New York is not dead yet.
The past year has seen a number of lamentations about the death of major American cities. Several commentators have argued that the coronavirus pandemic has irrevocably altered the fortunes of cities. These commentators point to the shining towers and sprawling office parks that power the economic engines of places such as New York, San Francisco, Seattle, and Chicago. These are cities built on people needing to live close to physical offices. The idea is that, with the rise of remote work, people will move to cheaper cities in states such as Texas, Idaho, and North Carolina. Empty office towers may have a cascading effect: less tax revenue, less of a multiplier effect from businesses, and fewer people moving in, not to mention their status as hulking, ugly symbols of urban blight.
The exodus is real in some regards. According to CNBC, 135,600 more people left California between July 2019 and July 2020 than moved there. The city of New York reported a net loss of 70,000 people, taking $34 billion in lost tax revenue with them. In addition, a variety of companies have announced that their work-from-home arrangements will be extended. American Express and Capital One are allowing employees to work from home until at least Labor Day 2021, while other companies such as Shopify, Salesforce, and Slack are planning to make at least a remote work option permanent.
Despite these trends, there are clear reasons why these cities will rebound. New York City is still the nation’s center of finance. It has been a major urban center for the past three centuries. New York was a significant trading port in the 18th century, then a hub of industry throughout the 19th, and later a center for finance and technology. It has established itself as a center for economic success. Along with Chicago and Los Angeles, New York was able to survive the decades of deindustrialization that damaged so many prominent American cities. If they could survive the 1970s, these cities can certainly survive what looks to be a temporary pandemic.
In the case of New York specifically, there are too many prominent company headquarters close to one another in Lower and Midtown Manhattan. People in these locations may not want to fly across the country for business trips, but they will want to network with one another in person. Building social capital is the way to secure promotions, earn raises, and set oneself up for future jobs. Once Zoom happy hours end, remote workers in Topeka or Abilene will lose the opportunity to network with the highest executives at their company. They will have a clear incentive to come back to the main office.
In addition, the amenities of these major cities dwarf those of their competitors. People do not only move to places like New York because they are close to jobs. Cities such as New York and Chicago have centuries-old culture that other large cities cannot compete with. Durham, North Carolina, has the Durham Performing Arts Center, but New York has Broadway. Boise has an impressive 30 or so restaurants that serve pho, while New York has over 100. Along with food and the performing arts, New York and Chicago have countless museums, public parks, art galleries, nightclubs, and cultural sites that are not rivaled by those of other cities.
The trickle back has already begun. Numerous stories have come out discussing people with two homes moving back to their primary residences in New York and other major cities. Workers continue returning to the office. Crucially, rents have begun to rebound. Jeff Andrews wrote in Curbed last week that “as a glorious reopening of New York City beckons in the second half of this year, the Manhattan rental market is doing a sharp return to behaving like its old self.” Landlords clearly see no reason for demand to significantly drop in the next year.
This trend will only intensify as the vaccination rate increases. Already, New York has announced that 80,000 remote government workers are headed back to the office. In addition, millions of Americans could not leave their homes in major cities in the past year because of financial insecurity. Once they are vaccinated, these people will be in a prime position. They will have access to the restaurants, clubs, and theaters that make large cities cultural centers as well as economic ones. Many could have a raised income as demand for products and services increases and the labor market eventually tightens again. They will benefit from a lower crime rate as well, since greater economic prosperity almost always leads to a resultant drop in crime. Then, these happy urban dwellers will tell their friends about how great New York or Chicago is, and more people will return to the city.
American cities were burned during the American Revolution. Many were racked by riots throughout the 19th and early 20th centuries. Their doom was predicted after every economic collapse. Some cities, such as those in the Rust Belt, did suffer long-term economic privation. But even the worst-hit sites in places such as Michigan and Ohio have begun to rebound, starting a process that New York and Chicago began in the 1990s. If world-historical economic calamities did not kill off the nation’s great cities, the coronavirus pandemic will not either.