Part II: Understanding Digital Nomads

30 minutes, 20 links

You’re reading an excerpt from Global Natives: The New Frontiers of Work, Travel, and Innovation, a guide to digital nomads and the work-from-anywhere movement, by Lauren Razavi. Purchase the book for instant digital access.

Who is a Digital Nomad?

A digital nomad is someone who works remotely and travels at the same time. Those who fit this label also tend to match other identities, depending on where and who they are—and who’s asking. Like other social groups, nomads often outwardly define themselves in ways that don’t resonate with their own perceptions. They have to tick the right boxes for immigration, insurance, healthcare, and taxes, and the rules and norms often vary drastically between countries. By traditional institutions, nomads might be called expats, tourists, or business travelers. The paperwork might say they’re young people studying or interning abroad, or identify them as retirees on a round-the-world trip.

People often assume nomads are constantly on the move, but each new place takes an investment of time and energy, hassles and costs. There are incentives to stick around a while. Some nomads relocate every year or two, deeply and slowly exploring each area and organizing side trips to nearby cities and countries. Others travel to a new destination every month or six months, getting a feel for the place before moving on. Often, they’ll keep returning to favorite spots, strengthening their connection to a destination and community with each visit.

A study by MBO Partners found that 32% of American nomads planned to be nomadic for less than one year—though as the Hacker Paradise story shows, people often end up staying on or returning to the lifestyle after trying it out—and 54% planned to continue for the next two years.* Rather than establishing a set routine in one home city, nomads adapt to each new place they go. The fundamental human desires stay the same—food, fun, friends, fitness—but the rituals vary from place to place. Nomads design the interactions between their work and other aspects of their lives, optimizing for what they want to see and experience.

Nomads are longer-term visitors than tourists, keen to create stability, habits, and routines that support their productivity and wellbeing, just like everybody else. Many still consider their country of origin to be their home base, and spend regular time there, or in another chosen home, each year. Whatever their travel pattern, the defining feature of the nomad mindset is a flexible attitude toward location. They aren’t choosing the life of a settler, but of a slow-traveling nomad.

For me, life looks different—but in other ways, entirely consistent—depending on my location. Long summer walks are my exercise in Amsterdam, while I’ll hit the gym and pool in my building in Kuala Lumpur. Lunch in the UK may be a sandwich from an outdoor market, while it’s likely to be a plate of rice from a hawker center in Singapore. Wherever I am, I’ll probably play Pokémon Go on my smartphone to explore new neighborhoods. I almost always know the location of the best specialty coffee shop—a global craft culture that crosses national boundaries. I might also do karaoke in Thailand, hop between cocktail bars in Hong Kong, and have a beach barbecue in Melbourne. Like most of the nomads I’ve met, I’m a great believer in doing what’s good in a place—usually whatever the locals do—to keep myself entertained, even if it’s something I wouldn’t instinctively choose to do elsewhere.

These lifestyle differences are an inherent part of the fun of all travel, and they’re also what prompt an important process of self-reflection and personal growth during nomad trips. Through travel, people come to understand what shapes their sense of identity, community, home, and belonging. And their thinking is constantly challenged by cultural and social differences, giving them a uniquely global perspective.

People often question the long-term viability of living as a digital nomad, which is a valid response if you understand most of us to be location-hopping every other week. But the nomad reality is slower-paced, and mainly concerned with the idea of creating the life you want, in the place that suits you best, unhindered by the requirements of conventional work.

How Many Nomads Are There?

Because nomads are such a fluid group, few governments, institutions, or organizations invested in surveys and research related to them in the 2010s. There just wasn’t much incentive while nomadism was still a fringe movement. Today, though, visa and border policy are beginning to modernize, spurred by the global shift to remote work. We’ll explore how this is playing out in the later parts of the book, but what you need to know for now is that who exactly nomads are is difficult to measure, quantify, and analyze.

Since 2018, the consultancy firm MBO Partners has published a yearly State of Independence in America survey, one of few studies to collect data about digital nomads. While the survey only covers US residents, the 2021 edition found that 15.5 million Americans already identify as digital nomads (up from 10.9 million in 2020 and 7.3 million in 2019).* It also indicated that 65 million Americans are either planning to become digital nomads within three years, or are considering it. If those numbers prove accurate, 25% of the US population could be nomadic by the middle of the decade.

