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Where the jobs are being created in cities

According to a new report released by City Observatory, US cities have officially reversed a 50-year trend towards decentralization.

We know that urban living has been seeing a renaissance over the last decade or so, but as recently as 2002 – 2007 (pre-Great Recession), the suburbs and peripheral areas were still seeing significantly higher job growth: 1.2% per year in the periphery versus 0.1% in the city center. The “city center” is defined as a 3 mile radius around the center of the city in this study.

However since 2007 things have flipped:

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Chart Source: City Observatory

Why is this happening? Here’s a snippet from City Observatory:

The strength of city centers appears to be driven by a combination of the growing attractiveness of urban living, and the relatively stronger performance of urban-centered industries (business and professional services, software) relative to decentralized industries (construction, manufacturing) in this economic cycle. While it remains to be seen whether these same patterns continue to hold as the recovery progresses, (the latest LEHD data on city center job growth are for calendar year 2011), there are structural forces that suggest the trend of center-led growth will continue.

In some ways, it just makes intuitive sense. People started returning to cities and so the jobs followed (although there were also structural changes to the economy). 

The big question, however, is whether this trend will continue? My bet is on yes. What do you think?

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