Small-Town USA May Offer Solution to Outsourcing

I've talked from time to time about the coming wave of dispersal from cities. It's not that cities will suddenly be empty and you'll be able to swing through the canyons of lower Manhattan on vines as thick as your wrist. Far from it. Cities will always be filled with people who want the urban lifestyle. The walkability, the convenience, the whole shebang. Most of these people will be young and single. A handful will be retirees with money. The huge swath in the middle (like me) who are married and have kids are fleeing the cities in droves for greener pastures (literally). Techcentral station has an article about how the cable modem is going to revolutionize our world and our society. How? By allowing people to work for any company in the country from home. Wherever home may be. My cousin worked as a trader in Manhattan for years. She finally had enough and got her employer to agree to allow her to relocate anywhere she wanted. Literally. She and her husband searched around and decided to move to Florida. (Don't ask me why, I don't get it either. I think the beaches in SC or OBX are as good or better. Personally, I wouldn't move anywhere near there. See; Hurricanes. But I digress...) Now she commutes to the other room and is on the beach by 4:30 (traders are total slackers). I'm hoping MY job will be the same soon. Technically, I could do my job from my house most days. Right now, I log in the an NYC VPN anyway and my boss is in NYC 4 days a week and here half a day on Friday. My clients are people who I need to meet with rarely (at this stage in the project). If I could move to a less populated/cheaper area on my current salary I could live like a king. I'm no fan of say...rural South Dakota but on this salary, I could do very very well. It would be nearly overwhelming to look at a map of the country (or worse, the world) and be able to pick whatever you want. There are other family pressures to be sure but when you remove employment from the equation you are almost completely free. To wit, the author of the article talks about rural Washington:

Only a couple hundred people live there. And from the look of the place at least half of them are senior citizens. The town is almost painfully low tech and provincial. It's surrounded on all sides by a beautiful but brutally isolating vastness so empty you could fit entire nations inside it. Not only is Half.com no Internet boom-town, you have to drive almost 100 miles out of it before you can even make a call on your cell phone. The town's name and its slogan are lies.
It occurred to me, though, that the day places like this one will become real dot-com towns may be coming.
Real estate in much of rural America is shockingly inexpensive, especially in the remote parts of the West. Houses are practically free compared with what they cost in Seattle and Portland, not to mention what they cost in New York, Los Angeles, and Chicago. That's because hardly anyone can move there and find a job. First Wave agriculture economies (to borrow Alvin Toffler's terminology require fewer and fewer humans to do the work. These places hemorrhage young people to large urban areas, and they've been doing it ever since the Second Wave Industrial Revolution got rolling hundreds of years ago. Rural economies keep spiraling downward, and home prices circle the drain along with them. When the current generation of senior citizens passes, and a smaller number of young people grow up to take their places, home prices will be knocked into oblivion. The number of houses for sale will drastically exceed the number of people who live anywhere near them and might want to buy one.
Meanwhile, telecommuting jobs are more common than ever. There will only be more of them in the future. In the past such jobs were rare because they were impractical or downright impossible. Blue collar workers needed to show up in person at factories. Office workers didn't have email, teleconferencing, instant messaging, and other various "virtual water cooler" places to meet and discuss work projects online. Now they do.

And that is the key. Now people are programmed to do the face-to-face thing. There is certainly some value in it. It helps build rapport and communication is certainly facilitated by face to face but now that we have cheap, fast, quality webcams that is possible over the interweb. We will begin to see a mindset change that people will realize that in person meetings will not the be norm, but the exception. Like an office Christmas party. Once or twice a year (depending upon industry) type thing.

There isn't, not yet anyway, a huge outflow of telecommuting employees from the cities to the American countryside or to the beaches of Latin America. That's partly because there are very few households where both wage-earners telecommute. If one spouse has a day job rooted in a specific geographic location, the telecommuting spouse has to stay put. But if the number of telecommuting jobs ever reaches, say, 30 percent of the total number of white collar jobs available, millions of American households will include two wage-earners who can live absolutely anywhere they want as long as they can connect to the Internet.

He's forgetting something. When you have huge savings in cost of living, you may not need two salaries. One of you might even be willing to give up their current career to work on something in their new, cheaper location. My wife and I, for example, decided she would stay home with the kids when we decided to have them. That was a 50% reduction in income but a sacrifice we think is worth it. Imagine if I could cut my costs in half. I would be very very happy. I went to realtor.com to check some areas where I'd like to live and I could buy my house for (in some cases) half or less than I owe now. I could literally cut my mortgage to a third of what it is now. With that money, I could afford many things that I cannot now. It would be like getting a 50% raise in salary. Astronomical.

These two trends -- declining rural real estate values and increasing white collar telecommuting jobs -- are slowly approaching their respective tipping points. When they both reach those points, a third new trend will likely be born. At the same time large numbers of people can effectively work from anywhere, real estate in the countryside will be both plentiful and even more dizzyingly cheap than it already is. Many who today leave cities for the suburbs because they want to live in "the country" will have the option of actually living in the country at hugely reduced cost, with real peace and quiet, with vanishingly close to zero crime rates, and with zero-minute commute times. Towns like Half.com may, then, become small dot-com cities in fact as well as in name.
The First Wave agriculture revolution created small towns - or "villages." The Second Wave Industrial Revolution depleted and drained them. The Third Wave tech revolution just might restore them.

Moreover, the cities with traditionally high rent costs will plummet. Apartments in Manhattan will be much larger and much cheaper. You will also see people intentionally creating communities of like minded people. In Florida, Ave Maria University is creating a hub of conservative Catholics around the school. They are building an extensive housing development as well as primary schools and the attentant infrastructure. The idea is to create some sort of conservative Catholic oasis where like minded people can live together and worship together. Imagine if half (or more) of this group could telecommute. You may find people grouping by ethnicity, politics, religion or even weirder things like fandom. It's not hard to imagine Trekkies creating their own development themed on Trek. Houses would be styled like the show, streets would be named after the characters. Carry this out to it's inevitable but bizaare conclusion. In extremis, this could lead to a balkinization effect but I doubt the effect will have much impact. It's not easy to get a large group of even like-minded people to move to a single place without significant incentives. See: Free State Project.
The other unmentioned side of the coin is going to be a depression in wages. One of the market pressures on wages is cost of living. That's exactly why jobs are moving to India. It's cheaper. Well, it's cheaper to live in rural South Dakota (or nearly any state) than New York or LA. Remove that cost barrier to employment and people can and will work for less. The second downward pressure will be a much larger labor pool to draw from. If you now have access to hundreds of times the number of applicants for a job because location is no longer a factor, you can lower the salary. Rural Man will take much less than Urban Man for the same job. Quite simply, he can afford to.

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