Nichols College Economics Chair and Professor Hans G. Despain, Ph.D.
The (Springfield) Republican / MassLive.com and The Reminder newspaper company have published an opinion column by Nichols College Economics Chair and Professor Hans G. Despain, Ph.D., about State Sen. Eric Lesser’s (D-Longmeadow) proposed remote worker incentive program. The legislation would encourage people to move from eastern Massachusetts to the western part of the state.
Dr. Despain writes: “The proposal is simple, new workers who work remotely from home are “incentivized” to relocate to Western Massachusetts. The pilot program allocates $1 million in a three-year incentive period to eligible new citizens. Qualified remote workers would receive a maximum of $5,000 per year, and a total maximum of $10,000 per worker.”
He concludes: “This is very economically smart legislation.”
Read the full piece as it appeared on MassLive, below:
Sen. Eric Lesser’s remote worker incentive program smart economic legislation (Guest viewpoint)
Senator Eric Lesser’s (D-Longmeadow) proposed ‘remote worker incentive program,’ as reported in Dan Glaun’s article, “Lesser: Move West, Senator wants to offer $10,000 for those who want to escape Boston rents,” Feb. 9, page A1, will generate great economic benefit for the region. Specifically, the $1 million investment proposed by Senator Lesser’s ‘remote worker incentive program,’ would generate between $50 million to $150 million extra economic activity. State Rep. Aaron Vega is absolutely correct recognizing such a program is especially beneficial to Holyoke, with little down side to Boston.
The proposal is simple, new workers who work remotely from home are “incentivized” to relocate to Western Massachusetts. The pilot program allocates $1 million in a three-year incentive period to eligible new citizens. Qualified remote workers would receive a maximum of $5,000 per year, and a total maximum of $10,000 per worker.
The first thing to underscore is the fact this is quite literally a jobs creation program. For example for each new citizen who relocates to Holyoke, she brings with her a job to the area that previously did not exist in the area.
Lesser is 100 percent correct to point out if we ignore these “remote jobs” we do so “at our peril.” The Bureau of Labor Statistics shows that remote working options have exploded by more than 250 percent since 2001. In 2017, 30 percent of the tech jobs in San Francisco went to workers outside the city. Glaun’s story highlights Boon and Caro Sheridan who moved to Holyoke from Austin; in 2017 a whopping 60 percent of tech jobs in Austin work outside Texas.
Even more important to Western Massachusetts than remote tech jobs are the remote ‘FIRE’ sector jobs in Finance, Insurance, and Real Estate. The FIRE sector is increasingly turning to remote work to boost productivity and quality-of-life for its workers. Western Massachusetts is smack in the center of FIRE sector hubs in Worcester, Boston, Hartford, and New York. Lesser’s proposed bill would be certain to attract these workers.
The return on Lesser’s proposed $1 million pilot program would be impressive. The program is structured so that the $1 million would attract 200 (or more) new citizens and new jobs. With most of these jobs likely from within the high-salary FIRE sector, a reasonable conservative estimation of the average salary would be $150,000. Based on consumption spending patterns and taxes, the extra economic benefit would be approximately $60,000 per year per citizen/worker.
With 200 new citizens increasing economic activity by $60,000 per year the economic impact would be $12 million per year, or $36 million in a three-year incentive period. The spending multiplier effect would double these amounts in total economic benefit to the region. Thus, a $1 million three-year incentive program would generate $72 million dollars in increased economic activity as a reasonable conservative estimate, or a range of $50 million to $150 million. This is very economically smart legislation.
Dr. Hans G. Despain is economics department chair at Nichols College and a resident of Longmeadow.