Why Cities Aren’t Dying

It’s a bit spooky to cycle around downtown Washington these days, for reasons having nothing to do with campaigns and elections. Most offices are closed, most hotels are nearly empty or locked up entirely, the theaters have offered no shows since March, and the coffee shops, restaurants, and retailers that catered to a bustling city are either out of business or struggling to survive. If you believe what’s in the papers, city dwellers who can afford to do so are fleeing for the hills (or beaches) and plan to live there permanently. Their employers, having learned to function virtually during the pandemic, will slim down their offices and make telework permanent for most of their employees. The city will wither.

This “trend” is usually illustrated with anecdotes about families who have forsaken their Brooklyn brownstones for five acres with pool in Woodstock or the Hamptons, coupled with a mention of some company that says it will henceforth allow employees to live and work wherever they wish. But this is one of those “forever” trends that will burn itself out fairly soon. As I argue in Outside the Box, globalization will increasingly have more to do with spreading ideas than with moving goods, and urban centers will be at the heart of that process.

Companies and non-profit organizations choose to locate in dense cities for good reasons. One of the main ones, obviously, is access to a large pool of workers with needed skills — and while some of those workers will undoubtedly be happy to work remotely so they can go fishing on their lunch hour, the most ambitious will want to be in the middle of the action, whether in a research center, a newsroom, or a corporate headquarters. That’s why, within just the past couple years, companies such as Caterpillar and General Electric moved their headquarters from small towns or suburbs to city centers: the workers they most coveted didn’t want to be in the boonies.

A second reason companies want to bring their office workers together is to make them feel part of an organization. People get satisfaction from working and sharing ideas with other people. When employees leave, hiring replacements is expensive and time-consuming. If bringing workers to a downtown office makes them more engaged, increases tenure, and reduces the need for recruiting, it’s a good investment.

The third reason the urban office won’t go away — perhaps related to the other two — is that firms in big cities have higher productivity than those elsewhere. Wages, rents, lunch dates, and construction have always been far more expensive in London, San Francisco, and Shanghai than in exurban business parks or smaller towns. The only reason employers accept that burden is that the benefits of locating in a dense city more than make up for the costs. Video calls may work fine for handling routine business, but they don’t seem so effective in coming up with ideas for the sorts of new products and new processes that boost profits. Having people together, in one place, makes a difference.

My guess is that the pandemic will lead to some changes on the margin. Before COVID-19 arrived, only one U.S. worker in ten teleworked. Less than half of all workers thought that remote work might be feasible in their jobs, and among that minority, only one-fourth, mainly college-educated workers in managerial or professional jobs, regularly worked from home. The experience of the pandemic may encourage employers to permit occasional telework among other groups of workers. But as vaccines come into use, most of us will be told to head back to the office, and as we do, cities will bustle once again.

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2 thoughts on “Why Cities Aren’t Dying”

  1. Your post piqued my curiosity and I look forward to hearing your arguments and expanding my own perspective on the future. I am a big fan of your work and was extremely excited to see that you wrote a follow up the “The Box”.

    I have worked as an analyst at a Fortune 250 financial services company for a decade and prior to COVID there was already a steady shift from onsite workers to Managed Service Providers (MSPs), which is a fancy way of saying outsourced. These are typically white collar IT jobs that support our core systems and there are a few onsite resources that manage an offshore team. Since COVID, our company has gone almost entirely remote and feedback from management is that the productivity has not suffered. The transition to the MSPs has also been much smoother than expected.

    The point about workers wanting to be part of a team sharing ideas and working in person is valid, but I don’t think it applies to all white collar jobs equally. My thought is that large companies will be quick to connect the dots – if I can pay 10 developers $100,000 each (plus benefits) to work remote across the US, then why can’t I pay 10 people $50,000 each (no benefits) to work from India? And what if those 10 people in India are able to work in the same office, realizing the benefits of being part of a team that you outlined?

    I also think that one reason companies were slow to embrace remote work pre-COVID is that it required a large investment in IT resources – both human and hardware. COVID has forced companies to scale the learning curve and make that investment.

    Again, huge fan of your work and looking forward to reading the new book and your future posts.

  2. Hi, Mr. Levinson,
    I am new in reading your blog. You are presenting the case of post “container-box” era. I am wondering if you thought about the agitation politics of modern time. As internet blog lets everyone, including many dangerous people, to get into public forum. People are not aware of the influence on politics by these elements. Look how Democratic party was defeated during this election. These rabble-rousers are a hidden but powerful factor in US politics.

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