As remote work rises, consider the services sector

The pandemic and economic downturn of the last year has brought questions about how society is changing in the present, and what shifts might stay with us going forward. These can seem like big questions to answer from the four walls of our home offices. That’s why we’ve turned to data to help to begin to find answers.

When it comes to the future of tech jobs, one key question is how remote work will affect the clustering of software workforces in tech “hubs” that we’ve seen over the last decade. This month, new data from Indeed, first flagged by Axios, shows that tech jobs are remaining stable in cities like Baltimore, even as remote work picks up.

Indeed’s State of the Labor Market report states that tech jobs have remained concentrated in the eight big tech hubs. Baltimore is one of these, alongside Austin, Boston, Raleigh, San Francisco, San Jose, Seattle and D.C. The report defines the big hubs as “the metropolitan areas with at least 1 million population with the highest shares of local job postings in software development in the year just before the pandemic.”

It finds that the tech hubs posted steeper declines in job postings during the pandemic than other cities, but this wasn’t because of the software and IT jobs themselves. In fact, Baltimore had one of the lowest declines in tech job postings, alongside Austin, the report states. And there’s reason for optimism: Nationwide, Dice reported a 28% increase in overall tech jobs postings for the first quarter of this year.

Rather, it was the services jobs like retail, child care and food prep that accounted for the decline in the tech hub cities. Retail job postings declined 16% in the eight hubs in February 2021 vs. February 2020, while the change was 0% in across all other metros. Food prep and service postings, meanwhile, were down 31% in the larger hubs, compared to 17% elsewhere. That’s where the hit to jobs from remote work came in.

“Tech hubs have clusters of both tech jobs and related professional services jobs that can be done from home,” author Jed Kolko writes. “With high shares of people working from home, local businesses like shops and restaurants have been getting less traffic. As a result, job postings and employment have suffered.”

Baltimore had the least decline in tech job postings. (Image via Indeed)

The hard-hit services sector’s struggles are having real impact. The Downtown Partnership of Baltimore reported that the city’s downtown neighborhoods lost 6,815 jobs in 2020. While an increase in office vacancy plays a role, the area has also seen a string of restaurant and shop closures. It’s why relief funds targeted at the hardest-hit businesses, like a $2 million restaurant grant fund created by the city last week, have gone toward this sector.

Still, this may not all be a permanent state. The pandemic’s economic downturn may prove to be temporary. As we saw in recent data in D.C., there are already signs of recovery. And there’s talk of how a shift toward remote work can bring a “fundamental reset” for downtowns, as urbanist Richard Florida put it at the DPOB’s report release event. Meanwhile, Miami Mayor Francis X. Suarez is championing the importance of cultivating a new generation of tech companies for all local economies after leading VCs decamped San Francisco for his city.

Yet with the rise of remote work, the struggling services sector might continue to be battered as the office gets a rethink. We don’t know for sure, but the jobs data offers a reminder: Even as a city’s economy is made up of different sectors creating different kinds of jobs, and more are moving remote, it’s all intertwined when it comes to creating a vibrant center.