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.”

Remote Work Is Here to Stay and That’s a Good Thing

“It’s looking more and more like there’s no reason for some of us to change out of pajamas; the evidence suggests that remote work has been a boon for many people and is here to stay. That has big implications for expanding people’s choices about where they live and why. But it may also widen the divide between those can work where they live and those who must live where they work.

“More than 20 percent of the workforce could work remotely three to five days a week as effectively as they could if working from an office,” the U.S.-based consulting firm McKinsey & Company reported in November of an analysis of the workforces in nine countries (China, France, Germany, India, Japan, Mexico, Spain, the United Kingdom, and the United States). “If remote work took hold at that level, that would mean three to four times as many people working from home than before the pandemic and would have a profound impact on urban economies, transportation, and consumer spending, among other things.”

Researchers at the University of Chicago’s Becker Friedman Institute (BFI) agree that remote work has gained a larger permanent presence in our lives.

“Our survey evidence says that 22 percent of all full work days will be supplied from home after the pandemic ends, compared with just 5 percent before,” Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis report in a working paper based on data drawn from 15,000 Americans.”