Most workers in the 1880s did not live outside city limits. This was because of the lack of good transportation for workers which would have allowed them to live outside the cities in which they worked.
In the 1800s, it was not easy to travel long distances to work. There were streetcars and trolleys, but those forms of mass transit did not generally reach very far and were not widespread. The average worker needed to live close enough to his or her place of work to be able to walk to and from work every day. Because they needed to commute by foot, they had to live relatively close to their jobs. This meant that they could not generally live outside city limits.
Because of a lack of good transportation options, most workers in the 1880s still lived inside city limits.