Why low-tax states are benefitting from work-from-home policies

Yahoo Finance's Akiko Fujita, Jen Rogers, and Melody Hahm discuss Facebook's new policies about working from home.

Video Transcript

AKIKO FUJITA: Let's talk about what our offices are going to look like, or likely to look like, once the reopening process happens, at least in some major cities like here in New York City. We certainly heard from a lot of tech companies, Twitter in the very beginning saying that they will allow some workers to work from home permanently. Facebook yesterday coming out and saying that maybe 50% could work from home over the next five to 10 years. Then we got this news today from Vox's CEO saying the company will allow workers to work from anywhere at least until 2021, with work stipends as well as health benefits.

Jen, I want to bring you into the conversation here, because you know, I guess the question is really, you know, are these tech companies doing this because they are in a position to do it? And how permanent is this work from home likely going to be?

JEN ROGERS: I mean, look, it is-- I think there are some workers that are asking for it. And the tech companies have the ability to do it. This is the way their businesses are run. They have the technology. They have extra money to throw at this problem.

But in terms of what it's going to look like long-term, I've been talking to some people that say maybe the pendulum is going to come back. Some people want to go to the office. It's kind of like the rush to the public cloud that we had. And then we've seen this move to hybrid, because you need-- people thought, well, actually, for security, I want to have some stuff here at the office.

So the same way, a lot of people are starting to think about this hybrid work where you will be able to go to the office if you want or work virtually. That's actually, though, more expensive, because you still have to have the real estate. So in the end, they might not be saving that much if that's what employees eventually demand because they want to still have that face-to-face with their other workers there.

AKIKO FUJITA: There is a question, though, if you allow or if you start to recruit based on this remote work-from-home scenario, are we going to potentially see people work out of some of these areas that are more expensive, like the Bay Area? We put that question to Alexis Ohanian, who is the Co-Founder of Reddit, as well as Initialized Capital, about which states are likely to benefit as a result of this shift.

OK, I'm not sure if we have that. But he essentially said that states like Florida, low-tax states that are likely to benefit-- and Melody, I want to bring you into the conversation, because you know, anytime something like this happens people say, well, there's going to be an exit from California. That talk has been going on for a while. But is there a point to that conversation this time around? Because these tech companies are committing to, in a case like Facebook or Twitter, a more long-term remote work environment?

MELODY HAHM: To a certain extent. I mean, we saw Mark Zuckerberg's comments, and even that internal Facebook survey-- which we should take with a grain of salt-- which found that 50% of Facebook employees say they're just about as productive in the office as they are at home, which means that 50% actually feel more productive in the office.

So my thinking here is that a lot of these tech companies that have already tried to diversify their office space, really centering on Austin-- of course, a lot of the, you know, whether it's Crystal City or Crystal Springs in the DC area, just thinking about all of the new sort of up-and-coming cities, which have gotten pricey to begin with.

So I do expect there to be some movement, some re-jostling, people who want to be able to buy a house who do work at tech companies who haven't been laid off who are able to get into the market, even though we haven't seen home prices stabilize yet. I do anticipate there will be some of that action. But it's very much an overblown narrative, as we've encountered over the last couple of years.

AKIKO FUJITA: Melody, I guess the counter to that is, are we going to see a more diverse workforce? Especially with tech companies, there's been so much talk about how it is very insular. They recruit within. They recruit within specific regions. Now they don't necessarily have to be from there, and they don't have to be able to afford living in that area either.

MELODY HAHM: Exactly. And you know, even the concept of seasonal workers-- on the blue collar front, we can see a sort of parallel universe happening with these tech companies who, perhaps in light of Cyber Monday or in light of Amazon Prime Day, even from the corporate side of things, they could invest more in R&D, invest more in marketing. And basically, those employees can be anywhere.

We have seen the very wide spectrum of how tech companies have thought about work-from-home pre-pandemic, right? And the likes of Facebook we're actually very much on the far end, where they facilitated that a lot. That was very possible, whereas the Amazons of the world had kind of looked down upon that approach.

And I have quite a few colleagues and friends who work at Amazon, who prior to the pandemic were chastised for working from home, even if they were given the option. So this sort of judgment will no longer be able to exist, especially when the executives, the chief executives are coming out saying that they will accommodate this new normal.

JEN ROGERS: And just in terms of the salary arbitrage that we've been talking about-- people being able to keep their same salary, move to a state maybe that doesn't have taxes or has a lower cost of living. Remember, yesterday we did hear from Facebook that if you moved, they would readjust your salary. And that is something that we could likely see from other companies.

And remember, we are seeing reductions in salaries already, having nothing-- not doing with people getting to stay home longer. But from advertising companies to media companies, we've had a number of them come out and just say, OK, we're just cutting salaries 15%. We're cutting salaries 20%. So as part of this transition, that might become a recurring narrative as well.

AKIKO FUJITA: Yes, certainly a number of elements to be watching as these offices determine how their workplace is going to look like when they reopen.