https://www.americancityandcounty.com/wp-content/themes/acc_child/assets/images/logo/footer-logo.png
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcast
  • Resources & Events
    • Back
    • Resources
    • Webinars
    • White Papers
    • IWCE 2022
    • How to Contribute
    • Municipal Cost Index – Archive
    • Equipment Watch Page
    • American City & County Awards
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Privacy Statement
    • Terms of Service
American City and County
  • NEWSLETTER
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcasts
  • Resources/Events
    • Back
    • Webinars
    • White Papers/eBooks
    • IWCE 2022
    • How to Contribute
    • American City & County Awards
    • Municipal Cost Index
    • Equipment Watch Page
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Cookie Policy
    • Privacy Stament
    • Terms of Service
  • newsletter
  • Administration
  • Economy & Finance
  • Procurement
  • Public Safety
  • Public Works & Utilities
  • Smart Cities & Technology
  • Magazine
acc.com

Hybrid Work


Work is not where you go. It’s what you do. In today’s hybrid work world, it is no longer enough to solve for the challenges of remote work or support a safe office re-entry. It’s about finding solutions to not just recover in the face of change, but to thrive and innovate. Empower your workers at home, in the office, or anywhere.
Telework is here to stay, but what does that mean for wage tax revenue?

Telework is here to stay, but what does that mean for wage tax revenue?

  • Written by Andy Castillo
  • 23rd February 2022

It’s been two years, now, since local businesses shuttered their office doors and sent employees home with laptops to telework from their living rooms—forced to do so by pandemic-induced stay-at-home-orders. It’s still unclear what the long-term impact of this novel digital-first economy will have on government tax revenue streams. 

Commuter-driven revenue, such as sales tax on morning coffee, parking fees and tax on wages earned inside municipal limits—any revenue generated by people who don’t live there full-time—is a budgetary staple for many cities. When the pandemic set in, many communities were forced to slash budgets and adapt.

“Now that many of the telework policies that U.S. employers adopted out of necessity in 2020 are becoming permanent, some employees will be able to cut back or eliminate the time they spend commuting or move farther from their place of work. Fewer commuters—or workers who commute less often—could translate into a shrinking local revenue base and contribute to long-term fiscal challenges for local governments,” reads an analysis of 10 American cities and their tax-revenue risk published by The Pew Charitable Trusts. The study leverages commuter Census data to compare the tax revenue risk of Baltimore; Carson City, Nevada; Washington, D.C.; Denver; New Orleans; New York; Philadelphia; Richmond, Va.; San Francisco; and St. Louis. 

A city’s level of risk depends on the types of jobs and businesses it’s home to. Those that house white collar workers—especially those in finance, management and professional industries, according to the study—could see a particularly sharp decline in revenue because those roles are aligned with remote work. In contrast, laborers in service jobs, health care and hospitality can’t complete their work from home.  

Of the 10 cities included in the study, “Richmond has the highest commuter share at 77 percent. San Francisco’s is lower at 62 percent, but that city has the highest share of professional jobs, 29 percent. That data point signals potential increased fiscal risk if remote work arrangements stay in place. In contrast, Carson City’s low share of professional jobs, 7 percent, could reduce its fiscal risk,” the study says. 

The evolution of telework and its impact on revenues could be profound.  

“In Philadelphia, for example, wage tax revenue through January 2021 came in well below pre-pandemic forecasts. City experts attributed part of the wage tax revenue decline in the information, financial activities, and professional services sectors to the number of usual commuters who were exempt from the wage tax while working remotely,” the study says. 

According to a 2021 analysis from Philidelphia’s City’s Office of the Controller, industries more likely to support remote work saw an “outsized decline” over the first year of the pandemic. While this was at least partially attributed to job losses, “telecommuting for non-residents has already had a substantial effect on the city’s finances.”  

Another report from Pew Charitable Trusts on Philidelphia notes telecommuting “could have significant long-term implications for Philadelphia’s wage tax, which has produced nearly half of the city’s locally generated tax revenue in recent years.” 

Beyond revenue losses, the telework-evolution and the loss of people traveling to offices poses other impact risks. Twelve of New England’s 38 transit systems, for example, “rely on directly generated revenue to cover at least one-quarter of their operating expenses. All but one of those 12 systems saw their ridership decline by more than one-half during the first year of the pandemic,” reads a brief from the Federal Reserve Bank of Boston, which is a part of the Central bank of the United States. 

