A cost of living crisis is
unfolding in America's major Cities. We can't afford to live in
this city if you're a Working class New Yorker. The problems are acute in
downtown Manhattan. One bedroom units are
renting for nearly $4,000 a Month on average. There's a reason people are
willing to pay. It drives you and it
motivates you. And it keeps you hungry. It
keeps you always thinking, Because no matter what, you
know, there's somebody out There hustling more.
There's somebody thinking Something new. You can
never become complacent. That's what's so beautiful
about this city. People have returned to
cities to see their friends And have a good time. That's pushing rents to new
highs in places like Los Angeles, Chicago and cities
across the Sunbelt. While renters have
returned, many commuters Haven't, despite the return
to office push from major Companies like Goldman
Sachs and JPMorgan. More days at home could
help workers escape high City prices and long
commutes. But there could be a cost
to that decision. I think it's really hard to
form high quality new Relationships remotely. I think it's easier to
maintain existing Connections. There's just something about
meeting in person that you Can't replicate virtually. During the pandemic, we saw
some jobs where it could be Done remotely. However, new
hires dropped dramatically, About 40% for over a year
and a half. This is really compatible
with a view that firms had
Trouble onboarding new
workers because it was Difficult for them to
learn. As prices keep rising across
the country. We ask our American major
cities like New York still Worth it. The biggest
benefit of cities are the People being close to
others in your field of work Can unleash powerful
benefits. Economists call this the
theory of agglomeration. When there's a concentration
of an industry in the city That can make those firms
and people more productive. You know, New York City is
a good example. You have like this variety
of restaurants that you just Can't have in a population
of 50,000 people. There's long been a
hypothesis of agglomeration Economies, which just means
that we get more productive When we are enmeshed in a
maelstrom of economic Activity, both because we
can buy and sell, we can Find workers to hire, we
can find employers to hire Us, and we can learn from
one another. Within large cities, the
benefit that you have is the Diversity. It's the
diversity of people. The diversity of culture is
diversity of ways of life. And I think that is not
what is always present in Smaller cities, but I think
that is an individual choice On the person to decide if
they want to stay in a Larger city or not. Evan Robinson runs America
on Tech, a nonprofit that Teaches young professionals
how to code. They have offices in Los
Angeles, Miami and New York City. We're looking at it from a
data perspective about where Our most underestimated
communities are located, and That happens to be within
or in proximity of the Largest cities.
Opportunities like this are
one of the big benefits of Cities, and it's what makes
many consider them to be Worth it despite the costs. But in the age of remote
work, Sunbelt cities are Poaching talent from the
old titans in Silicon Valley, in New York. People are fleeing
governments and places that They're not wanted or they
feel that they're not Wanted, or where they're
being taxed to death. A lot of these tech
companies, they're saying, Oh, yeah, you can work
remotely. But, you know, in Many cases they're also
saying like, we're not going To pay you quite the same
amount. Making it in any major city
has never been easy. I always wanted to come into
Manhattan, be a businessman In Manhattan. You can say
anything negative you want To say. There's a lot of
negative things to say about This place. It's a
financial epicenter of the World, and it drives you
and it motivates you and it Keeps you hungry. It keeps
you always thinking. That's the exciting part,
right? And I'll be honest.
Actually, that's what the City has lost the most with
COVID, is that it's lacking That energy. You walk
around, you don't feel that Energy. You don't feel that
buzz. Before the pandemic. Manhattan could more than
double in population during Working hours. You're looking at a
visualization of data that Was collected by NYU's
Wagner School in 2012. Although this hasn't been
updated since the pandemic, We can clearly see
Manhattan's heartbeat has Changed since then. Foot traffic plummeted
during the darkest days of
The pandemic. At one point,
consumer spending fell more Than 50% across Midtown. The business community
hopes that eventually those Vacant storefronts get new
tenants. Where I am most fearful is
the retail space in the Business districts in the
Grand Central area. You have about a 30%
vacancy of all retail Spaces. At best, we will
have two thirds of Pre-pandemic level foot
traffic in Midtown moving Forward. Spending from high skilled
workers has kept major Cities afloat through the
years. Tech workers in particular
have clustered into about Eight major US cities,
raising issues of Affordability in each. Prospects for the software
engineers and data Scientists in this cohort
remain strong. For example, the median
worker at Google made over $270,000 a year in 2020,
according to SEC filings. Other workers fare pretty
well, too. The purchasing power of
these specialists can shoot Prices upward for housing
and other goods. Silicon Valley is kind of
maybe the most famous Example where, you know,
it's really costly to live And there's a ton of
regulation and yet software Companies seem to continue
to locate there. And a lot of that is
because of agglomeration Economies. If these workers leave the
usual major cities, it could Fundamentally change the
economy. The ability to serve a latte
with a smile was a path Towards a steady paycheck. Now, when people stop going
to to work downtown, those Jobs disappear.
