A few years ago, Aaron Renn was writing, I think about the General Electric headquarters’ move from suburban New York to Downtown Boston in 2016, that in the future, city center jobs would go to high-value industries like corporate HQs and professional services, and then lower-end stuff like call centers would go in suburban office parks. At the time I didn’t understand the full meaning of this – I was still thinking of employment in a narrow city center of a few blocks rather than a broader region, like the 100 km^2 zone I use to compare the US with Canada and France because that’s the most granular data I have in the latter two countries. But in retrospect, Aaron was getting at a dangerous trend in which job markets deurbanize. This is not a new trend – office park sprawl goes back to the 1970s, and industrial sprawl even earlier – and to some extent it’s less about deurbanization and more about the urban job market reaching maximum size. But whatever the history of it, it’s a serious threat to economic performance – and the solution to it requires better public transportation.
Cities as job markets
I’ve written before about production theory. The only thing I have to add on the theory side is that since I wrote that post, I was at a talk that Alain Bertaud gave at Marron, about urbanization. The main topic of the talk was about urban growth and sprawl in the developing world, but at the beginning of the presentation, he gave some remarks about cities and corona. Zoom meetings like the one we had, he warned, were fine, but cities are fundamentally job markets that succeed through spontaneous interaction, and this spontaneity does not exist with remote work. This is to a large extent the new urban geography thesis of Paul Krugman or the work of Ed Glaeser – cities exist as places of production first, and this production requires close proximity.
Now, close proximity depends on technology. In a city with the transport technology of London circa 1800, close proximity means the scope of the City of London, and even 5 km is uncomfortably far. In a city with cars and highways, the distance is much greater – but it is not the same as commute distance. A half-hour drive is not spontaneous. When I asked American friends and coworkers about their productivity through the spring corona lockdowns, a Boston lawyer told me that lawyers wouldn’t even travel midday for clients for 20-30 minutes, since their time was too valuable – they’d schedule conference calls.
This does not mean that the entire work market has to be within such a short distance. It certainly helps, but different industries can cluster in different parts of the city. But there is a maximum distance within which the city is recognizably a single job market.
Aaron Renn’s bifurcation
Aaron talks about bifurcation a lot, between winners and losers. He relates the move of large corporate HQs to city centers to this bifurcation: city centers win by having higher-value added, higher-paying jobs, everyone else gets saddled with lower-end jobs. Moreover, these lower-end jobs are commodities – a call center can be anywhere – and therefore they compete on price and not quality, frustrating the attempt of any region on the margins of the US to climb up the value chain.
That said, even the sort of job sprawl of the 1970s, spearheaded by big companies’ move out of city centers to rich suburbs like GE to Fairfield and IBM to Armonk, represents the same threat to urban productivity. That was driven by snobbishness – the elite suburbanized, and then dragged jobs outside the city with it, for example GE did partly on spurious grounds of resilience in face of nuclear war destroying city centers. Today, the city gains higher-end jobs at the expense of the suburbs, the opposite of the situation in the 1970s. But the same situation of jobs outside one major core persists.
Is this polycentricity?
No. It’s become fashionable to speak of polycentric cities as the next evolution, to decongest old cores. But doing so requires the urban geography to have centers. I pointed out previously that Los Angeles may claim to be polycentric but is just weak-centered – the secondary centers have a few tens of thousands of jobs each at most. This is not like the big city centers one finds in Kyoto, Osaka, and Kobe, or even in the Rhine-Ruhr or Randstad.
Keihanshin, the Rhine-Ruhr, and Randstad are all agglomerations of historic cities. It is possible to also form polycentric regions out of new development – for example, Yokohama was founded as a 19th-century treaty port and then grew as a Tokyo suburb. Both New York and Paris have moved their central business districts by a few kilometers gradually, New York from Lower Manhattan to Midtown and Paris from Les Halles to around the Opera; both also have near-center business centers, like Long Island City or La Défense. Even then there’s likely to be some efficiency loss in decentralizing city center jobs this way, but it’s still easier to shuttle between Times Square and World Trade Center than between either and New Brunswick.
The public transit solution
In the 1970s, the abandonment of city centers was motivated by a desire to escape their poverty and a belief that the suburbs were the future. Urban poverty still exists but inner-urban wealth is considerable and increasing, and the belief that the suburbs were the future turned out to be incorrect – one cannot be a suburb of nowhere.
The model of suburbanization that can be sustained is one built from the late 19th century to about the 1950s and early 60s: jobs stay in the city, people go wherever.
Doing so requires three things: offices, dwellings, and a way of getting between them.
Offices mean commercial upzoning – some American cities are good about it, but the ones with the most demand, like New York, aren’t. In general there’s little appetite for commercializing near-center neighborhoods in the US, whereas Europe is looser about it and therefore new firms can sprout a few subway stops outside the primary center, for example Spotify two stops outside T-Centralen. Residences likewise require upzoning, especially for mid- and high-rise apartment buildings near subway stations where they exist and have capacity.
But in many cases, it’s required to also build up public transportation. Big central business districts feature hundreds of thousands of people converging on a small area at the peak, and the biggest go up into the millions. The highest-capacity form of transportation is required, which is rapid transit, never cars or surface transit.
Rapid transit and city centers are symbiotic, now as in 1910. An expansive rapid transit system, with high service quality, is required to serve city centers from multiple directions; and city centers are required to give people something to take the trains to, or else they’ll just drive everywhere and only take the train to the sports stadium or the airport.
And ultimately, city centers are required for economic efficiency, because of the importance of proximity for spontaneous economic and social interactions. Rapid transit also benefits from high efficiency – it’s very cheap to operate compared with the cost of car ownership. The alternative is a kind of deurbanization, in which people may live at high density relative to travel speeds but don’t form large clusters enabling the highest productivity.