More and more countries are realizing the benefits of bringing remote professionals in for long periods of time.
Puerto Rico Gov. Pedro Pierluisi signed a law in January to promote telecommuting in private enterprises to encourage outside investment. With this, the U.S. territory joins 22 sovereign states and territories in Latin America and the Caribbean that have passed legislation officially welcoming remote workers.
Last year, Nomad List, an online community of self-identified, location-independent workers, named Buenos Aires the best place in America for digital nomads. The city government says it welcomed 72,450 digital nomads in 2022, up from 9,600 in 2021, based on incentives to attract remote workers.
Many highly paid, highly educated people from rich countries can and prefer to work remotely, not always from home. Companies that need the skills or knowledge these people have should accept off-site employees or offer it as a benefit.
“Businesses that partner with digital nomads have more satisfied workers,” says Nicole Cieslicki, senior director of global services at workforce provider MBO Partners.
Due to varied lifestyles and economic reasons, an increasing number of people want to spend all or most of their time outside their home country. More and more people are choosing Latin America.
According to the authors of the Digital Nomad Visa Whitepaper, published last December by consultancy Remote Commons, three of the world’s ten largest digital nomad hotspots are in Latin America: Mexico, Costa Rica and Colombia. Meanwhile, Buenos Aires, Mexico City and Medellin are among the region’s top 10 cities, according to the Nomad List. Panama and Uruguay are particularly popular among his clients, says Mikkel Thorup, CEO of consultancy Expat Money. Women nomads list Costa Rica, Mexico, Chile and Peru among their top 10 favorite countries, according to the online knowledge center of team collaboration platform provider Pumble.
Research and stories show that people are flocking to cities like Medellin; Rio de Janeiro; Mexico City, Playa del Carmen and Oaxaca in Mexico; and Buenos Aires. In 2023, the fastest growing hubs in the Americas were Montevideo, Uruguay; Santiago, Chile; and Florianópolis, Brazil, according to another Nomad List study.
Finding reliable data on remote workers around the world is not easy. A global study of digital nomads published on the blog A Brother Abroad estimates that up to 35 million people may be moving around the world. In the US, which appears to have the best performance, 17.3 million American workers now call themselves digital nomads, up 131% between 2019 and 2022 and now up another 2%, according to MBO Partners. than in 2022, according to MBO Partners.
The only official data available appears to come from a 2022 analysis of the population of overseas citizens by the U.S. Department of State Bureau of Consular Affairs, which estimated that there were nine million U.S. citizens living abroad in 2019.
Birth of the nomads
Working outside the employer’s place of business has a long history. However, according to the authors of the Remote Commons white paper, the history of digital nomads begins in the 1990s with the advent of the Internet and mobile computing.
Before the advent of “telecommuting,” the most well-known remote workers were foreign correspondents. In addition to the media, typical expatriates have been sent on assignment by a multinational company for an extended stay at its subsidiary, according to Cieslicki of MPO Partners. Benefits included housing and private schools for children. “A lot of these packages don’t make sense. [financially for the firms, anymore]”, she adds.
In the 1990s, top technology professionals, especially computer engineers, found nothing that would stop them from working anywhere. This has been helped by advances in communications technology, such as the introduction of Skype in 2003, which has reduced telephone costs, said Bobby Casey, managing director of consultancy Global Wealth Protection (GWP).
Around the same time, most major cities in the world had decent internet access. The new class of workers takes its name from Carl Malamud’s 1992 book Travels, in which he described the “digital nomad.”
The next wave of nomads consisted of so-called influencers who bragged and blogged about how to do it. Then came the Covid-19 lockdowns. In March 2020, remote work in the US jumped from 4% to 45%, according to Liam Martin, co-founder and chief marketing officer of productivity software provider Staff.com. “It was the biggest change since the Industrial Revolution, which took 80 years.”
“I wrote that Covid-19 was the best thing that happened to humanity,” says GWP’s Casey. “I received death threats. But it exposed the reality that remote work is where it’s at.”
After the pandemic, the Great Resignation occurred. Today, even many high-ranking executives refuse to return to the office routine.
The term “digital nomad” has become a catch-all category for remote workers who spend some time away from home. These include regular expatriates, people with a base who travel frequently, and snowbirds escaping the freezing winter climate. They also include freelancers, independent contractors, entrepreneurs, business owners, and part-time and full-time employees. Some move around a lot, and some stay in one place forever or for a long period of time.
Author and travel writer Tim Leffel says only 5% of the more than 10,000 subscribers to his newsletter Nomadico are not solely location-based.
Attracting Keyboard Warriors
According to the authors of Remote Commons, there are five main reasons why people choose a semi-nomadic lifestyle: flexibility and autonomy, cost of living, adventure and travel, career advancement and personal growth.
“The main reason is money,” says Millie Arceo of Mexico consultancy Legally, based in Playa del Carmen on the Yucatan Peninsula. “Their money has a lot of value here. Real estate is cheaper and they can live better.”
The Baltic state of Estonia pioneered an e-residency program in 2014 and became the first European country to offer a digital nomad visa in August 2020. which exempts nomads from income tax in Barbados. Dozens of countries soon followed suit.
Despite all the fuss about traveler visas, experience shows that they don’t make much difference. The Ecuadorian government said it issued only 113 such documents in the 16 months to July 2023. However, just five minutes in the Mariscal district of Quito provides ample indications of a much larger “gringo” presence.
Rules vary by country; but, as a rule, there are three fast-track ways to obtain a medium-term or long-term visa. Prospective nomads must prove a certain level of annual income outside the country, ranging from US$12,240 in Colombia to US$100,000 in the Cayman Islands. They may need to prove sufficient passive income from a pension or interest, dividends, rent, payments or royalties. Or, in some places, they may invest directly in real estate or local businesses.
“While digital travel visas are supposedly plentiful, few offer enough ease and flexibility to compete with tourist visas,” write the authors of Remote Commons. “Working on tourist visas may be technically illegal, but enforcement is virtually non-existent. Most digital nomads come from rich countries with strong passports, such as the US, UK or Germany. Therefore, tourist visas remain the most attractive option unless they are planning a long stay.”
A cottage industry of consulting firms for nomads, their employers and clients is emerging. It is difficult for recipient countries to determine the economic consequences. Since nomads derive their income from abroad, there are no threats to domestic jobs. Instead, the effect will be similar to that of remittances—a diffuse boost to businesses ranging from housebuilders and furniture makers to bars and restaurants.
According to Pumble, the average digital nomad makes around $125,000 per year. When the minimum wage in a relatively developed country like Brazil is less than $300 a month, it’s easy to see why local politicians might want to introduce such an introduction to nomadic purchasing power.