Does the ‘Future of Work’ Open a New Growth Horizon for Small Towns?

Remote work has been lifted up as a new opportunity for small towns, but some old-fashioned obstacles remain. In Missouri, creativity and collaboration are key for community leaders looking to overcome them. 

The county courthouse in Mexico, Missouri, and the surrounding square where locals are planning a co-working space for small businesses and remote workers (Photo by Erik Richardson)

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The economic history of many small towns, beyond agriculture, is closely tied to manufacturing and production businesses. A good example of this is Mexico, Missouri, a small town of about 11,500 people located two hours northwest of St. Louis. Here, ties to manufacturing include a number of companies past and present, who design and manufacture everything from commercial refrigeration units to golf carts and light metal products for the automotive and transportation industries.

The paradigm case in Mexico was the A.P. Green refractory. Green was a world-leader in the production of firebrick used in boiler systems and in kilns for the steel industry. As it scaled down and closed, from 1998 to 2003, the town lost more than a thousand jobs — not just production-line positions, but engineering and executive management positions, as well.

To offset the impact crater that closures like this cause, a common strategy is to work at bringing other, similar businesses to the area, and Mexico has had mixed success in that regard. When it comes to the fortunes of rural places, it now takes more than one big business or one big solution to help a community thrive.

With the changing shape of remote and hybrid workplaces, and the continuing spread of high-speed internet access in rural areas, new options are opening up for bringing small-scale jobs and companies to towns all over the map. More specifically, with $65 billion for improvements to rural high-speed internet access in President Biden’s infrastructure plan, the potential for a renaissance and reinvention of small towns looms large.

Leveraging that potential in a way that creates sustainable growth, will take a multi-dimensional approach.

Work From Anywhere?

Research by McKinsey Global Institute found that as much as 25 percent of the workforce in advanced economies like the U.S. could work from home between three and five days a week. That would be more than four times the level of remote work than baselines before the pandemic.

Even more workers would take the opportunity if they could. Not only is there feasibility for growing the remote sector, but there is high demand as well. According to Global Workplace Analytics, about 37% of remote employees would take a 10% pay cut to continue working from home. This trend will grow even further as new technology in development makes current options seem like baby steps.

Back in Mexico, the local Chamber of Commerce, led by Executive Director Dana Keller, is considering a number of proactive strategies to tap into this new opportunity.

One possibility is using a newly renovated office building, just off the square, to create a co-working space. This could be used for smaller operations looking to possibly relocate to Mexico, while saving on the costs of developing its own offices, or it could be used to house new businesses in the start-up phase—much like incubator and accelerator facilities in larger urban areas. This option would help serve sectors of the market that still require some on-site equipment and resources or space for team meetings and thus are not yet able to operate one hundred percent work-from-home.

In any case, shared office spaces, where remote employees can gather to work, have become more widely available in different cities and will accommodate a growing percentage of remote workers in coming years.

No Home Office Without a Home

As much as technology and pandemic-era trends are accelerating people’s ability to work remotely, there are still some old-fashioned obstacles in place. One of the biggest of these is the shortage of affordable housing for people and families looking to relocate.

Marissa Lightsey, a realtor and brokerage owner, explained that it is still common to have a house list on the market for a day or less before it gets an offer. While there might seem like a number of houses available at a given time on the listing sites, many of those either need significant repair or they are priced out of the range of many working families. “A fair percent of the time there are people already lined up looking for a house, so I can connect them with a newly-available house even before it is listed,” Lightsey says of Mexico.

In theory, a high-demand market would draw developers to step in and put up new houses to push the supply curve toward a new balance point. Unfortunately, small-town markets are not able to offer the same profit margin on development that even mid-sized cities can—also illustrated in the above comparison.

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Tags: missourismall townshome officefuture of work

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