Zooming and the future of cities

In 1999, when I was still a more or less pure academic teaching at the Massachusetts Institute of Technology, I co-wrote a book on spatial economics with Masahisa Fujita, at the University of Kyoto, and Anthony Venables, then at the London School of Economics. We were able to do much of the collaboration remotely, exchanging chapter drafts by email. But to finalize the project, we felt the need to spend some time meeting face to face, gathering (as best I can remember) for about a week of intense work in Cambridge, Massachusetts.

I’m telling this old story partly to explain that I’ve had a long-standing fascination with economic geography, and partly as a starting point for thinking about one big geographical question for this new age of Zoom meetings and remote work: What’s going to happen to cities? The connection will be clear in a few minutes.

At this point, it seems fairly clear that the COVID-19 pandemic will have persistent effects on where and how we work. As I wrote recently, the rise of remote work, initially a response to fears of infection, appears to have jump-started a work revolution that had been technologically possible for a while but needed to reach critical mass. The era in which the great majority of white-collar workers spent 9 a.m. to 5 p.m. in the office five days a week doesn’t seem to be coming back. It’s unclear how many of us will remain purely work-from-home; more on that, too, in a minute. But even hybrid work, in which employees go to the office two or three days a week, means greatly reduced demand for office space. Evidence from card swipes suggests that only about half the office space in major U.S. cities is currently in use, with little indication of a return to pre-pandemic norms.

Does this mean that big cities are about to enter a death spiral? Probably not.

In trying to think this through, I found myself rereading an old paper by Jess Gaspar and Edward Glaeser, written in the early days of the internet. Then as now, many people were arguing that the increased ease of long-distance communication would undermine the rationale for large cities. Gaspar and Glaeser argued, however, that there would be an opposing effect: Technology would foster an increase in both business and personal contacts. Since making the most of these contacts would require at least occasional face-to-face interactions, such interactions might well increase rather than decline; and cities remain the best places to have lots of face-to-face interaction.

One interesting piece of evidence they offered involved an even earlier technology, the telephone. One might have expected telephones to reduce the demand for business travel — you didn’t have to visit your colleagues to communicate with them, you could just call. In fact, however, rising use of telephones went hand in hand with rising business travel: Workers began interacting more with people in other cities, but solidifying these contacts required occasionally meeting them in person. And they argued that the internet would have similar effects.

Hence my anecdote about academic collaboration. Masa, Tony and I probably couldn’t or wouldn’t have carried out our joint work without the internet, but if we hadn’t launched the project, they wouldn’t have needed to fly to America to get it done.

So, how does all this apply to the remote-work revolution and its impact on cities? Americans probably aren’t going back to the office full time. But they will continue to work together, maybe even more than before. And some of this work will still need to be done face to face, which will mean that people will still want to live in or near big cities.

In fact, there’s some preliminary evidence that working from home is, in some ways, actually making urban life more attractive: People who don’t have to commute to the office every day spend more time frequenting local shops, restaurants and so on, improving the quality of their neighborhoods.

That said, remote work will surely shift metropolitan areas’ centers of gravity away from their central business districts. In 2021, economists Arjun Ramani and Nicholas Bloom coined the term “doughnut effect” for a trend in which people were moving away from expensive housing in urban centers and toward less-expensive housing in less-central locations. Changes in house prices suggest that the doughnut effect is continuing even though many workers have gone back to the office at least part time, which makes sense: Workers are willing to accept longer commutes in return for cheaper housing if they only have to commute two or three times a week rather than if they have to do it every day.

And we might note that the process in which working from home leads to increased amenities can apply to suburbs as well as urban neighborhoods. This is purely casual personal observation, but the dining and shopping opportunities in central New Jersey seem to be significantly better now than they were before the pandemic.

Will we see a long-term exodus, not just from urban centers but completely away from large metropolitan areas? Remote work certainly offers that possibility. Still, I’m skeptical about whether it’s going to be a big deal.

Why? Because even fully remote work, which doesn’t involve any regular visits to the office, doesn’t eliminate the need for occasional face-to-face interaction. Gaspar and Glaeser used rising business travel as an indicator that improved telecommunications wouldn’t necessarily hurt cities; well, surveys indicate that despite the fact that we’re all Zooming these days, business travel is rebounding fast and may soon reach pre-pandemic levels.

What this suggests, at least to me, is that even fully remote workers will generally want to live in places that have relatively easy access to major business centers — exurbs rather than small towns in Middle America.

And I have one final hypothesis: Some of the biggest beneficiaries of the change in how and where we work may be heretofore declining small cities that aren’t too far from bigger metros.

One of my favorite papers in urban economics was an old piece, also co-written by Glaeser, this time with Joseph Gyourko, which pointed out that even cities that have lost much of their original economic rationale tend to decline only slowly. Why? Because housing is durable, and declining old cities offer would-be residents a cheap place to live.

Historically, these declining cities tended to attract less-educated workers, often immigrants. (I spent my early childhood in Utica, New York; my old neighborhood is largely Bosnian now.) But it’s easy to see how such cities, if situated within striking distance of urban hustle and bustle, could now attract highly educated remote workers, who would in turn create a market for urban amenities that bring in even more such workers.

In other words, places such as Kingston, New York, could become boomtowns.

So, these are interesting times for urban America. Zoom and other videoconferencing apps haven’t made cities obsolete. But it looks as if the pandemic will permanently change the urban landscape.

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