Working remotely — and richer for it
Clocking in from home can offer big savings and more fun if you do it right.
America’s suburbs grew out of a simple and appealing notion: Earn top pay working in the city and enjoy a more idyllic life by commuting. Communications technology — and the steady if grudging enlightenment of employers — is turbocharging that concept for millions of Americans. Now, many knowledge workers can earn top pay from a big-city employer and live wherever they want — including across the country or halfway around the world.
Five million or so U.S. workers toil from home for the majority of their work hours, various studies report, and the total is rising. Employers are increasingly understanding the cost savings (fewer desks, parking spots and etc. to pay for) and increased worker happiness and productivity (no hours lost to ugly commutes, better quality of life) that telecommuting can create.
If telecommuting is available to you — or, if you’re already doing it — you owe it to yourself to step back and fully consider the financial and lifestyle benefits. Yes, living in the house you formerly commuted from — be it a city residence or one in the suburbs — may be the best thing for you. Family, friends and other connections are likely close at hand.
But for many people, the chance to reimagine their lives without changing jobs is a fabulous opportunity. According to one recent survey, seven in 10 freelancers said they would consider moving, thanks to their job flexibility, and are interested in options other than a large city. Below, I’ll walk you through how to estimate your purchasing power in other locales, plus other considerations you’ll want to review. First, let’s look at a few examples that show how moving can immediately boost your bank account.
New York to Knoxville: Say you earn $100,000 a year in New York. After a 12.7 percent state and local tax bill and your federal taxes (we’re assuming 22 percent), your net is actually $65,000.
Factor in weak purchasing power, and that drops to $53,566. Take that salary to Knoxville, Tenn., where the local tax burden is 7.3 percent, and the purchasing power of $100 is more like $112. Your new take-home pay is $79,184 — a 48 percent increase.
Like to see the leaves turn in the fall? Rather than rent a car, spend hours in traffic and the highway for some upstate New York leaf-peeping, you could buy a used car and drive an hour from Knoxville to the Great Smoky Mountains. (Yes, they have fall colors in Tennessee.)
Silicon Valley-to-Austin: $100,000 in Mountain View, Calif., after your tax burden and cost of living is actually worth $53,989. In Austin, it’s worth $70,752. So, you can afford a place to live — Austin real estate is lots cheaper — and you’ll get Austin’s quirky startup and music culture.
Washington D.C.-toPueblo: If you love D.C.’s proximity to the Blue Ridge Mountains of Virginia, or ski resorts of Pennsylvania, a move to Pueblo, Colo., would get you even closer to the mountains without fighting traffic in the nation’s secondmost congested city. Your ($100,000) $56,589 adjusted salary in D.C. turns into $75,043 in Pueblo, a onethird earnings boost.
As I said, moving might not be for you. But if it is, you could pay off student loans faster or save for retirement. Your quality of life can improve in other ways, such as better public schools for your kids or a lower cost of living.
To do this for yourself, pick your own city candidates for relocation and then do some calculations:
Taxes: The Tax Foundation website helpfully ranks states by their state and local tax burden. It also provides an annual analysis of income tax rates, for insight into where rates are going down — Idaho, Iowa, North Carolina, Utah, Vermont — and where they recently went up (New Jersey).
Cost of living: A simple Google search of “cost of living by metro area” will give you a good sense of whether you’re getting the best bang for your buck in any region. But if you want to look at the country as a whole, the Tax Foundation has produced an interactive map on purchasing power using federal Bureau of Labor Statistics data. The map makes it easy to find places in the country where your dollars go further, like in Boise, Idaho; Knoxville, Tennessee; or St. Louis. Your pay loses value in San Francisco, New York City and Washington, D.C.
Of course, not everything is about money. Here are a few more things you’ll want to factor into your quality of life considerations.
Schools: If you have kids and want access to quality public education, you might be willing to sacrifice a bit in taxes or purchasing power. I use Greatschools.org data to look at things like test scores and demographics. It also has parent reviews.
Transportation: Your office might be down the hall from your bedroom, but you’ll still need to get around. And if you drive a lot for your job, you don’t want to move to an area that is woefully behind on maintaining its roads and bridges, and will take miles off the life of your car. The American Society of Civil Engineers tracks that and other related stats. If you want to ditch your car, or if access to transit is important to you, you’ll want to see which areas of the country have the most reliable systems. You could read Christof Spieler’s “Trains, Buses, People: An Opinionated Atlas of U.S. Transit,” or you could check out the news outlet CityLab for a summary and handy chart of top-performing transit systems.
Airports are also a consideration. Forbes ranks the nation’s top airports for on-time flights and traveler experience. And you can drill down with the Bureau of Transportation Statistics’ Airport Snapshots.
Don’t forget the internet: While eight in 10 Americans have a broadband subscription, that average goes way down in rural areas. The U.S. Census Bureau has mapped those rates, and it’s easy to see that there are large swaths of the country that have a low share of internet subscribers. While it doesn’t mean the internet isn’t available - after all, that’s what satellite internet companies are here for - it does mean that a high-speed internet package with unlimited data and super-fast processing might be out of reach. If that’s important to your job - or your late-night Netflix binges - it’s worth checking if you’re eyeing a lower-cost area with a broadband subscription rate under 85 percent.
The bottom line is, telecommuting is poised to grow rapidly. An estimated 57 million Americans are freelancing. Of those, 28 percent now do it full time, but even more (50 percent) say they view freelancing as a longterm career rather than a side gig. So if you have a mobile job, you have a huge opportunity to give yourself a pay raise and boost your quality of life by packing up and changing cities. But make sure you do your research first.