This story reflects the views of this author, but not necessarily the editorial position of Fast Company.
Today Amazon announced that it’s whittled down more than 230 applicants to a shortlist of 20 places where it will build a second headquarters, dubbed “HQ2.” With up to 50,000 new high-skilled jobs and $5 billion of investment at stake, the contest has been fierce, with cities, counties, and states all competing to offer a $530-billion company what’s likely to be an extraordinarily lavish package of tax incentives.
It comes as no surprise that the 20 finalists are all big, educated, and prosperous urban hubs, or else nearby suburbs within close commuting distances to large cities. Los Angeles, Chicago, Toronto, Atlanta, and Maryland’s Montgomery County (just over the Potomac from Washington, D.C.) are all in the running.
This should have us worried. The same economic development playbook that’s driving competition for HQ2 seems less and less sustainable. Over the last decade, our obsession with luring large corporate offices toward increasingly dense central business districts has strained American life as we know it–particularly for the younger half of the workforce. For too many cities, being an engine of fast-paced, high-skilled job growth has also meant higher rents, longer commutes, less savings, and fewer homeowners.
If we’re going to build a future of work that’s secure, innovative, and equitable, we’re going to need to buck one of the fastest-growing global trends: the urbanization of work.
Clustering Ourselves Into A Corner
This isn’t an impossible problem to solve. We need to start generating work where people live, and there’s never been a better time for it. Technological advances–think widespread videoconferencing apps, a growing freelance labor pool, and the proliferation of coworking spaces and collaboration software–combined with rise of the knowledge economy offer alternatives to a 1950s-style work-here-live-there paradigm.
Not long after the internet went mainstream, many predicted remote and virtual workplaces would soon be the norm. And as our digital lives expanded in the early 2000s, it made sense to believe that a company’s physical office was nearing obsolescence, at least for the post-industrial economy’s growing knowledge workers.
Yet in 2018, place remains all-important. Sure, more people are working from home these days than ever before, but the growth of remote work has been slower than expected. According to the Bureau of Labor Statistics, the share of workers who performed some of their work from home rose only five percentage points in the 12 years between 2003 and 2015 (from 19% to 24%). A major reason is the clustering of high-tech industries in urban areas, with mini Silicon Valleys appearing all over North America, from the Vancouver-Seattle region to the Boston-Providence corridor. Indeed, much of the post-recession growth in the United States has been driven by two intersecting forces: the dynamics of tech employment and municipal politics.
Facing an acute shortage of the high-skilled talent they need, tech companies–many of which might even be based out in the suburbs, like Facebook and Alphabet–have piled into downtowns in search of more and better talent. That often means poaching from your competitor down the block. Too many companies remain unimaginative about the workforce flexibility that technology offers, and too few big cities want that to change.
City leaders still want bright, shiny symbols of their grandeur, and many are desperate to claim the mantle of “job creator,” even if it means deferring tax revenue for generations. As the competition for Amazon’s HQ2 reveals, many politicians are willing to give away the bank to make it happen.
Related: It’s Time To Break Up Amazon
Farther And Farther
The net effect of all these factors has been an unprecedented geographic concentration of jobs–and opportunity. As the U.S. emerged from an economic recovery in the early 1990s, 125 counties created half of all new businesses, according to Census data. Compare that with our most recent economic recovery, which picked up beginning in 2010: just 20 counties have created half of all new businesses.
Then there’s the concentration of jobs within cities themselves. Over the last decade, job-growth rates within city centers have outpaced their once-dominant suburbs. This isn’t just a New York or San Francisco phenomenon but has also played out elsewhere, from Chicago and Orlando to Charlotte and Milwaukee. In other words, the jobs haven’t just gotten farther and farther from folks who live in rural areas. They’ve even gotten farther from folks who live in cities themselves.
Consider this 2015 Brookings Institution report, which found that the number of jobs within the typical commute distance for residents of major metro areas fell by 7% between 2000 and 2012; In fact, job opportunities within typical commuting distances shrunk in 67 of the largest 96 metro areas in the U.S.
The consequences of refusing to reimagine where and how we work threatens the American dream as we know it. With rents rising faster than incomes in many major American cities, rates of homeownership–historically one of the main drivers of wealth creation, but not necessarily anymore—hit a 50-year low in mid-2016.
Go Home Already
This summer, WordPress CEO Matt Mullenweg told workers in his posh 14,000-square-foot San Francisco office to go home and not come back. He wasn’t firing everybody. Instead, the CEO of the popular publishing platform was inviting his employees to do their work wherever they wanted, and promising he’d help them do it.
Mullenweg has completely reorganized his 550-person, $1-billion company around working remotely. Employees now get stipends to set up home offices. When they have meetings, they do it in online chatrooms. And when work does really require some face time, WordPress pays the costs for them to meet up.
Earlier this year, Zapier’s CEO Wade Foster told his tech company’s employees, many of whom were struggling to make ends meet in the San Francisco metro area, that he’d pay them up to $10,000 to move somewhere else. “It can be a real challenge to turn the Bay Area into a lifelong home rather than a short stop somewhere in our twenties and thirties,” Foster, who’s originally from central Missouri, explained to his workers in a blog post last March.
“The housing crunch and high cost of living simply price out many families and, despite loving the area, the realities are many of us need to look elsewhere to create the life we want for our families.” (While Zapier tells Fast Company that applications have grown 53% as of last October since the “de-location” offer was announced, two Bay Area employees have been hired but no one at the company has yet taken Foster up on it.)
Zapier is one of a handful of companies that is 100% remote; it’s published a downloadable guide showing other executives how to do the same. Buffer ditched its offices for a completely distributed workforce two years ago, and while GitHub keeps a few physical workspaces for those who want to show up, it has also allowed its employees to work wherever they want for years, even renting coworking spaces around the world for in-person collaboration.
The freedom to work from anywhere is also one major factor cited by the growing number of freelancers. With more than 57 million Americans having freelanced this year, 45% say that being able to work where they want allows them to live in a less expensive area than a traditional job, according to my company Upwork’s latest Freelancing in America report. And finally, we have the technology to do what previous rounds of innovation haven’t: The proliferation of coworking spaces, faster and more widely available broadband (even despite the roiling net-neutrality wars), the growing popularity of video chat and collaboration platforms, and the promise of virtual and augmented reality are all ways to reinvent work outside of the cities that threaten to stifle it.
But before we can embrace these geographic freedoms, first we need to update our industrial-era mind-set. We no longer work how we used to. We shouldn’t all be working where we’re used to, either.