Figure: Growth in American digital nomads, from a survey by MBO Partners.*

A digital nomad named Pieter Levels, who we’ll learn more about later in the book, gave a conference talk about the future of digital nomads back in 2015. In it, he considers the implications of five ongoing global trends:

  1. Faster, cheaper internet

  2. Faster, cheaper air travel

  3. More freelancers

  4. Fewer marriages

  5. Less home ownership

Based on these shifts, Levels predicted there would be one billion digital nomads in the world by the year 2035. That’s equivalent to around 12% of the global population today. Even to those of us who were nomadic at the time, that figure sounded crazy. Nevertheless, respectable media brands like the Economist, Guardian and BBC all ran it in their stories.

But will Levels’s napkin math be proven right?

The growth of digital nomads will largely depend on the availability of remote jobs. During the COVID-19 pandemic, many positions that had previously been in-office jobs suddenly became “anywhere jobs,” meaning they can be done remotely as efficiently or more efficiently than in a physical office.* Reflecting on this change, a McKinsey report from February 2021 estimated that up to 25% of the workforce in advanced economies would work remotely going forward.* For emerging economies, their projection was 10%. That’s a fivefold increase in the number of remote workers worldwide compared to 2019. The trend of employees quitting their jobs in favor of remote, flexible roles—“the Great Resignation”—suggests these will become the default work models in the near future.

Of course, being a digital nomad became more difficult as border closures and new travel requirements swept across the world in response to COVID-19. Still, there are many who continued despite the increase in stress, complexity, and expanse. Lockdowns in major European and American cities saw many people spend more time online, leading them to discover the possibility of digital nomadism. It didn’t take long for them to start dreaming about their ideal lifestyle, or for the media to begin referring to nomads as a cohesive group for the first time. Excited headlines like “COVID-19 Ushers in a New Era of Full-Time Travel” (Wall Street Journal, December 7th, 2020) and “Remote Work Made Digital Nomads Possible. The Pandemic Made Them Essential” (Fast Company, May 13th, 2021) brought digital nomadism to wider audiences than ever before.

In this context, one billion nomads by 2035 doesn’t seem nearly so outlandish. The internet, and especially the remote work it enables, fundamentally alters the human relationship with place.

There are now growing incentives for governments to examine who is and isn’t a nomad, and to understand more about their habits and needs, but it will likely take years to set up effective monitoring and gather meaningful data sets. Even once the structures are created, designing the right incentives for nomads to report their status will be tough. The way nomads live has never been outlawed, as such, but it has existed outside the usual purposes of travel. Sharing too many details with the authorities can result in delays, hassle, attention, and other undesirable consequences. When both business and pleasure are at stake, the easiest option is to tick the box that will prompt the fewest questions at the border.

The Nomad Work Philosophy

One of the rare early studies about digital nomads was initiated by a Harvard Professor named Beth Altringer.

Working across design, behavioral science, and innovation, Altringer was used to hearing about the latest hubs, ideas, and trends from around the world. In 2014, everybody she spoke to seemed to mention the same place: an Indonesian town of 30,000 where a group of expats had launched a vibrant new coworking space. Just a year after opening, it was now home to a disproportionately large startup community, and the town had become known as a global hotspot for entrepreneurship and sustainable design.

The name of that town was Ubud, and the name of the coworking space Altringer kept hearing about was Hubud, the same place I met Hacker Paradise in Bali. She decided to take a trip, interested in investigating whether this success could be replicated elsewhere.* She spent several weeks working from Hubud, meeting digital nomads in the wild and trying out the lifestyle for herself. The questions that compelled her most were around nomad finances, so she returned to Harvard and launched a survey.

The highest earners in Altringer’s study were finance professionals, serial entrepreneurs, and top-tier software engineers, bringing in $8K per month on average and carrying minimal debt. Some of this group were motivated primarily by the tax advantages of a location-independent lifestyle, an issue we’ll explore in the next section of the book. Other high earners included the early employees of successful startups, salaried employees of big tech companies, and elite freelance coders represented by talent managers. Many of these people considered nomadism a long-term lifestyle, though some of them traveled within their home country rather than going overseas. The most successful nomads in the study tended to have in-demand skills, have already proven themselves professionally, and held their own interpretation of what constitutes a good life.

