How Can Big Cities Get Us to Live There (Again)?
In 1948, E.B. White wrote that nobody should come to New York City to live unless he was willing to be lucky. For New York and other big U.S. cities to renew themselves after getting hollowed out by the pandemic, they will need an influx of people looking to try their luck. Success could radically change them, but failure could leave them badly hobbled.
When the pandemic first struck in early 2020, big American cities emptied, and the closer you got to a city’s center, whether you called it Midtown or Downtown or the Financial District, the emptier it looked. People with the option to work from home decamped for the suburbs and beyond, and even as Covid fears eased, many are coming into the city only intermittently, with Census Bureau figures showing nearly 70 million people working from home at least once a week, and big-city offices more empty than full.
The retreat from working daily at the office has reduced the appeal of living near it. A Brookings Institution analysis of census data shows that 42 of 48 urban core counties—including Sunbelt ones such as Dallas and Miami-Dade—lost population from July 2020 to July 2021. Change-of-address statistics from the U.S. Postal Service suggest the population shifts away from urban centers have persisted. So do rents and home prices, which Stanford University economists Arjun Ramani and Nicholas Bloom have found are up much more in the suburbs of major metropolitan areas than in areas close to city business districts.
There is still hope that more people will eventually start coming to the office more often, boosting downtown economies and helping downtown living to gain back some of its appeal. But with hybrid work arrangements here to stay, many cities could be entering a perilous period. This is more true of big cities with long commutes that make coming to the office more onerous than in smaller ones, where hollowing-out effects haven’t been as pronounced. And it is more true in places such as New York and San Francisco, where a lot of people work in fields such as tech and finance where work-from-home is more of an option, than in places like Miami.
Office workers are a major source of income for downtown businesses. If people come in to work only half time, they will probably only spend half as much. Office buildings are also in trouble. So far, many have hung onto their tenants, since businesses still don’t know how often their employees might eventually be coming in, optimizing space for hybrid work arrangements is very much a work in progress (everybody wants to come in on Tuesday, nobody wants to come in on Friday), and many leases haven’t yet come up for renewal since the start of the pandemic.
For cities, the danger is that the financial strains created by population loss and reduced downtown spending and office occupancy end up snowballing. To cover lost revenue from commercial and residential taxes, cities might need to cut services or raise taxes—either of which could make them less attractive places to live. One can imagine some cities entering an environment similar to the 1960s and 1970s, when the loss of manufacturing jobs in places such as Detroit, St. Louis and Cleveland spurred an urban flight, exacerbated by racial tensions, that made them less and less livable.
New York City, which when Mr. White wrote about it in 1948 included over one million manufacturing workers, was one of the places badly damaged by urban flight. In some respects, the revival that began to take hold in the 1980s might point a way forward. For example, Manhattan loft apartments that now fetch multiple millions of dollars were industrial spaces, emptied by the exodus of garment industries and other light manufacturers out of the city. Office buildings, particularly lower quality ones, could similarly be converted into living spaces, helping alleviate housing affordability problems. But while there have been some efforts to do that across the country, they don’t amount to much so far.
The bigger factor in the 1980s revival of New York and some other older cities, including Boston and Minneapolis, was people. Research by Harvard University economist Edward Glaeser has shown that cities with more educated populations were able to transition toward more knowledge-based industries, such as finance and professional services, in comparison to cities such as Detroit. If hybrid work arrangements continue to make living in a city less appealing to some people, successful cities will be the ones that attract people that find value in in-person work and human contact.
Indeed, the loss of population that city centers experienced during the pandemic had at least as much to do with fewer people moving to cities than with people moving out. A change-of-address analysis conducted by Michigan Technological University professor Richelle Winkler and doctoral student Julia Petersen finds that migration into urban core counties slowed during the pandemic, while the number of people migrating out of rural areas, in particular—typically younger adults heading to major urban cities—fell. The sharp decline in international migration following the pandemic also hurt, because immigrants often head to cities.
The best outcome—and it could take time—would be for the exit of hybrid workers to lead to a lowering of living costs that draws new entrants to city cores. Harvard’s Mr. Glaeser thinks they might look a bit more like the Manhattan he knew as a kid in the 1970s and early 1980s—a little grittier, but (one hopes) not so many muggings. “You might see younger, scrappier firms and younger, scrappier people,” he says. Some of them might run into a bit of luck.
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