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For decades people have predicted technology would level America’s geographic playing field, allowing areas outside of knowledge-industry hubs such as the San Francisco Bay and New York metropolitan areas to attract more high earners. It hasn’t happened, but Covid-19 could change that.
Cities have historically been the drivers of commerce and innovation. When people and firms gathered near one another, they were able to quickly meet each other’s needs while sharing ideas. Technology seems like it should have eroded those benefits. Instead, some cities, such as Detroit, fell into steep decline while others, such as New York, after setbacks, emerged as vital as ever.
What happened, says Harvard University economist Edward Glaeser, is that although information technology made it easier for manufacturers to move away from cities, it increased the benefits of proximity when it came to developing innovations in knowledge-intensive industries. So even though they were initially hurt by manufacturers’ exit, places that had many educated people eventually thrived.
But communications technology has kept advancing and workers have become more adept at using it, especially amid the Covid-19 crisis and the work-from-home experiment it has created. Having learned that they can work effectively without having everybody in the office, companies won’t unlearn it.
Christy Johnson founded Artemis Connection, a 35-person consulting firm, five years ago, and from the start everybody has worked remotely. Among the upsides to using remote workers, beyond not having to pay for expensive office space, she says, is the ability to tap into talent everywhere.
Many of her firms’ clients are interested in continuing to use remote-work arrangements once the crisis has passed, but she acknowledges that it isn’t applicable in all settings. “There are some areas where face to face has to happen—think about innovation that has to happen in a lab,” she says.
Companies also need to take into consideration the employee loyalty that comes when people work together. Younger workers’ desire to live and work where they can meet and mingle will remain a draw, too. Harvard’s Mr. Glaeser says that more companies may move to set up satellite offices to keep those benefits while casting a larger net for talent.
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“I think we’ll see more clusters of creativity in remote offices centered around consumer cities—places where people want to live, like Boulder or Vail,” he says. Having workers telecommute from home a couple of days a week—a measure many employers will likely adopt to lengthen social distancing until a vaccine becomes available—could be another lasting change.
Many companies will just go back to their old way of doing things, but even partial adoption could have big repercussions. People who only go to office a few days a week, for example, will be more willing to live far from the city, affecting property values. It also would lower the demand for commercial office space and hurt sales at downtown restaurants and retailers.
Cities might have to reinvent themselves all over again.
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