windfall for the local economy. But they’re also driving up housing prices, and leaving many local workers struggling to keep up.
“There’s a whole series of ripple effects that occur from this,” said Ross DeVol, president and chief executive officer of Heartland Forward, a nonprofit think tank focused on economic performance in the center of the U.S.
Poonam Kahlon, 36, made the switch to a fully remote role in February. The mother of two young children had moved near Wilmington, North Carolina, in June 2019 to be head of human resources at a local company. Now she works for a firm headquartered in New Jersey.
Pay wasn't the main driver for her — she wanted a better work-life balance and more time with her kids and husband. Employees like her are pushing local companies to offer hybrid options and higher wages.
“They're going to miss out on good talent if they are not being flexible with the workforce,” she said.
Lisa Leath, founder of a Wilmington-based HR consulting firm that primarily serves businesses in Southeast North Carolina, said remote work has also helped attract talent from all over the country, lured by the lifestyle and the beaches.
“We’re having to look at compensation basically every month or every other month to make sure that we're on track with market because it's hard enough to find folks,” she said. “So when you get your team whole, you want to make sure that you retain them.”
Poaching engineers
Almost 1,000 miles away in Little Rock, Arkansas, nonprofit grid operator Southwest Power Pool is also having a hard time retaining workers lured by remote job offers from far-flung employers.
Southwest Power Pool, which serves almost 19 million people across more than a dozen states, has seen company-wide turnover roughly double to about 8% to 9%, Chief Executive Officer Barbara Sugg said.
At least half of those leaving are engineers, but information-technology employees are also being lured away with salaries that are often 30% to 50% higher than pay at the grid, she said. Most employees who left for other jobs have remained local.
All seven of the state and regional grid operators on the continental U.S. said they faced similar challenges. At Midcontinent Independent System Operator, which serves 42 million people in states including Indiana, Iowa and Michigan, highly trained engineers and other staff are being poached by rival grids, utilities and renewable power developers.
As a result, grid operators are beginning to allow some employees to work from home, raising wages and encouraging people with different experience levels to apply for roles they might not have considered before. Southwest Power Pool has even hired three fully-remote employees who live in other parts of the state and country — something that was unheard of for grid operators before the pandemic.
Nationwide, local businesses are getting creative. Paul McDonald, senior executive director at the staffing agency Robert Half, said that many smaller companies are leaning into hiring candidates that may not have all of the technical skills needed and then training them.
Benjamin Jones, chief executive of Mobile reCell, an IT company based in Fishers, Indiana, has employed a similar strategy: “We’ve focused on the philosophy of giving people opportunities from a young age.”
Sugg, the Southwest Power Pool CEO, emphasized the need to adapt to the new world.
“The reality is people in Arkansas can work anywhere now,” she said. “The world around us has just changed on a dime and we need to change with it.”
