Remote work has brought about a massive change in California’s labor market, with nearly one in eight employees now working mainly from home, a new study has revealed.
The shift is not only influencing migration and hiring, but it is also altering the state’s economic and geographic landscape.
According to a recent report from the state’s Legislative Analyst’s Office, one-eighth of all employees across the state now work mainly from home, accounting for a three-fold increase since 2019.
The pandemic accelerated the widespread adoption of remote work, with the share of employees working mainly from home peaking in 2021, the study noted. As health restrictions eased and vaccines became widely available, the work-from-home share fell from 21% in 2021 to 13% in 2023.
Unlike the steep decline in those two years, the rate of work-from-home has dropped to 9% over the last few years.
Remote Work Has Changed Jobs
The latest figures suggest that remote work continues to be prevalent in California, with several reasons driving this change.
According to the study, most employees in these roles create or oversee information, communication, or decisions instead of physical services or goods.
Remote jobs also tend to be well-compensated, with average hourly wages that are twice as high as those for other jobs.
Some of the job categories that have witnessed the most structural changes due to remote work include those in the sectors of technology, finance and accounting, business and government operations, and sales and marketing.
Referred to as ‘heavily remote jobs’ in the study, these four job groups account for around 2.6 million California workers, equivalent to roughly one in seven workers statewide in remote-capable sectors.
Despite the popularity of fully remote jobs, California has failed to keep pace with the rise of heavily remote jobs across the country.
Heavily remote jobs have grown more slowly in the Bay Area and the Los Angeles area, spanning the Los Angeles and Orange Counties, while they grew relatively faster in the less urban parts of the state.
Migration Trends
The pandemic has altered both inflow and outflow of workers in heavily remote jobs.
California is losing more workers than it has gained for nearly the past 25 years, analysts said.
Before the pandemic, California would welcome roughly 55,000 workers from the heavily remote job sectors in a typical year, while 50,000 moved to other states. This resulted in a net inflow of 5,000 workers.
Following the pandemic, the net outflow recorded a massive change.
In 2021, 43,000 workers moved to California from other states, whereas 80,000 left, resulting in a net outflow of 37,000 in that year alone, according to the study. While the net outflow of workers has shrunk in the following years, it has still remained substantially large.
Geographically, fewer workers in remote jobs moved to some of the largest urban centers in the Bay Area and Los Angeles from other states.
Before the pandemic, migration of workers was primarily concentrated in these urban areas. The trend began to change, however.
By 2019, net migration from other states to these urban areas had begun to decline, with the pandemic accelerating the trend. The net outflow from these areas peaked in 2021, driven entirely by workers moving away from these areas.
The massive outflow figures could be due to affordability challenges and rising living costs. These urban areas in California have historically been some of the most expensive cities.
Earlier, workers were forced to live in expensive cities due to their jobs. With the widespread adoption of remote work, workers are free to keep their jobs and move to affordable residential areas in cities, suburban communities, or even leave the state and shift to lower-cost states.
Remote work also makes California-based jobs accessible to those outside the state, enabling employers to hire from a wider national pool than a restricted regional pool.
The study noted that long-term effects of remote work can eventually raise questions about California’s affordability and quality of life, the state’s economy, and potentially reshape the state’s population patterns and labor market in the years ahead.
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