The COVID pandemic revealed that many workers can work from anywhere. Are cities ready to attract them?
The future of cities and the future of work are intimately connected. They always have been. During the industrial age, rural farmers flocked to the urban centers, and the cities we know today were born. Now those workers, many of whom are so-called 'knowledge workers' are completely mobile, untethered from the offices that kept them in urban cores. Most cities are not ready for this new reality.
The Current State of Work
The COVID pandemic is winding down in most of the developed world, and economies are returning to normal. Are they really, though? After all, during the pandemic, nearly 80% of companies switched to at-home work. That's millions of experienced and educated people working from home.
Furthermore, 47% of company CEOs have said they will make work-from-home permanent. This not only saves the company a lot of money that would otherwise go to real estate, office furniture, maintenance, HVAC, energy, etc. But statistics show that workers who work from home save an average of $5000 per year in transportation and meal costs. This savings translates into nearly 40x more productivity.
Money savings and more productivity. What's not a company to like?
Of course, these are administrative and computer-based jobs we're talking about. Some jobs can never be remote, such as construction or food service. Nobody wants to fly on an airplane with an empty cockpit.
For the knowledge workers of the world, however, there is little reason at all that they would need to venture to an office. This is the reality of the world today, and, given the benefits to both companies and workers, all signs point to the trend growing in the future.
So where does that leave cities?
Unfortunately, cities are about to experience extremely uneven shock.
How Workers Grow Cities
When a worker sets up home in a city, they bring a lot of tertiary benefits. First, they buy or rent a home. That creates tax revenue for the city. The worker buys clothing and food, and dines at restaurants and drinks at pubs and visits galleries. That grows local businesses.
The worker falls in love, gets married, and has kids. The family meets other families and they share activities and interests. That fills schools and creates community.
You get the picture.
The median income in the US, which is an average metric for both Canada and Australia as well, earns just over $47,000 a year. The average worker will spend 72% of their income on housing, goods, services, and transportation. Overall, a single worker brings $41,328 in spending to a city. Nearly $6,000 of that will become tax revenue for the city. That's just one worker.
As you can see, workers play a major role in city life. Without them, cities rot and crumble. Just look at Detroit.
If a single worker brings so much value to a city, then what are cities to do when there are millions of remote workers who can live anywhere they like?
This is the future cities face. It's not something far off in the future, either. It's now. COVID created a new class of remote worker. No longer are they bloggers or Instagram 'influencers.' Now they're IT engineers and accountants and security analysts. These are licensed HR professionals and industrial planners.
Take Shopify as an example. The Ottawa-based tech giant, which has a global reach, employs 7,000 people. These are people with the skills to keep a $6 billion ecommerce platform running. In 2020, Shopify sent everyone home and closed their massive office in downtown Ottawa. Then Shopify announced that they were permanently keeping remote-work for the entire company.
7,000 employees, each of whom earns an average of $78,000 CAD, are now free to live wherever they like. That's just one company in one city.
How Can Cities Attract Remote Workers?
How can cities attract these workers?
A lot depends on lifestyle and ease of living. There are multiple reasons workers would choose one city over another, but in poll after poll, the same trends are found.
Affordability
The number one issue workers cited as their reasons for choosing a place to live is affordability. Cities like New York, San Francisco, Toronto, London, and Tokyo are completely unaffordable for the average income. Until now, workers were forced to live in these crowded and expensive cities because that’s where their employers were located.
Not any longer.
Take St. Louis, Missouri, as an example.
This midwestern US city is rated as one of the nicest places in America to live. It has a low crime rate (even lower than the average Canadian city), miles of parkland, a gentle climate, and it is extremely affordable. The average two-bedroom apartment costs under $800 a month. A four-bedroom house costs less than $300,000.
Cities that offer abundant and spacious housing that is affordable are going to attract workers away from legacy cities.
Lifestyle
People want to be happy. Nobody wants to live stressed out and tired and afraid. That’s why lifestyle, a fairly broad category, ranks high among workers wants and needs.
Lifestyle includes things like amenities, entertainment, cultural events, parks, and socializing. Cities that offer a good mix of all of these things will attract workers. This means the arts, sports, and culture needs to become key policy matters for government planners.
Lifestyle can also translate to community, which is another area in which polled workers overwhelmingly responded as necessary. Workers want friends. They want neighbours. They want to feel that they are ‘home,’ no matter where they live. This is why things like parks, schools, and walkability scores are so important. Public zoning processes will need to take this into serious consideration in the future.
Transportation
Transportation is a misnomer. It doesn’t mean so much the amount of roads in a city, because ultimately, the city of the future should need less roads. Workers don’t want to spend their lives in traffic.
Instead, transportation means the ability for people to get around with as few headaches as possible. As such, public transportation plays a major role. Buses and trains and subways need to be incredibly dependable and affordable. They must reach all points of a city, and people shouldn’t have to wait and wonder when the next bus is coming.