Below this group were mostly software engineers and some of the more successful online marketers. At lower income levels, the most common careers were in online sales and marketing, life coaching, and blogging. Nearly 60% of this group carried more than $60K in debt.

Typically, the nomads Altringer met opted for remote career tracks that were more flexible than those they left behind. These workers were often more concerned with day-to-day happiness than financial success, though Altringer questioned the sustainability of this position:

On average, nomads make around $1,000 a month, which at first glance goes very far in a low-cost location. But this $1,000 average doesn’t tell the full story. It is heavily skewed by exceptionally high earners, which hides the fact that the majority of nomads are making very modest salaries, not saving adequately for the future, and consistently struggling to keep their skills at a level that will allow them to return home where they left off.

The original data from Altringer’s survey is not public. From the scant information available, it seems a few hundred nomads filled in an online questionnaire (still viewable here) and then Altringer wrote up the results as a standalone Forbes article in December 2015. There’s also an archived version of a Q&A with her published on Nomad List, but this, too, is light on detail.*

According to the MBO Partners study of American nomads, 21% were earning less than $25K per year and 44% more than $75K in 2021.* It would be easy to conclude that many nomads are in a precarious position, choosing a path that leaves them worse off in their careers and with less financial security than the alternative. But this assessment misses the nuance in how nomads think about work and money. The traditional measure of monthly income may tell a very different story than the nomads themselves.

Some nomads are remote employees for overseas companies, in which case their income is predictable and they can choose where to live and travel according to the value of their salary, work obligations, and individual preferences. Others, however, take on consulting gigs or freelance projects to generate a pot of cash and then use it as a personal runway (a term borrowed from the startup world) to fund their lifestyle for a stretch of months or even years on the road. Just a few weeks of work might comfortably sustain them for the rest of the year in a low-cost destination. There are, of course, also nomads who struggle to make ends meet, as Altringer’s research shows, and there are even those who take on financial losses to pursue the lifestyle in the first place.

Nomads don’t do one type of work in a single industry, but in general, they pursue some form of knowledge work. That means they make money from their skills and expertise, whether it be as a remote worker for a company, as a service provider to clients, or as a digital maker creating their own products. Nomads can be coders, writers, artists, designers, consultants, entrepreneurs, marketers, crypto-anarchists, and just about anything else you can accomplish using a laptop and an internet connection. Tech professionals tend to be overrepresented, given that remote and flexible work has been normalized in their field for years.

A nomad may be junior or senior in their profession, earning a high or low salary by the standards of a global city, and could fall into almost any age bracket (though the demographics often skew younger, since it’s easier for those without partners, children, and mortgages to deal with the practicalities of long-term travel).

This diversity leads to a common question in nomad forums: “What kind of job should I get to become a digital nomad?” There is no good answer to this question, because their occupation isn’t what nomads have in common—the way they live is. For a movement so often externally defined by where and how they work, nomads themselves are generally more concerned with the other parts of their lives.

The traditional 9–5 work week requires people’s presence at an office and sets them up to spend the rest of their time chasing the nebulous concept of work/life balance. Few ever claim to have accomplished this mystical feat. That isn’t surprising when you consider that this work pattern usually requires another 10 hours of commute time each week, for which workers are not even paid. A 30-minute commute five days a week equates to almost eleven whole days and nights of a person’s life spent in transit each year.

If 40 hours are spent on work each week, 10 hours on commuting, 10 hours on washing and personal care, 10 hours on food (buying, cooking, and eating), and 56 hours on sleep, that leaves around 50 hours per week for other activities like dating, relationships, hobbies, exercise, reading, and socializing. The idea of finding “balance” in a lifestyle that requires as many hours for work and related activities as it does for sleep is a farce.

Nomads take a more intentional approach. Rather than focusing on balance, they focus on integration. They consider work’s role alongside every other aspect of their lives. They may not work consistent hours, sprinting a few times a day rather than enduring eight hours straight, and they often blur the lines between work and play. They might take days off midweek to avoid the tourist crowds on Saturdays, or spend leisure time learning new skills that relate to their work.