If we have a shift to
hybrid work, maybe that will Mean fewer people in the
offices. But you'll also see Commercial rents going
down, and you'll see Younger, scrappier firms
replace older and more staid Firms that have sent their
office workers home. Hopefully, those younger,
scrappier firms will Continue to demand things
from the urban service Workers and provide
opportunity for Americans Who start with less. I am more worried about
cities like Cleveland and Detroit that started on the
edge of of survival, where a Decline in demand for
offices can really mean just Increased vacancies, which
then spill through the urban Service economy. The surge of people into
major rental markets masks The sluggish return to
normal in downtowns. Demand is still strong for
city life because, well, It's fun. In 2018, the most
recent year with data Available, New York City
had nearly 20,000 Restaurants and over 2000
bars. I mentioned kind of the
diversity of restaurants, But there's also the mating
market, right? Like young people want to
be in a market where they Have other young people to
meet and friends, right? Like we're kind of
inherently social creatures And a density of social
connections which cities Provide is going to
continue doing that going Forward. But those connections will
cost you. Quite honestly, the cost of
living here is only gone up. It has not gone down. Quality of life is gone
down in many ways. Rent hikes are hitting some
previously affordable Neighborhoods. Grocery
prices are rising, too,
Squeezing even the most
frugal people. Economists believe that
returns for living in a big City have flattened for
less skilled workers since The 1970s. Cities should become fairer
places that, while cities Are relatively good places
for adults, even for adults Who don't have fancy
degrees because there are These urban service
sectors, they're really not Great places for poor kids. As the likelihood of
recession increases, leaders Are trying to manage rising
inequality. What we are announcing today
is the largest investment in The city's history in
support of vulnerable New Yorkers experiencing
homelessness on our streets And subway. I think that that is the
most important thing to Getting people back here. You know, there's a
significant decline in Ridership on the subway. And a large part of that is
if people can avoid taking It, they will. Transit ridership in New
York remains well below Pre-pandemic levels. If this trend continues, it
could impact the quality of Service down the line. It is absolutely true that
public transit becomes safer When there are more people
who are taking it. This was Jane Jacobs
fundamental insight that in Fact, having more people
around makes places safe. The available data suggests
New York is still much, much Safer than it was during
the 1970s. They may become slightly
less safe, but there's still The best means to get
around New York most of the Time.
Urban living today looks
like a long commute to the Office that may feel
unnecessary. Or working remotely from a
cramped and expensive Apartment. This makes a
return to the city seem like A raw deal for many people,
especially if they can do Their jobs from home. What is permanent about the
pandemic? And what we thought was
probably permanent was this Change in the productivity
of remote work. There is always a sort of
curve for the adoption of New technologies. We would have gotten all
these technologies fully Adopted eventually, but the
pandemic accelerated it. The theory of agglomeration
shined in the late 20th Century when fax machines
and paper dominated offices. It'll be tested in an era
of hybrid work. Our staff is coming into the
office 1 to 2 days a week. What we have seen is that
this creates more Flexibility. This creates a
more morale within our team And more work life balance. I really think going
forward, hybrid work is here To stay, but so is very
much face to face contact. It was exactly in the
industries that were most Capable of enabling remote
work prior to the pandemic. Like information
technology. Like Google. They bought a
million and a half square Feet in downtown Manhattan,
even though if they really Wanted to enable remote
work, they could have Enabled remote work. So our city's still worth
it. If you're 23, 24, 21,
especially, this is the time To invest in your career
and you can always come back To where you want to live.
You're just going to have More options about where
you want to live if you
Invest in your career now
and make yourself a more Productive employee. Cities, especially city like
Manhattan, is 100% still Worth moving to. And you
see a lot of people come Here and they they go buy
every penny they have just To enjoy, experience living
here for a couple of years. And the major banks are
going to pound their chests. They say, get back to work,
be here five days a week. You will lose talent if you
force people to come in five Days a week. While you've seen kind of
this migration of a lot of Individuals leaving major
cities into smaller cities. Majority of the population
doesn't have the opportunity To kind of move. And I think during a time
of uncertainty is important That we're making not only
strategic investments but Meaningful investments into
communities that need it Most. Just remember that life is
better spent live. Just think about how much
better it was when you were Around other people. That's what cities are
delivering, where people are Moving up and down all over
the place. And you have the
opportunity to learn from Them, from their mistakes
and from their successes. And good luck to you.
