Digital nomads want to work from anywhere. Some worry that’s creating problems for local communities

Federico de Jesús is happy for remote workers to set up shop in Puerto Rico — as long as they pay their taxes.

Even before the pandemic made working away from the office more common, the island territory saw an influx of wealthy investors and new workers, including so-called digital nomads, moving in to work beachside due, in part, to tax breaks for non residents.

Now, he says, many are making life on the island unaffordable for its residents.

“It’s not about getting Americans out of Puerto Rico,” said de Jesús, a representative for advocacy group Losing Puerto Rico, on CBC Radio’s Spark. “There are a lot of great Americans that come and create jobs and pay their taxes.”

“We’re concerned with colonial gentrifiers that are pricing people out of their homes.”

The trend toward digital nomadism — a lifestyle that allows workers to travel the globe while logging into their job from wherever they are — has been growing in recent years, but saw a sharp rise after the pandemic opened the door to more flexibility at work. 

According to an August report by U.S.-based human resources company MBO Partners, the number of Americans who call themselves digital nomads grew by 131 per cent from 2019 to 2022.

It’s attracting a typically younger group — millennials and Gen Z workers — often in well-paid tech and knowledge jobs. 

But that freedom to work from anywhere has created tension in some communities where the cost of living has spiked for locals.

“Digital nomads mainly aren’t staying in hotels, so then what happens is there has to be real estate for them,” said Rachael Woldoff, a sociology professor at West Virginia University.

“You could say, ‘Well, maybe they just build housing for them so it’s not taking anything away.’ That may or may not be true…. Even if you are building for them, it changes the place.”

‘You can work from anywhere’

Kristin Wilson recently made a return to her pre-pandemic life as a “location-independent entrepreneur.”

“I was able to go to Portugal for a few months last year and then the U.K. this year, and other parts of Europe,” said Wilson, who’s currently based in Manchester. 

The content creator and founder of a relocation company for other digital nomads has been travelling and working remotely since 2012.

“You can work from anywhere. You can live almost anywhere. And for so many years, it was something that was very unconventional,” she said.

“But these days it’s becoming more and more mainstream.” 

Digital nomadism existed before the pandemic, but the shift toward remote work saw many workers reject the idea of required in-office face time. 

In her book, Digital Nomads: In Search of Meaningful Work in the New Economy, Woldoff profiles workers who say they burned out from their jobs.

“They felt like they lived in these creative class cities, but they couldn’t take advantage of the amenities because the cost of living was high [and] their wages were not keeping up with the costs,” she said.

“They were so busy working and trying to pay their bills and keep up with their lifestyle, they found themselves in a lot of despair.”

For those workers, finding a new surrounding — whether it’s the Indonesian island of Bali or metropolitan Lisbon — was the solution. 

“They were just very confused as digital natives,” said Woldoff. “Almost like, why are people who are a little bit older than them so focused on face-time culture?”

Meanwhile, jurisdictions such as Portugal have actively invited remote workers to the region in hopes of stimulating the local economy.

Rising housing costs in Puerto Rico

Puerto Rico’s unique tax incentives make it an inviting locale for remote workers and cryptocurrency investors.

Individual investors who relocate to the island are exempt from paying income and capital gains taxes on the passive income they earn. The breaks aren’t available to locals and existing residents. 

If Congress doesn’t act to remove the tax exemption for those folks at the federal level, it’s going to keep coming.– Federico de Jesús

In order to be eligible, investors are required to buy real estate on the island. That’s led to a steep rise in housing prices, with some investors offering locals blank cheques for unlisted houses, according to the New York Times.

“They have to purchase a home to prove that they live in Puerto Rico, only live half of the year there, and they’re making it just so much more expensive for people to live,” de Jesús said.

“A friend of mine lives in the town of San Germán. He got accepted into the University of Puerto Rico Law School in San Juan, and he couldn’t get a rent below $3,000 a month in an area that a few years ago you could get an apartment for $500.”

While the Puerto Rico example is on the extreme end, similar issues have popped up in Portugal’s capital where locals are being priced out of the housing market as more competition is spiking prices.

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Wilson says that the affordability challenges cities face aren’t necessarily related to a rise in digital nomadism, but sustainability within the tourism industry.

“I think it’s unfair to point all of the blame at digital nomads,” said Wilson. “And the real point here is that change is hard, but change is happening and technology is promoting change at a very rapid rate.”

“I know that the people in the digital nomad community are very hardworking, very forward thinking and want to partner with local people and local governments to be able to make sure that they’re having a net positive impact in the places that they’re going.”

Change to tax law needed: de Jesús

Digital nomads need to be conscious of the impact they can have on local communities, says Woldoff.

“The government and the people there have to be protected. So their housing, their way of life, their, you know, the way they live and has to be respected,” she said.

But to de Jesús, fighting for his home’s residents, that means changes to the tax law.

“If Congress doesn’t act to remove the tax exemption for those folks at the federal level, it’s going to keep coming,” he said.

Puerto Ricans, he adds, are “very concerned that we’re going to become Hawaii 2.0 where Hawaii isn’t for Hawaiians. It’s for a lot of other folks, but not native Hawaiians.”