Remote tools like Slack, Gmail, and Zoom make a nomad’s virtual work environment consistent wherever they go. Knowledge work can be solitary, requiring deep, focused hours in front of a computer screen each day. If this work can be performed anywhere, there is incentive to optimize the rest of your life, and especially your location, around other priorities. According to MBO Partners, 81% of American nomads are “highly satisfied” and 9% “satisfied” with their work and lifestyle. It’s little surprise that people with flexibility, freedom, and control over their lives are satisfied with their choices.

Reid Hoffman, best known as LinkedIn’s co-founder, argues in the 2014 book The Alliance: Managing Talent in the Networked Age that the whole world is in transition from a status quo of lifetime employment to one of “temporary, sporadic, and informal” work performed on a project-by-project basis. In the future, he says, an individual’s ability to cultivate useful, broad, and deep networks will be the primary metric of career success. If Hoffman’s vision proves accurate, nomads may be an early glimpse of an emerging global middle class that navigates the world very differently than their predecessors.

There’s a lot to learn from examining people’s desire for global mobility, and how they’ve accomplished it by exploiting cracks in the current systems. Because nomads lack formal recognition, reforms and innovations that could make travel, global work, and freelancing simpler and safer for everyone often go overlooked or unrepresented. In today’s world of nation-state infrastructure, nomadic life can be precarious and full of friction. Remote workers who choose to hit the road are largely on their own, because a social safety net doesn’t exist beyond the borders of a country.

Now, as more people experiment with the nomad lifestyle, policymakers have to decide how to address their needs, or risk losing these travelers—and their own citizens—to destinations with a more attractive offer. We’ll explore this shift in later parts of the book, and visit some of the nomad hubs that are leading the transition to global, remote work.

Nomads and Taxes

This is my first time at Davos and I find it quite a bewildering experience, to be honest. … I hear people talking the language of participation and justice and equality and transparency, but then almost no one raises the real issue of tax avoidance, and of the rich just not paying their fair share. It feels like I’m at a firefighter’s conference and no one’s allowed to speak about water. … This is not rocket science. We can talk for a very long time about all these stupid philanthropy schemes, we can invite Bono once more, but come on, we’ve got to be talking about taxes. That’s it: taxes, taxes, taxes. All the rest is bullshit.Rutger Bregman, historian and author*

Who pays what to whom, and when, is hard enough to figure out when you still live in the town where you grew up. Frequent or infrequent relocation, dual or multiple citizenships, and other features of global, remote work challenge tax norms. Who we pay taxes to has traditionally been about where we live and work, but the internet has made the “where” part more difficult to pin down.

Taxes can be hyperlocalized: If you live in an area where people are well-off and pay more into the system, there are better services available—from recycling facilities and good schools to road infrastructure and community spaces. But you also pay taxes into your nation’s military whether or not you want to go to war, and into its arts programs whether or not you love the theater, and into its scientific research whether or not you believe in evolution or vaccination. So, what does it mean—and how do taxes work—when you see yourself as a global citizen?

Let’s look at an example. If a nomad with a German passport is based in Vietnam for six months and works remotely for a US company, the tax implications quickly become complicated. Our nomad is likely registered with the German authorities for income taxes, and their US employer will transact with them as a German resident and pay their salary into a German bank account.

If our nomad has their own self-employed business entity to receive their income, it will likely be in Germany rather than Vietnam. So, Vietnam doesn’t benefit from the US company’s business taxes or from our German nomad’s income taxes. If our nomad is living in Vietnam and using the local infrastructure, though, shouldn’t they be obliged to pay taxes there? The intuitive answer is yes, but the reality is more complicated than a simple “yes” or “no.”

