How did you move New York’s economy from the center to the periphery?

The future of remote work does not look so rosy today. Changes in the economic outlook and fear of a recession have caused companies in sectors such as technology to trust again in the traditional head-to-head model. examples Twitter s pop That in addition to adjusting the remote work policy – canceling it in the first case and reducing it to two days of remote work in the second – they have implemented mass layoffs.

also, linkedin They warned in October that remote working could peak in the UK and US. On the other hand, there are economists who warn of the negative impact that remote work can have on the economy of large cities: the so-called donut effect.

donut effect. according to Published report Stated in May 2021 by the US National Administration for Economic Research (National Bureau of Economic Research in English), the donut effect is the phenomenon whereby demand for certain goods and services moves from large city centers to less populated areas. , located in the vicinity of those same big cities. The researchers reached this conclusion after determining the impact of COVID-19 on immigration patterns and housing markets, using data from the US Postal Service and real estate company Zillow. This is a problem echoed by the World Economic Forum.

The economy is linked to “mobility”. On November 28th The World Economic Forum published a document It analyzed the negative impact of remote work on the income of companies such as restaurants, cafes, barbershops, gyms, and taxi transportation services. According to the study, which was conducted on a sample of 35,000 workers in the United Kingdom, the abolition of the trip to and from work (the “commute” in English) in certain areas reduced the level of spending in those areas. In addition, it concluded that demand for certain services decreased in some central neighborhoods of large cities while it increased in the periphery of those cities, in line with what was reported by the US National Administration for Economic Research. It is, in fact, a phenomenon that concerns the councils of major North American cities.

US alert. As economist Nicholas Bloom points out in an article published in New York times Last week, the fact that there were workers coming to the office two to three days a week, like those in a hybrid system, reduced retail spending in big US cities like New York or San Francisco. Blum pointed to reduced spending on “meals, drinks, dinners, and purchases by office workers,” which would reduce “billions of dollars in economic activity,” and would reduce municipal collections in these large cities.

Insomnia in the Big Apple. Eric Adams, Mayor of New York, expression His concern about the issue in March: “We have a very large number of New Yorkers who are out of town who work remotely, which is affecting our economy.” The solution, according to the mayor of the city whose offices They saw their value drop by 28% due to a lack of demand due to remote workingis to end telecommuting and bring workers back to the city, and to create face-to-face jobs in the Big Apple.

Less use of public transportation. Some of the data justify Adams’ concern and confirm what the economist Nicholas Blum indicated. Last April, the decrease in the number of passengers in the New York subway was 74.5% compared to pre-pandemic levelsWhich reduce revenue Public transit, according to the Metropolitan Transportation Authority.

normal evolution. It is logical that telecommuting will cause changes in the economic system that has practically excluded telecommuting as a suitable tool at the level of production. However, if we look at the data, the solution is not to go back in time: according to a study by several North American universities, employees who work remotely Can become up to 9% more productive of those who work from the office. also, Increases the welfare and savings of remote workers. In other words, it is a tool that can be beneficial to both companies and their workers, and thus beneficial to society.

Photo: Jeffrey Bloom/Unsplash