One way to describe cities is to call them labor markets. Historically, people have chosen to live in cities because they have provided economic opportunities (among, of course, many other things). That's why the data is very clear: wages are higher in larger cities.

But what we have also seen over the last few years -- and what is causing a lot of dislocation in real estate markets -- is an untethering of work. More people are working from home and from locations that offer greater lifestyle benefits (or greater tax benefits).

We spoke recently about what this divide between in-person and remote work might mean, but regardless of this outcome, I think there's an important truth here: Lots of people would like to live somewhere else. (In my case, my daydreams take me to Paris.)

And for the first time ever, really, it is possible for more people to do this and stay connected to work somewhere else. Earlier innovations, such as the streetcar or car, also compressed geographies and empowered people to travel greater distances. But now the catchment area has seemingly expanded to the world.

I'm not saying anything particularly novel here, but I do think it's important to point out that this desire exists in many of us. Because this tension between "I do work here" but "I really want to live over there" seems like it's only increasing.

I was speaking with a writer from the Globe & Mail today about the future of office. We were half talking about a new AAA strata office building -- called Capital Point -- that we (Slate) are in the midst of launching in the Metrotown neighborhood of Burnaby, BC. And we were half talking about whether or not we're all going to return to offices.

This is one of the great debates of the pandemic but, as I mentioned in my 2021 predictions post, I think it's overblown. The longer I work from home and spend my entire day on video calls (only to start actual work in the evening), the more I become convinced that this is a suboptimal arrangement for productivity, collaboration, personal motivation, employee morale, and talent retention (among many other things).

We have complete conviction around great offices in the right locations. That's why Amazon and whoever else continue to build. They're rightly looking past this period of dislocation (12-24 months of suck). Again, this is not to say that there won't be some changes and that certain pre-existing trends haven't been accelerated, because they have been. But I believe that humans will continue to cluster for work.

In fact, it's hard to disentangle cities and offices. Cities are labor markets. It's where agglomeration economies take hold and where people come to improve their socioeconomic standing in the world (as well as meet people and have fun). To say that we no longer need to come together in person for work is to say, in a way, that we no longer need cities. We can all decentralize.

That is not a bet that I am prepared to make.

For more information about Capital Point and to register for the project, click here.

What happens when wages and real estate prices become too high in a city? Companies start growing in lower cost locations. We’ve all seen this before. 

Fred Wilson recently blogged about this “spillover effect”, citing a New York Times article talking about the growth of tech offices in Phoenix. As someone who sits on the board of many technology companies, he was noticing a thematic trend:

“A big theme of board meetings I’ve been in over the past year is the crazy high cost of talent in the big tech centers (SF, NYC, LA, Boston, Seattle) and the need to grow headcount in lower cost locations.”

We talk a lot about housing prices on this blog, and so I think it’s useful to see how this, along with high wages, also impacts companies. The two are interrelated.

Below is a chart from the NY Times article showing the US cities with the highest number of technology jobs and the most growth from 2010 to 2015. 

San Francisco is in a league of its own. But overall, the growth is in tech and many cities are adding lots of technology jobs. Look at Detroit and Boston right beside each other (Detroit obviously has a smaller starting base). And look at how Miami is nowhere to be found.

Of course, one interesting question is whether these new outposts – such as Phoenix – can truly come into their own and carve out a niche:

“We don’t want to be San Francisco’s back office — we need more creators here,” said Scott Salkin, a founder and the chief executive of Allbound, which is based in Phoenix, makes sales software and has offices down the hall from Gainsight’s.

Even with the high cost of living, it’s hard to supplant the coastal hegemony. That’s where people go to chase riches. As comedian Daniel Tosh likes to say, “the middle of the country is for people who gave up on their dreams.”

Though for some, living in a place like Denver or Salt Lake City and snowboarding every weekend is a better outcome than living in a studio apartment and commuting an hour to work.