This past week, our CEO and I discussed whether a position which reports up through me should be ‘remote’ or ‘on-site’ moving forward. It is currently the former, and I would prefer to keep it that way for a variety of reasons. We wouldn’t have had this discussion 12 months ago, as all jobs at our company were ‘on-site.’ To be sure, we could be flexible if conditions warranted, but these accommodations were always temporary.
However, the pandemic has forced us to be more adaptable. By us, I mean all of us and not just Oakworth Capital Bank. Think about how different your life and working conditions are now compared with this time last year. It seems we already living in the ‘new normal,’ whether we realize it or not.
One common prediction about ‘the new normal’ is a higher percentage of American jobs will be remote. Frankly, this is a layup, as the trend was already there prior to COVID-19. The events of the past year have simply, shall we say, expedited the inevitable. However, while more people might work remotely in the future, that doesn’t necessarily mean they want to live remotely, if you catch my drift.
Much has been made about the recent exodus of people from larger cities like New York and Chicago, but how much of this is due to the ability to work remotely and how much is due to, let’s not sugarcoat it, poor governance and high taxes? Further, how many people leaving these big cities are moving to someplace in the middle of nowhere? To small towns and far flung hamlets across this great country of ours? Huts in the woods? Caves in the cliffs? Or are they leaving to go to the suburbs or only slightly less large metro areas?
While hardly a scientific study, I haven’t noticed a sudden influx of New York license plates around here outside of those on I-65 headed to the Gulf coast. No one has approached me and asked: “is there anywheres around here where I can blankety-blank get some decent blankety-blank corned beef? Don’t any of youse Southern blankety-blanks know how to blankety-blank make a blankety-blank, blankety-blank sandwich. What the blankety-blank is wrong with this blankety-blank picture? Blankety-blank!”
Well, maybe that is a little hyperbolic. Still, the point is there: working remotely is NOT the same as living remotely. It is simply the ability to have a more flexible work life.
Yesterday, I read an article about how Natchez, Mississippi, is paying people to move there. The incentive includes up to $2,500 in relocation reimbursements and a $300 monthly stipend for a year. To qualify, the New York Post wrote:
“To qualify for the incentive program, a future Natchez resident will need to work for an employer outside the region and be able to work remotely. They will then need to establish primary residence in the city and buy a home valued at $150,000 or more. They have to own and live in the home for at least a year. They also need to be 18 or older and eligible to work in the U.S.”
I have been to Natchez and found it to be a charming place, quaint might be a better choice of words. So much so, the city will undoubtedly get a few takers on its offer. However, I can’t imagine it will be enough to send home prices through the roof. The reason for it is pretty simple: Natchez is kind of off the beaten path. It is about an hour and a half to Alexandria (Louisiana) to the west, and a like amount to Baton Rouge to the south. Going east, or northeast, it will take about an hour and 45 minutes to get to Jackson, and a similar amount of time to get to Monroe (Louisiana) to the north (northwest).
All told, according to the ‘Big Radius Tool’ at statsamerica.org, there are about 158,873 people living within a 50-mile radius of Natchez, a decline of 5.9% over the last 10 years. Then there is the fact it is a pretty poor place, with a per capita income in Adams County of only $35,563 in 2019 (according to the Bureau of Economic Analysis). This was 91% of the average for Mississippi and 63% of the national average for that year.
Hey, my hat is off to the folks in Natchez; it is worth a shot and there isn’t really any downside. If folks don’t come, they weren’t coming anyhow, and you got a little ink in the national media for the first time in decades. It will be interesting to see how it works out, even if I think it is a real longshot.
You see, for the most part, people want to have access to the amenities a city might offer, even if they don’t want to live in the city itself. Take healthcare as an example. How many of us would want to permanently live in an area without access to a hospital or other medical clinic? Without places of worship? A decent grocery store? Other people with comparable tastes and interests? Live music? Plays? Sports? Restaurants? Shopping? Etc.?
Before anyone from Mississippi corrects me that Natchez has those things, all of this stuff is relative. To someone from Clayton, Louisiana, Natchez is ‘going to town,’ where there are options. But to someone from New York, Atlanta, or even Birmingham? Somewhat remote country living would be a tough row to hoe on a permanent basis, a real culture shock. But from Manhattan to Stamford? From Buckhead to Alpharetta? Southside to Hoover? I think you get the picture. T
In the end, a lot of things which we think will be different in ‘the new normal’ probably won’t be as drastic as we envision. Personally, I think remote working won’t gut/filet downtown business districts and commercial real estate as much as feared, in and of itself. Don’t get me wrong, it isn’t going to be a tailwind either.
However, good projects will still be good projects. Opportunities will still be opportunities. People will still want to live near where ‘the action is,’ as we are social creatures. Offices will still be necessary, as will office workers. Well-governed cities will continue to thrive, especially those with adequate educational and healthcare options. Live music will still be awesome, as will a good meal at a good restaurant. Poorly run cities with high tax rates will continue to suffer, and will continue to try to pin the blame elsewhere. Advancements in technology will continue to make us more efficient, not obsolete. As Bill Clinton said, and I don’t quote him often: “the price of doing the same old thing is far higher than the price of change.”
In essence, much in the new normal will be as it was in the old normal, even if a few more of us work from home. You see, flexibility is the key to both change and working remotely; it is not remoteness.
Take care, and have a great weekend.
John Norris
Chief Economist
As always, nothing in this newsletter should be considered or otherwise construed as an offer to buy or sell investment services or securities of any type. Any individual action you might take from reading this newsletter is at your own risk. My opinion, as those of our investment committee, are subject to change without notice. Finally, the opinions expressed herein are not necessarily those of the reset of the associates and/or shareholders of Oakworth Capital Bank or the official position of the company itself.