Upset by the news that roughly 58 percent of District of Columbia employees live in the suburbs, the D.C. City Council is considering an array of soft and hard measures to try to require that city jobs go to city residents. These kind of policies are fairly common around the country and quite misguided.
From the viewpoint of a city employee, what happens when you impose a residency requirement is that he or she is taking a pay cut. But if the city actually cut municipal worker pay across the board by 2 percent, that would actually accomplish something useful. You could hire more government workers and or cut sales taxes, providing more services and helping local private businesses. What you'd have to worry about on the flip side is that you'd be reducing the quality of public services. When you do it through the residency requirement, you run the same risk of degrading the quality of the workers you can hire, but you don't have any of the counterbalancing benefits.
The idea, obviously, is that you're somehow "keeping the money in the city" with the residency requirement, but nothing about micromanaging where people live succeeds in micromanaging where they spend their money. Especially in a place like Washington where housing costs are already high, it's not at all clear what benefits you'd accrue this way. You're just making life harder for municipal workers for the sake of a cheap talking point.