Remote work is overrated. America’s supercities are coming back.

“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. Notice that it really favors both the firm and the worker. Firms move to the Bay Area and they’re really looking for somebody that is specialized in a certain branch of biotech; and vice versa, it’s much harder for them in Chicago.

And also notice this advantage is not there for unskilled or non-specialized labor. If you are a janitor or a secretary or a welder, the advantages of agglomeration don’t really mean much for you — but if you are a specialized scientist or mathematician or engineer or an innovator, that market thickness will provide a better match. So that’s one important channel that has been documented to improve the productivity both of the firm and the work.”

“for the innovation sector broadly defined, I think they’re going to see quantifiable losses in productivity as measured by quantifiable losses in the amount of innovation these types of workers will be able to create. A lot of the existing research points to the fact that by clustering geographically, these inventors, before Covid, were significantly more productive in quantifiable ways. I have a paper where I quantify the number of patents that an inventor could gain by moving to a tech cluster and the quality of those patents as measured by patent citations. So we’re talking about quantifiable causal effect on productivity and creativity; the moment you start losing that creativity and productivity, that’s when both the employer and employee have something to lose from this decentralized application.”

“some occupations can be probably managed in the long run remotely without huge losses in productivity. Probably that depends, from industry to industry and employer to employer.”

“So we’ve been talking a lot about labor demand — people moving to superstar cities to get these good jobs. There’s another facet, which is labor supply. A lot of young people actually want to live in these places — a lot of young people were attracted by the urban amenities. Right now it’s not too surprising that places like San Francisco and New York are deserted by a lot of these same people, because right now a lot of these urban amenities are shut down.
Assuming that we can go back to feel safe around each other and the vaccines can manage our safety effectively, I think it’s fair to assume that urban amenities will come back pretty much at the same level that existed before, so [the] labor supply of well-educated workers will keep flowing to these places.”

Will Cities Survive 2020?

“Kirkland requires that any accessory dwelling units (ADUs)—often known as granny flats or in-law suites—can be no larger than 800 square feet and no higher than 15 feet above the main home. They also must come with an off-street parking space.

Of the people who applied for such permits in Kirkland since 1995, nearly half never ended up starting construction. A survey by the city in 2018 found that design constraints were the biggest difficulty applicants faced.

Kirkland’s granny flat rule is just one of countless examples of ordinances, restrictions, and red tape that have slowly wrapped up America’s cities, regulating how much people can build, where they can build it, and what they can use it for.

While often justified initially as a means of protecting public health, zoning codes have now gone far beyond nuisance laws—which limited themselves to regulating the externalities of the most noxious polluters—and control of infectious disease. They instead incorporated planners’ desires to scientifically manage cities, protect property values, and combat the moral corruption that supposedly came with high-density housing.”

“”It’s a bit counterintuitive. Very large cities have problems of pollution and congestion, which are very difficult to solve,” says Alain Bertaud, a senior research scholar at New York University’s Marron Institute of Urban Management. “In spite of all that…these messy cities, if you look at what people produce, they produce a much larger part of the [gross domestic product] than the rest of the country per capita.”

Cities at their root, says Bertaud, are labor markets where people are presented with lots of choices about where to work and companies have lots of options for whom to hire. This intense intermingling of capital and labor means innovative ideas can spread more quickly and production can become more specialized. The result is that urban economies end up producing more wealth than would be possible if the workers and firms that inhabit them were spread out among smaller communities.”

“In 1793, Philadelphia, then America’s capital, was hit with a severe outbreak of yellow fever that killed 10 percent of the city’s population. “It’s pretty shocking, and it’s something that the founding fathers had to deal with. I think it’s left out of the musical Hamilton,” says Catherine Brinkley, an assistant professor of community and regional development at the University of California, Davis.

This outbreak of yellow fever, says Brinkley, inspired the first efforts to start cleaning up city streets through mucking out gutters and creating alleyways where waste could be dumped. Cholera outbreaks in American cities in the 19th century led to the creation of the first systems that could pipe in clean water and carry away sewage.

The stubborn unwillingness of people to abandon cities even in the face of periodic epidemics gave rise to interventions that made urban life a little less deadly. In his 2011 book Triumph of the City, the Harvard economist Edward Glaeser notes that developments like municipal water service and waste collection—which he calls “self-protecting urban innovations”—led to significant reductions in urban mortality. Between the end of the Civil War and the 1920s, the death rate in New York City dropped by two-thirds. Chicago saw a similar decline over the same period, with about half that fall in mortality chalked up to the provision of clean water.

The later addition of use-segregating, density-restricting zoning codes, predicated on the now-discredited “miasma” theory that a lack of light and air was to blame for the spread of urban disease, did much less to improve public health.”

“Most folks, whether they’re medieval Parisians or modern Americans, are unwilling to spend more than 30 minutes traveling, one way, between home and work.

This iron law of urban commuting—sometimes known as Marchetti’s constant, after Italian physicist Cesare Marchetti—has profound implications for how cities look, and, particularly, how sprawling or dense they can be.

If cities exist primarily as labor markets, and people are generally only willing to spend 30 minutes getting to work, the scale of an urban area’s agglomeration effects is going to depend on (a) how many jobs your average city worker can reach within a half-hour’s travel from his home and (b) how many employees can live within 30 minutes of your average city firm.

One can imagine two basic ways of adjusting for this reality: building up to accommodate more homes and firms within a given space, or speeding travel so that more destinations can be reached in a given amount of time.

Physical limits on both building and transportation technology meant that for the first few thousand years of their existence, cities tended to be pretty small, cramped places. Jonathan English, writing for CityLab in 2019, showed that pre-industrial urban areas packed most of their populations within a mile of the city center in order to accommodate a half-hour walking commute. The 19th century brought with it innovations not just in public health but also in transportation and building construction, allowing cities to grow beyond their previous limitations.”

State and Local Governments Need Some Tough Love From Uncle Sam

“A report from the National League of Cities in May revealed that the states weren’t very good at getting the money to local governments. Also, a new dataset collected by the Department of the Treasury Office of Inspector General that looks at how much the state and local governments have spent of their coronavirus relief bill funds as of June 30 shows that they have spent much less than you might think.

Some states have spent virtually none of the money allocated by Uncle Sam.

South Carolina, for example, has yet to use its $2 billion in relief. Michigan, which is asking for a bailout, spent only 3 percent of the more than $3 billion it received. New Jersey is also asking for a bailout, yet it has distributed a measly 2.1 percent of its federal funds so far.

The states demanding bailouts may likely argue that what they really need is more flexibility in order to be able to use federal funds to address their revenue shortfalls. As matters stand right now, states must use the bailout money on coronavirus-related expenditures. So, when those actual expenditures are lower than the allocated funds, they can’t spend them.

The flexibility argument doesn’t hold water, in my opinion. It’s one thing for state and local governments to ask the federal government for help to cover expenditures they couldn’t foresee, such as those related to the pandemic. But they shouldn’t be asking federal taxpayers to pay for their routine expenditures, especially when these governments have failed to plan appropriately for revenue shortfalls that inevitably occur, as they’re bound to encounter emergencies. Governments should prepare for them. They should cut spending and, if that’s not enough, they should turn to their own citizens for the funds needed to cover non-coronavirus expenditures. Those funds could be obtained through higher taxes or spending cuts elsewhere. Their routine spending should come from their taxes.

State and local governments are always eager to have the federal government solve their financial problems for them. But they will continue to have financial difficulties as long as Uncle Sam continues to cave. The first step toward having healthier and more responsible state and local governments would be no bailout.”