Land of Opportunity?

Economic Advantage of Dense Cities

There’s an article in the New York Times which, as you will discern, does not surprise me at all but will no doubt come as a bolt from the blue to those who think that the U. S. can use all of the low-skill workers it can get. A recent study has found that large metropolitan areas no longer provide the advantages to low-skill workers that they once did:

For decades, workers migrated to big cities in America that promised abundant jobs and decent wages — in clerical offices in New York, at shipbuilding yards in Oakland, on auto assembly lines around Detroit.

Big, dense cities offered not just better pay for lower-skilled workers; cities offered them better kinds of jobs.

This is much less true today, as workers hurt by the decline in manufacturing know. Because of this, cities no longer offer low-skilled workers the economic advantages they once did, according to new analysis by the M.I.T. economist David Autor.

Workers, whether with a college degree or not, could long count on earning more in denser urban areas than in rural ones. Today, that pattern holds for highly educated workers — and has in fact grown much stronger. For workers without any college education, the added wage benefits of dense cities have mostly disappeared in Mr. Autor’s data…

I would add that I suspect that the economic advantage to highly dense cities does not hold for all workers with college educations but is mostly concentrated on workers with degrees in just a few fields but that’s just my suspicion.

I have one question and one observation about this. First, the question. Who are these low-skilled workers. I think there are several categories:

  • Illegal immigrants
  • The children of illegal immigrants
  • The unskilled spouses of skilled legal immigrants
  • Other legal immigrants sponsored by legal immigrants
  • Blacks
  • Some whites, particularly those from rural areas

And here’s the observation. The cost of these low-skill workers is higher in highly dense cities than in smaller cities or rural areas.

I’ll leave you with this thought from the cited article:

“People have lamented, ‘Well, all these areas that lost manufacturing, why don’t those workers just get up and go somewhere else?’” said Mr. Autor, who looked at wage data from the census and American Community Survey and recently presented the findings at the annual meeting of the American Economic Association. “It’s just not at all obvious what that place is. It’s less obvious to me now than it was a month ago.”

2 comments… add one
  • Guarneri Link

    There is something here that doesn’t sit right, but I can’t quite crystallize it.

    The flattening of the slopes of the red dot clusters supports the central thesis of density. (I’ll return to this in a bit). However, overall flattening over time of the red dots has to indicate the hollowing out of manufacturing (foreign competition) and competition in labor markets from immigration. Lastly, the green dots show how the return to skills, employed in fewer Ag or manufacturing environments, has simply marched on.

    A conundrum presents itself in industries, two formerly very prominent, that were not really located in dense areas. Other than USS South Works or Rouge Steel, that industry resided in smaller towns. That continues today. Take, say, Nucor in Kankakee, Burns Harbor Works in Portage or the old Inland continuous cold mill in New Carlisle, IN. And auto really populated the Anderson, INs or Lordstown, OHs of the world rather than Detroit or adjacent Detroit. Lastly, in my business the preponderance of companies have been in second, third and fourth+ tier towns. It’s just an observation, and runs counter to the authors paper.

    It seems that trade and immigration issues and their effects stand as policy issues on their own, not city vs rural. And as far as mobility, people on this site have moved considerable distances for employment reasons. And once upon a long, long time ago the West Was Won. A decision by a person refusing to move from their home town of, say, Kokomo, IN to a more prosperous Ft Worth, TX is a personal value judgment. I’m not sure we should be supporting that decision with income support policies.

  • bob sykes Link

    The ongoing deindustrialization of America is the source of many social problems, including opioid addiction. The central fact is cities like New York for most of their history were centers of manufacturing. All those tenements were occupied by manufacturing laborers, including textiles, seamstressing, leather, shoe makers, iron workers… Manufacturing and transport is why cities existed in the first place.

    So it is not just places like the Rust Belt that deindustrialized, so did BosWash, Chicago, San Francisco, LA… And old small cities like Mount Vernon, Ohio, which was once a center of manufacturing for the Ohio oil and gas industry. The Mount Vernon Bridge Company supplied the steel for Ohio Stadium and for Boston’s now removed Central Artery, plus over 1,000 bridges in the Midwest and East.

    Besides creating a whole class of surplus labor, both white and black, deindustrialization has wrecked the tax bases of local, state and federal governments. High wage, high tax paying industries are being replaced by low wage, low tax paying service companies.

    It has also undermined our military. Not only can we not afford it anymore, we lack the industrial capability to replace it.

    And the Ruling Class continues down this path. They richly deserve a Mussolini moment, every single one of them.

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