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What the recovery from the Great Recession reveals about post-pandemic work and cities

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Since the onset of the COVID-19 pandemic, there has been ongoing debate about the future of cities in a post-pandemic world, particularly about so-called “superstar” cities. Some economists and journalists paint gloomy pictures, predicting that many service jobs will not survive this economic downturn, while others remain optimistic about cities’ role in a post-pandemic economic recovery.

Most of these predictions are based on migration trends (across and within regions) and the possibility of permanent remote work. So, are physical workplaces obsolete now? Has the pandemic structurally changed how and where we work?

The answer is no—at least not for most workers. Remote work is not feasible for the majority of people who have continued to work at their usual job sites throughout the pandemic, and who will continue to do so afterward. In addition, while some workers can be productive remotely, it’s far from ideal for many types of work and workers in the long term.

In the immediate term, however, the pandemic has brought a dramatic change of scenery to office work and, thus, to cities and metropolitan regions, where a much larger share of jobs are office work. It is particularly notable that in the information sector, big tech firms such as Salesforce and Spotify recently announced that they will allow employees to permanently work remotely after the pandemic. This is a major reversal of the pre-pandemic trend for a sector that has been densely clustering in a handful of cities in the last decade.

In this piece, we examine post-Great Recession trends in job locations to look for hints about whether and how cities will survive and recover from the COVID-19 pandemic and its economic fallout.

Continued demand for dense places in metropolitan America

Job location trends can provide some insight into what types of places and place attributes companies and workers value. In a 2019 report, Brookings investigated where jobs were concentrating in large U.S. metropolitan areas and found that, during the Great Recession of 2007 to 2009, less dense suburban and exurban areas lost jobs faster than denser urban areas, resulting in a sharp increase in overall job density. As the economy started to recover, job growth favored the densest of America’s large metropolitan areas and the dense places within them. These metro areas grew jobs despite their high costs, indicating the value employers and workers place on physical proximity.

With new data, we updated this analysis through 2018. Since the end of the Great Recession, job density in the 95 largest metro areas increased by 17%, from an average of 23,000 jobs per square mile in 2010 to 27,000 jobs per square mile in 2018. Of those 95, four extremely dense metro areas—New York, Chicago, San Francisco, and Seattle—composed the bulk of this trend, with a 25% increase in their average job density. In contrast, overall job density in the other 91 large metro areas only increased by 6%.

Fig1

A significant portion of this densification came from the information sector, which benefits from localized knowledge spillovers. Between 2010 and 2018, the information sector’s job density increased by 51%, mainly driven by the largest and densest “superstar” metro areas (Figure 2). The sector’s jobs mostly grew in the San Francisco, San Jose, Calif., Los Angeles, New York, and Seattle metro areas, which account for 63% of job growth during that period (Table 1).

Fig2

Table1

These new demands for place were not limited to the information sector or just to superstar cities. Prior to the pandemic, there was strong and intensifying demand for dense places across most of the fastest-growing industries (Figure 2). One potential reason is that knowledge sector firms can be more productive in denser places, which better support learning and collaboration among workers and institutions and better match workers with jobs through larger talent pools.

Meanwhile, service sector businesses (e.g., retail and hospitality) adapting to changing demand and business realities may grow faster by being closer to their customers. It is particularly notable that this growing demand for dense places occurred at the same time as a major surge in telework, suggesting that telework may be part of what sustains and intensifies demand for dense places, increasing their accessibility, livability, and resilience.

For cities, equity is a larger challenge than economic competitiveness

The pre-pandemic trend of jobs locating in dense metro areas shows the effects of knowledge spillovers. The broader knowledge economy thrives on in-person collaboration, innovation, and tacit knowledge, which are hard to transfer into a purely remote format. For this reason, most office jobs—even tech jobs—are likely to remain in denser urban areas with a hybrid working model, or firms may establish satellite offices within a single region instead of just one huge headquarters. And for younger people who need to build social and professional networks and for workers in an economy that demands continuous reskilling, “fully remote” work is unlikely to be the best option in the long run. Hence, physical proximity and interaction will still be valued; the death of cities is not imminent.

“Superstar” cities are a different matter. The pandemic’s global, simultaneous disruption appears to have opened a window for tech companies to leave Silicon Valley. These firms are likely to move to other large, dense cities; Austin and Miami are emerging as the next destinations for tech companies. Still, in these places, job growth in tech industries—including the information sector—is a pre-pandemic trend (Table 1).

So, what at a glance scans as an “urban exodus” could, in fact, just be a transfer of job density to other large but relatively less dense metro areas. It could also be the dispersal of housing within individual metro areas, as jobs accumulate in regional clusters but people commute farther on fewer days through flexible work options, as evidenced by recent USPS data.

Dense urban areas will likely remain competitive. But that doesn’t mean that the current status of economic geography in the U.S. is healthy and sustainable. Even with the twists of the pandemic, these growth and migration trends are still advancing inequality within and between regions as tech jobs move to the fastest-growing large cities instead of the heartland and low-wage workers disproportionately suffer job losses.

To make the post-COVID-19 recovery more equitable, we will need to address this spatial and economic inequality with place-conscious and people-conscious policies. These could include policies that support more places to grow denser by revitalizing existing downtowns and Main Streets, or policies that establish growth centers and innovation districts in more places, bringing jobs to people and connecting local talent to the innovation economy.

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