For the past three decades, one of the central stories in the U.S. economy has been the rise of superstar cities. As the country has shifted from manufacturing to services, high-value knowledge industries such as technology, finance and pharmaceuticals have become more important. These industries tend to cluster because skilled workers, entrepreneurs, big companies and funding sources all want to be in the same area. As a result, these industries have concentrated in cities such as San Francisco, Los Angeles and New York, which have had enormous economic booms and skyrocketing rents while many other areas of the country are left to wither.
So how can the places that missed out ever compete? Some had hoped that remote work would ride to the rescue. Thanks to the internet, engineers or traders or project managers might be able to live in Akron, Ohio, while working for a company based on one of the coasts. But while technology is allowing more Americans to work outside of the office, so far this hasn’t been enough to overcome the need to be close to where the action is.
A second possibility is that people will start leaving superstar cities. This is already happening as politically powerful incumbent homeowners block new housing construction in many big cities, accelerating the increase in rents. Eventually this might force tech companies and other high-value industries to go looking for more-affordable locations; indeed, there’s already a steady trickle of tech companies leaving the San Francisco area and New York’s population has started to decline. But this trend is unlikely to help most other areas because the companies that leave tend to go to the next tier of budding superstars such as Austin, Texas; Denver; Atlanta; and Raleigh, N.C.
But a recent report from the company Emsi, which analyzes labor markets, finds that most of the big cities attracting the most talent are Sun Belt metro areas such as Phoenix, Las Vegas, Dallas-Fort Worth and Jacksonville, Fla., cities that are not usually the first places that come to mind in conversations about tech or finance.
Some had hoped that remote work would ride to the rescue.
Meanwhile, urbanist Richard Florida and economist Todd Gabe found that the cities that have been most effective at adding knowledge workers include places such as Pittsburgh, Cincinnati, Cleveland and St. Louis. In a similar vein, research by writer Ian Hathaway reveals that startup activity is rising in smaller hot spots.
The internet may be making it easier for residents of second-tier cities to live the kind of lifestyle previously only available to residents of New York – all while paying much lower rent. The first change is the rise of online dating. In the old days, getting a date in a small town was much harder than in the big city. But smartphone-enabled dating apps make it easier to find compatible partners nearby.
Social media itself is a huge change. The shift to online socializing means that living in an uncool city doesn’t sentence knowledge workers to a life of loneliness the way it once did.
Changes in cities’ physical environment are helping the shift. A good example is coworking. Working remotely no longer means being deprived of the structure of an office. The internet makes it easier to fill such spaces and to connect with people who work in the same space.
So how can small cities and declining regions take advantage of these shifts? Whereas before, a city might have to style itself as the “live music capital of the world” to attract knowledge workers, now all it needs is the basics – some apartment buildings, shopping villages, coffee shops, ethnic restaurants, bookstores and coworking spaces. And, of course, it needs cheap rent. Lots of cities will end up looking the same, but the internet will provide the variety.
In this scattered archipelago of livable towns, programmers, financiers and researchers will churn out value for companies with headquarters in Seattle or Cleveland, while finding love and friends and entertainment and meaning through their glowing screens.
Noah Smith is a Bloomberg Opinion columnist.
