Digital Nomads’ Effects on Host Cities

 
When COVID-19 hit, remote work skyrocketed allowing many professionals to work wherever they wanted to, leading to a new type of traveler: the digital nomad, “people who embrace a location-independent, technology-enabled lifestyle.” The main demographic of digital nomads are self-employed, well-educated young men working in the fields of technology, education and training, sales, market and public relations, consulting and creative services.

Digital nomads’ effects on host cities are both positive and negative as it creates economic opportunity, but also contribute to unwanted side effects for the locals. Two informative examples of digital nomads’ effects on host cities are Chiang Mai, Thailand and Mexico City, Mexico.

The Original Digital Nomad Magnet City: Chiang Mai

Chiang Mai, Thailand is known as one of the largest hubs for digital nomads in the world and the cultural center of Northern Thailand. The main attractions of Chiang Mai for digital nomads are their convenient working spaces, various choices for accommodations, low cost of living and friendly locals. Chiang Mai is one of the best and oldest examples of digital nomads’ effects on host cities as it hosted these travelers long before the pandemic.

The effects of digital nomadism on Chiang Mai range from economic and socio-cultural to digital/built-environmental impacts. In regards to the economy, these affluent visitors help the local economy by purchasing local products and services like accommodations and co-working spaces. Thailand also collects visa fees from digital nomads although they are low. Although not a direct economic benefit, locals and interviewees for the research on digital nomads’ effects on host cities noted that another benefit is skill-sharing as digital nomads inspire locals into entrepreneurship. The negative economic impact is the price increase and gentrification in areas where digital nomads live, which has driven out locals who work for a normal wage.

Socio-Cultural Impact

The socio-cultural impact on Chiang Mai includes a positive relationship built between locals and digital nomads as these visitors consistently made an effort to respect local culture and customs, although many digital nomads do not learn Thai. Locals often prefer this type of foreign visitor to normal tourists, according to the research. Exposure to digital nomads has also increased the locals’ interest in digital work. The negative impact of digital nomads is their privilege, noted especially when the pandemic hit and Thai people were out of jobs, while the digital nomad community did not face such an impact.

Digital nomads also impacted the digital and business presence of Chiang Mai as they created coworking and coliving spaces in Chai Mai and brought in businesses that cater to American and European visitors like Amazon drop shipping storefronts, according to the same research. The presence of social media in distributing information about the lifestyle of digital nomads has boosted Chiang Mai’s already great popularity, according to the research. Overall, digital nomadism in Chiang Mai has grown and benefited the local community but has also contributed to unwanted impacts like pushing locals out of previously affordable neighborhoods.

The New Hub: Mexico City

For digital nomads, the economic benefit of living in a low-cost-of-living city like Mexico City yet still earning European or American salaries is huge. Their “purchasing power” is above the national average with the average salary of Mexican workers coming in at 4,300 pesos compared to the average Mexico City inhabitant’s average salary of 6,000 to 10,000 pesos. This leaves many locals unable to pay rent in previously affordable, popular neighborhoods like Hipódromo Condesa whose rent has risen from an average of 18,000 pesos per month to 60,000 pesos per month. Many Mexican workers have to move outside the city, which adds to their commute and leaves them in neighborhoods with few services and more pollution.

Although digital nomads’ effects on host cities bring economic benefits, according to Airbnb, the restaurants, transportation and tourism services in Mexico City brought in about 9.3 billion pesos, Mexican workers do not always see this money, El Pais reports. Many digital nomads from Europe and America do not tip appropriately due to different views on tipping, leaving Mexican waiters unable to keep up with already high inflation. Although the long-term benefits of digital nomads’ effects on host cities like Mexico City are still to be determined, it is important to note the new stresses and new realities local Mexicans must face as Mexico City becomes a popular digital nomad location.

The Future of Digital Nomads

A research study MBO Partners’ 2022 State of Independence conducted concluded that 16.9 million American workers describe themselves as digital nomads. This is a 9% increase from 2021 and a 131% increase from pre-pandemic 2019. As of 2022, 69% of digital nomads reported that they plan to continue as digital nomads for the next two to three years.

As digital nomads continue to increase in number, many countries implement special visas or programs to promote longer-term stays. The Remotely From Georgia program requires digital nomads to stay for one year while proving they have the financial ability to pay taxes and accommodations. Thailand offers digital nomads 10-year visas and low tax rates.

Moving forward, many hubs for digital nomads will likely adopt more measures like the one that Héctor Magaña, economist and professor at the Mexico City Business School, Monterrey Tech, recommended for Mexico City. He recommends Mexico regulate rent in accordance with the salaries of the inhabitants of the city in order to balance the inequity, El Pais reports. If states do not limit the influx of digital nomads, housing costs could continue to rise. Overall, the takeaway of digital nomads’ effects on host cities is that while certain cities become magnets for digital nomads, the city must create clear rules to protect their locals.

– Arden Schraff
Photo: Flickr