In the US, this is only a benefit to bigger businesses or businesses with a presence in multiple states already (or those willing to take on quite a bit of new administrative work).
I work for a 15-person remote company based in a single state and the additional overhead required to understand taxation, labor laws, and other issues in even neighboring states is higher than you might think. We're putting it off and just hiring locally for now.
What do companies near the border do? If you are a small firm in NYC I can’t imagine it being unusual to employ people from NJ and Connecticut ad well as NY, and even further afield like PA. in Baltimore I can see you could have commuters from both virginias, Maryland, Delaware, Phillidelphoa, New Jersey and DC.
I think NY,CT, NJ are some of the few states with a kind of reciprocity agreement in place that makes this a bit easier.
I’m in Portland, OR and pre-pandemic, we’d have no issue hiring someone in Vancouver, WA, because they’d drive 15 minutes to our Portland office. Now, we choose to turn them away because of the bureaucracy and worry that we’re going to do something wrong. One day we’ll have to cross that (metaphorical/physical) bridge, but we’re not there quite yet.
It’s really easy for big businesses that have big HR departments and/or already have a physical presence in another state. But for 15 people, one doing HR part-time, it’s just not worth it right now.
If you can’t afford to pay to work out all of that complexity you probably can’t afford to be based in NYC. You might be better off being located in one of the suburbs and pulling talent from only one of those states.
Also there are probably a number of firms that specialize in dealing with that kind of situation so you can get outside help affordably.
(IMO companies stay this way because it’s simply cheaper and the hiring pool is bigger, but that’s not important in this discussion)
It just happens to benefit those whose prefer to stay at home.