The shift will also reduce the demand for office space, restaurants and retail stores. 

While the impact will undoubtedly be felt heavily across the board, cities that rely heavily on property taxes and those that don’t collect income or sales tax “could be more resilient to long-term shifts to remote work,” Pew’s study notes. 

Tags: homepage-featured-1 homepage-featured-2 homepage-featured-4 Administration Economy Hybrid Work Administration Economy

Most Recent


  • Amid shifting workplace expectations, local government employers must adapt
    Constrained by inflexible budgets, local government employers can’t compete with the lucrative salaries offered in the private sector. And while recruitment has always been a challenge for public employers, the last two years have been especially difficult. From January 2020 to the same month this year, government organizations lost around 600,000 jobs—more than manufacturing, wholesale […]
  • baseball
    Minor league baseball is helping cities hit a revitalization home run
    It’s that time of year again—the crack of the bat, the roar of the crowd when the home team hits a home run, not to mention the peanuts, Cracker Jacks and hot dogs! Nothing compares to the fun of gameday at the stadium, enjoying the national pastime of baseball. Some mid-sized cities have taken the […]
  • MSPs
    The MSP downstream cyberthreat paradox: Understanding the city and county connection
    Recently the Cybersecurity and Infrastructure Security Agency (CISA) along with the FBI, NSA, and international cyber authorities issued a cybersecurity advisory aimed at protecting managed service providers (MSPs) and their customers. This high-level advisory has been gestating for some time ever since the SolarWinds and Kaseya supply chain cyber-attacks. A software supply chain attack occurs […]
  • Philanthropic group to launch assistance portal for local admins navigating federal bureaucracy
    A joint venture announced Tuesday by a group of philanthropic organizations—in collaboration with the U.S. Conference of Mayors, the National League of Cities (NLC) and Results for America—seeks to help small and mid-sized communities secure their piece of the $550 billion in funding available for local governments navigating federal bureaucracy. The digital portal will launch […]

Leave a comment Cancel reply

-or-

Log in with your American City and County account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • In 2022, public employers face hiring challenges, opportunity
  • The new normal: How state and local governments can benefit from virtual desktop-as-a-service to support remote workforce
  • As the workforce emerges from a year online, telework can be leveraged for talent retention
  • The COVID reset: How the government work environment will be changing

Twitter


AmerCityCounty

Amid shifting workplace expectations, local government employers must adapt dlvr.it/SQm2RT

20th May 2022
AmerCityCounty

Smart911 emergency profiles provide first responders with more information, faster dlvr.it/SQh9gl

19th May 2022
AmerCityCounty

Minor league baseball is helping cities hit a revitalization home run dlvr.it/SQc5N4

18th May 2022
AmerCityCounty

Sustainable Purchasing Leadership Council can help governments get up to speed on sustainable buys dlvr.it/SQbwqL

18th May 2022
AmerCityCounty

The MSP downstream cyberthreat paradox: Understanding the city and county connection dlvr.it/SQYVjs

17th May 2022
AmerCityCounty

Philanthropic group to launch assistance portal for local admins navigating federal bureaucracy dlvr.it/SQY16G

17th May 2022
AmerCityCounty

Report: Nearly 95 percent of America’s mayors face harassment, threats and violence dlvr.it/SQTn2z

16th May 2022
AmerCityCounty

The PIO’s Ultimate Guide to Social Media dlvr.it/SQTdCK

16th May 2022

Newsletters

Sign up for American City & County’s newsletters to receive regular news and information updates about local governments.

Resale Insights Dashboard

The Resale Insights Dashboard provides model-level data for the entire used equipment market to help you save time and money.

Municipal Cost Index

Updated monthly since 1978, our exclusive Municipal Cost Index shows the effects of inflation on the cost of providing municipal services

Media Kit and Advertising

Want to reach our digital audience? Learn more here.

DISCOVER MORE FROM INFORMA TECH

  • IWCE’s Urgent Communications
  • IWCE Expo

WORKING WITH US

  • About Us
  • Contact Us

FOLLOW American City and County ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookies Policy
  • Terms
Copyright © 2022 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X