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One-third of Ohioans aren’t going back to the office when the pandemic ends.
They plan to work from home at least one to two days a week, according to a new study from the Ohio Mayors Alliance.
Researchers hired by the alliance analyzed 10 cities from across the state and found that, on average, 33% of workers wouldn’t be going back full-time.
That’s a big deal because these cities rely on income taxes paid by commuters for a decent chunk of their general revenue funds. Simply put: Fewer downtown workers means fewer municipal tax dollars and potentially fewer city services.
“Working from home isn’t a bad thing,” Ohio Mayors Alliance Director Keary McCarthy said. “But it does have unintended consequences that will affect cities, downtown businesses, and local economic development strategies.”
Working from home: More productivity, happier employees
The study looked at the financial data and industries in 10 Ohio cities: Akron, Cincinnati, Columbus, Dayton, Elyria, Fairfield, Kettering, Springfield, Strongsville and Toledo.
What the study found was working from home increased productivity and employee satisfaction in a significant percentage of the population.
“The vast majority of firms across the country and in Ohio have implemented or plan to implement some form of hybrid staffing for their office-type employees,” according to the report.
So, what does that mean for city budgets?
Well, it depends. For Columbus, where researchers estimated that 39% of workers could work remotely, it represents a potential loss of $110 million a year. That’s about a 12% cut to the city’s general revenue fund. That’s the money it uses to pay for services like police, fire and road repair.
Strongsville, on the other hand, could lose about 24% of its workforce and about 6% of its general fund.
The report also said that these numbers are a “very conservative analysis.” The researchers focused on personal income taxes. But office building owners, restaurants and other retail businesses (which collect sales taxes) would all be impacted by a decrease in commuters.
A group of researchers from the National Bureau of Economic Research surveyed 30,000 Americans each month starting in May 2020 and found two big things:
First, about 40% of people would look for another job if their employer asked them to return to the office full-time. Those folks would also change jobs without a pay increase if that new employer allowed more work-from-home options.
Second, employers are listening. Eighty-two percent said they will continue allowing remote work. That means about 30% of the U.S. workforce might stay home multiple days a week.
How will Ohio cities cope with loss of income tax from commuters?
Ohio cities are different from a lot of other cities in the U.S. because of their reliance on municipal income taxes.
Columbus, for example, got about 76% of its 2019 general fund from that particular tax. Cincinnati and Dayton got 70%, Akron got 57% and Strongsville came in at 82%.
That means Ohio cities are particularly vulnerable to a shift to working from home.
“This isn’t about Columbus’ budget,” Mayor Andrew Ginther said. Ohio’s metro areas have accounted for all of its job gains and nearly 9% of its gross domestic product gains for the last two decades, he sai.
“Metro areas drive the state’s economy,” Ginther said. “If Ohio’s cities aren’t thriving, Ohio’s economy isn’t thriving.”
But keeping Ohio’s cities healthy might require rethinking the way they tax both its residents and commuters.
Ohio doesn’t let cities require new hires to live within their borders. State lawmakers cut the local government fund in half during the Great Recession. They also increased property tax deductions and eliminated the estate tax.
Both McCarthy and Ginther said they weren’t asking for a legislative solution yet. But they’re hoping this data sparks some conversations.
“Cities want to do our part. We want to create jobs and be centers of innovation and development,” Ginther said. “But we need to do this in partnership with the state, and we need long-term, predictable streams of revenue to protect the quality of life in our cities.”
Anna Staver is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.