Many nomads “offshore” their incomes, meaning their tax obligations are in a different jurisdiction than they are physically present. At first, a nomad usually registers their employment or business—and therefore pays income taxes—in their country of origin, then works remotely from different places on an informal basis. Later, some may choose to move their business entity to one of fifteen jurisdictions that leverage no corporate taxes at all, or their employment to a country in which workers pay no income taxes.*

Right now, it’s also possible—and perfectly legal—to live and work as a digital nomad and pay no income taxes at all. People achieve this by staying only a few months in each country, which means that no jurisdiction has a claim to their salary. Some people argue that nomads live in a community with almost no obligation to it; their income is sent elsewhere—either “back home” or to a third country where they have registered for taxes, or they are never even eligible to pay taxes to begin with.

This offshoring problem, of course, is not exclusive to nomads. The tactics were pioneered by the ultra-wealthy and their accountants to achieve “tax efficiency,” and then adopted by nomads searching for the best way to handle their affairs. But by no means are all nomads seeking to opt out of any tax system. Some nomads may decide that paying taxes in their country of origin is the best option—they may choose to pay taxes where they have family. For others, it may be neither simple nor sensible to do so.

If a nomad with a Serbian passport spends no time at all in the country each year, uses no government service, and doesn’t vote in the country’s elections, does it make sense for them to pay taxes in Serbia? In many cases, there is just no tax infrastructure suitable for nomads.

Tax avoidance is a widespread and controversial issue, and many people, nomads included, do intentionally offshore their financial affairs to keep more of their earnings. The global tax system has many loopholes and has not kept pace with how people live and businesses operate. For most nomads, though, the bigger motivation for separating physical and tax location is sidestepping bureaucracy. The complexity and commitment of registering on the ground in most places leads nomads to choose a single jurisdiction in a language they speak, and stick with it for several years. In many examples, the business and income tax rates of a host country are actually lower than a nomad’s country of origin, but language barriers, cultural differences, and the burden of local administration make a formal arrangement unappealing. If registering to pay local income taxes were as simple as swiping a contactless travel card on a subway system, more nomads would do it.

The same moral arguments against offshoring taxes from wealthy countries to tax havens apply to nomads’ actions as wealthier-than-average residents in poorer countries: it deprives local populations of the revenues needed to fund economic development and create a better, fairer society. But income taxes are only one part of the story. Depending on whether a person is classified as a local resident or temporary visitor, they are obliged to pay various different taxes:

  • Income taxes: charged on a person’s individual earnings

  • Infrastructure taxes: charged to maintain public transport, water supply, trash and recycling services, hospitals, and other essential infrastructure

  • Consumption taxes: charged on local spending and transactions, often called Value-Added Tax or sales tax receipts

  • Tourist taxes: charged on visitors’ stays, usually payable per night via accommodation providers like hotels or serviced apartments

Nomads pay consumption taxes on their local spending and, in many countries, their classification as temporary visitors means they pay tourist taxes if a city or country chooses to charge them. Since nomads don’t pay infrastructure taxes, though, they make use of local services without giving much back to fund them. Nomads do tend to spend more money than locals on accommodation, hospitality, sightseeing, and other activities, which boosts the host community’s economy and makes them a profitable target market for new and expanded businesses.

As remote workers, nomads almost never take jobs away from the places they visit. In fact, sometimes they even create opportunities directly by starting a business or investing in one. A nomad’s global salary goes further in a low-cost destination, and beyond improving their own quality of life, nomads are drawn to the idea of investing directly in the places they like and the people they meet.

Later in the book, we’ll examine how to increase a destination’s global relevancy and competitiveness, and why this makes them such an attractive prospect for governments seeking to promote their city or country internationally. Next, though, we’ll get to know some of the early artists and writers whose vision of collaborative cross-cultural exchange has echoes in today’s nomad movement. We’ll also trace the history of digital nomads, including major figures, early predictions, and the growth of the nomadic movement to the present day.

Part III: A Brief History of Nomads31 minutes, 37 links

Notebook Nomads

If I had been born a century earlier, I probably would have found myself in Paris rather than Bali, hanging out at a bookstore instead of a coworking space.

In 1919, an American woman named Sylvia Beach opened a book shop, Shakespeare and Company, on Paris’s Left Bank. It was a good time and place to be a bookseller: Paris was a literary and artistic capital, home to all the major French book publishers, literary journals, event spaces, and art galleries. The country’s best thinkers—Marcel Proust, Jean-Paul Sartre, and Anatole France—flocked to the city to be part of its unique culture.

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