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Keeping New Yorkers in the City

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eye on the news

Keeping New Yorkers in the City

With more remote workers opting for suburban life, city policymakers take steps to retain residents. October 1, 2021
New York
Economy, finance, and budgets
Politics and law

Even as New York reopens, a barren midtown and fears about Covid variants point to big post-pandemic challenges. Though the city has imposed vaccination mandates, other aspects of everyday life are returning to normal. It’s likely that handshakes will come back, and Broadway and theater are returning as well, albeit with mask requirements. The pandemic even led to a few positive changes—the spread of open streets and outdoor dining around the city have improved livability.

But the coronavirus has left behind other, more persistent changes. The most salient is the new availability of remote work.

In the initial phase of the pandemic, the flexibility allowed by teleworking enabled many New Yorkers to leave the city entirely. In joint research with Vrinda Mittal, Jonas Peeters, and Stijn Van Nieuwerburgh, I found substantial shifts in migration to the nearby suburbs of large urban metropolitan areas. (We established migration through the use of mobile-phone geolocation data and change-of-address information.) As a consequence, the population in city centers declined while the number of people living in the outskirts of metropolitan areas increased. These shifts in population were associated with large changes in both rents and prices, which also reflected the pattern of urban flight. Both prices and rents increased in suburbs, relative to the urban core.

Though these trends are likely to be largely transitory, our modeling suggests that a portion of these shifts—those associated with trends in remote work, in particular—will remain more persistent. If the immediate exodus strongly disrupted rental markets in the short run, remote workers have resolved some of their uncertainty over time. Many have decamped permanently to the suburbs. Though many other New Yorkers are likely to return, remote work opens up new possibilities for knowledge workers to work and live across an expanded geography.

The consequence is that the urban core is facing huge downward price pressures across apartments, housing units, and commercial real estate. The pandemic made a direct hit on the commuting nexus that binds New York City together, and poses serious fiscal challenges to a city reliant on the incomes and property taxes imposed on the wealthiest residents, as studies from the Manhattan Institute have documented.

New York needs to prepare for a future in which workers live in the city not because they simply have to but because they actively choose to do so. Rather than relying on an assumption that office workers will necessarily come back to the office five days a week, the city should accept the reality that the midtown office nexus may be scrambled for the foreseeable future.

New York must draw from its stores of resilience and look back to the types of policies that brought the city out of decline following the fiscal crisis of the 1970s. This means addressing public-safety issues stemming from rising crime—a core campaign plank for Eric Adams, the Democratic mayoral nominee. It also means addressing the housing shortage, a key factor behind declining city populations even before the pandemic. Expanding up-zonings across neighborhoods and facilitating conversions of hotel and some office properties to residential housing can help promote live-work neighborhoods, which are likely to prove more resilient and sustainable than the old commuter-centric model.

The pandemic does not mean that cities are dead or that New York will inevitably face ruin. Still, the experience of the last several decades should give pause to those who think that vibrant urban life is inevitable. Reviving New York in the 1990s was a substantial achievement; the city’s post-9/11 recovery, too, was a testament to solid policies that enhanced livability and allowed the Big Apple to become a hub for the financial sector and other knowledge industries. To remain a globally competitive city, New York must work harder than ever to retain its residents—and attract new ones—in a world with more options.

Photo by ED JONES/AFP via Getty Images

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