This also applies to the ability to order an Uber (or a likewise service) and not depend on long wait times with archaic taxi medallion systems. The fact is that cities that ignore Uber do so at their own peril.
Another key part of transportation is cycling. Cities that provide safe and smooth bicycle paths will look more attractive. We’re not talking about painting a line at the side of a busy road, like an afterthought. Instead, dedicated pathways for cyclists are something that many cities in Europe have started implementing, and it has been paying off.
Stokholm, Sweden’s historic capital, has more bicycles than cars today. The reduction of car traffic in the city center has brought more people there. Less need for roads and parking garages has resulted in greater commercial activity, and there are more small businesses thriving in downtown Stockholm today then there were a decade ago.
Amenities
Finally, amenities are an obvious need for any city hoping to attract workers. Schools and hospitals are things that people look at extremely closely. If a worker has children, and a city’s schools are crumbling and underfunded and ridden with crime, then that city will lose out.
Cities need to take their public amenities seriously. Community centers, splash pads, sports and recreation, nature trails, and parkland are other areas that make a city inviting. These aren’t expenses. These are investments into the future of the city.
How Today’s Cities Stack Up
It’s sad. Actually, it’s horrifying, but most cities in North America are not prepared for the ‘new normal’ of work. Many of them operate on the old business-as-usual adage of the post-war industrial boom. Good old corruption from the 80’s and 90s also plays a big part in the current generation of municipal leaders. Elected officials care more about the developers who line their pockets than the actual needs of the city.
These cities will decline. It’s a matter of time.
Already, a few cities are taking advantage of the stubborn inability of other jurisdictions to get with the times.
Remember St. Louis? That beautiful affordable city on the Mississippi in the middle of America? The city has a fairly progressive government and is always thinking ahead. In summer 2020, as the pandemic sent millions of office workers home, St Louis jumped at the opportunity and held a competition to attract workers.
100 people from across America were offered rent-free, tax-free living for a year. The winners were chosen by lottery. More than 100,000 people applied and in August, St Louis invited the 100 winners.
The city was extremely confident in its ability to keep people living there. With a strong sense of community and excellent amenities, not to mention the parks, historic downtown, and affordability, St Louis has always been a good place to live. Yet it never gets much attention, for better or worse.
A year after the lottery, all 100 remote workers who moved there have decided to stay. They won’t be living for free anymore, but that doesn’t deter them. Rents are cheap anyways, and they’ve all built solid friendships. They’ve all integrated into the community.
There’s a reason St Louis ranked #8 in the world’s top 100 cities for remote workers.
Canadian Cities Are In Particular Trouble
With American cities like St Louis ahead of the curve, Canadian cities are in trouble. In Canada there’s a strong culture of not doing anything new. Despite its liberal image, Canada is a deeply conservative country. This is especially true with Canada’s major cities, where nobody wants to rock the boat.
That can’t last for long. Canadian cities will face serious threat from global competition. With America right on the doorstep and the Biden administration loosening immigration rules, Canadian remote workers will find better lifestyle and housing opportunities south of the border.
Canadian provincial governments are particularly stubborn. British Columbia still refuses to recognize Uber as a legal service, while Ontario’s government is grossly incompetent and self-serving. Quebec’s language laws and xenophobia already serve to drive business and workers out. Continued rolling lockdowns, even after vaccination targets have been met, will also play a role in chasing workers away to the US.
More importantly, is the fact that Canadian cities are extremely unaffordable and car-centric. Pedestrians are an afterthought. Public transit is dismal at the best of times. Toronto and Vancouver rate among the highest real estate prices in the world, but most of Canada is not far behind. In fact, as a whole, Canada is today the most expensive country in the world to buy a home. Homeownership is out of the question for most Millennial and Gen Z Canadians.
Where do you think they will go if cities like St Louis start attracting international remote workers? How will cities like Ottawa survive if the youth all leave and there is no one but a quickly aging population left behind?
Canadian governments seem oblivious to this fact. They ignored Uber. They ignored Bitcoin. Now they’re ignoring the reality of remote work. It won’t end well for Canadians.
Competition Is Fierce
What this means is the competition between cities will become fierce. The competition could be between cities on different continents, or it could be the city down the road. One will thrive while another decays.
The hubris of large metropolis like New York is about to take a knock. Smaller but more people-friendly cities (such as St Louis) are going to become the new big thing.
Governments at all levels will begin focusing on municipalities. They need to, because smart politicians will. Those who don’t will get left behind.
The Future Of Cities Is Now
COVID changed a lot of things. Work was one of them. The ripples of that will determine how entire cities look in the coming years. Cities that can’t attract remote workers will be in serious trouble. Cities like St Louis (and Houston, another new mecca for remote workers) will thrive.
This isn’t conjecture. It’s already begun, and there’s no turning back the clock.