Remote Work Is Overrated. America’s Supercities Are Coming Back

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Remote Work Is Overrated. America’s Supercities Are Coming Back


Apr 1, 2021

By Jerusalem Demsas

Read More: https://www.vox.com/22352360/remote-...work-from-home

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There’s a number of reasons so many humans and firms clustered into cities to begin with. Understanding why that is, and the pre-Covid-19 geography of employment, undercuts the likelihood that a significant amount of the American workforce will work remote in the long run. To understand the economics behind why people cluster in these high-cost-of-living regions and how the pandemic could change that, I turned to Enrico Moretti. Moretti is an economist and preeminent researcher in the fields of labor and urban economics at the University of California Berkeley.

- Moretti explains why high-productivity workers cluster in a handful of cities and why the strength of those forces means it’s unlikely that very many of us will be working fully remotely in the long run. We also discuss why such a small slice of the American labor force can determine so much about which cities dominate. — Agglomeration economies exist in all sectors, but they’re pretty pronounced in the newer industries, in the innovative industries. It’s the tendency of employers and workers to cluster geographically in a handful of locations. So it is the tendency, for example, of an industry like biotech to cluster geographically in three or four key cities. It’s the same whether you’re talking about social media or pharmaceutical or finance. — I have a new paper where I’m looking at high-tech clusters and I find a staggering amount of clustering when you look at a very narrow level of specialization. So, for example, if you look at all the inventors in computer science, the top 10 metro areas in the US account for 70 percent of all inventors in computer science.

- And that number is even larger if you look [at people who work with] semiconductors, 79 percent. If you look at biology and chemistry, that number is more like 56 percent; it’s still incredibly high. So what this is telling us is that there’s a deep-seated tendency of some sectors to cluster geographically. In some of my work and in some other people’s work, it’s emerged that the main reason is productivity. I think this is one of the key defining features of the economic geography of the US of the past 20, 30 years in fact, of the economic geography of most industrialized countries because they all exhibit characteristics of agglomeration. — For example, in Seattle, which is Microsoft. It is the same for Austin; in Austin there’s a different cluster with some people linked to Michael Dell. It’s the same for the research triangle, you know, Raleigh-Durham. — Why do we see that there is this increased concentration? What attracts people and companies to that cluster? Yes, the channel that you describe is certainly one important one, whereby the alumni of a certain company leave that company and then open their own startup.

- It’s not just that people are leaving the company and sticking around and opening another company. One microeconomic reason is the matching between labor demand and labor supply, between workers and firms, especially when we’re thinking about very specialized firms and very specialized workers. In larger labor markets, in labor markets which are thicker, where there are many companies for employees and many employees looking for companies there’s a growing body of evidence that points out that there’s better matching between an employee and a company. — So just to give you an example: If you are a biotech engineer who specializes in a certain branch of biotech and you move to Silicon Valley, where at any moment in time there’s a thousand biotech firms looking for biotech engineers, you might be able to find biotech firms that really value your branch of biotech. That same person moves to Chicago, when at that moment in time there’s a handful of firms looking for employees in biotech; well, you might have to settle for a less good match, a biotech firm that is not really looking for your area of specialization.

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Just 9 posts down from this thread is one called "Remote work is here to stay: Manhattan may never be the same." The endless speculation about what the future holds for cities in a post-pandemic world is getting so tiring. No one has a clue.