Are Cities Overrated? : Planet Money Big cities used to be the land of opportunity for most people. But with changes in work, some economists are wondering: Are cities overrated?

Are Cities Overrated?

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KENNY MALONE, HOST:

Just a warning - the actor Kurt Russell does swear one time in this episode.

GREG ROSALSKY, HOST:

Who are you? And what are you arguing, and why?

DENNIS SIMPSON: Greg, I'm Dennis Simpson (ph). I live in Hot Springs Village, Ark., a small rural community outside Hot Springs. And I'll argue that big cities simply aren't worth the cost. I can continue, but that's usually the kind of clip you use.

ROSALSKY: (Laughter).

MALONE: Dennis Simpson clearly knows how a PLANET MONEY episode works. He is a listener, and he sent us an email with an argument that stems from the fact that his life in Hot Springs Village, Ark., is apparently fricking great.

SIMPSON: It is 26,000 acres of complete awesome.

ROSALSKY: There are nine golf courses.

MALONE: Eleven lakes.

SIMPSON: I'm looking to cross our lake right now. It's not the largest lake in the Village, but it's very nice. Over that hill and over the hill behind it is 1.7 million acres of national forest.

ROSALSKY: Dennis says even the water is great.

SIMPSON: Mountain Valley water is bottled about 6 miles from here. We have some of the purest water in the United States.

MALONE: And on top of all of this, Dennis says Hot Springs Village is cheap, especially when he compares it to places like New York or San Francisco.

SIMPSON: We watch the realtor.com, and we watch the Zillow. I actually got a link the other day for a quarter-acre lot with a dead truck, a dead boat and a cinder-block 800-square-foot house that was $1.2 million in the Bay Area. And we joke about that. That's a $30,000 redneck home to us. That - you would never live in that.

ROSALSKY: (Laughter) So to boil down your argument, cities are overrated.

SIMPSON: I think cities are overrated. I really do. Yeah, they're overrated.

(SOUNDBITE OF FRANCOIS-MAXIME BOUTAULT AND FREDERIC VITANI'S "GET ON UP")

MALONE: Hello, and welcome to PLANET MONEY. I'm Kenny Malone.

ROSALSKY: And I'm Greg Rosalsky. The conventional wisdom from economists has been, if you want to make it in America, move to the city.

MALONE: But in the last few years, people have been leaving cities, cities like New York and San Francisco and Miami and Los Angeles. Today on the show, are cities overrated? Is it time to rethink where to live?

(SOUNDBITE OF FRANCOIS-MAXIME BOUTAULT AND FREDERIC VITANI'S "GET ON UP")

ROSALSKY: Today, we are going to talk to two of the country's leading economists to ask the question, have cities become overrated?

EDWARD GLAESER: No, they're not overrated. They do amazing things, and they have been doing amazing things for thousands of years.

MALONE: Ed Glaeser is an economist at Harvard and wrote a pretty popular book about cities called "Triumph Of The City."

ROSALSKY: What was the subtitle of that?

GLAESER: It's "Triumph Of The City: How Our Greatest Invention Makes Us Smarter, Healthier" (ph) - hold on. Let me get this - let me make sure I have the adjectives in order for you.

ROSALSKY: (Laughter).

MALONE: There are a lot of adjectives. And Ed Glaeser, for decades, has been one of the biggest cheerleaders for cities.

GLAESER: That's right. "Triumph Of The City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier."

ROSALSKY: Glaeser grew up in Manhattan in the 1970s and 1980s, which wasn't the most glamorous time for New York City, or really any of the country's major cities.

MALONE: Cities had been these manufacturing hubs. But during that period, the world kind of opened up. New York's garment industry went overseas, for example. Detroit's car business started shriveling up. The crime rates in cities skyrocketed. Cities became a place where scary things happened, or at least that was the reputation.

(SOUNDBITE OF FILM, "ESCAPE FROM NEW YORK")

UNIDENTIFIED ACTOR: (As Narrator) In New York, the entire city is a walled maximum-security prison.

ROSALSKY: If you've ever seen the movie "Escape From New York," the scary plot is it's the future, 1997, and the president has crashed in New York City and must be rescued.

(SOUNDBITE OF FILM, "ESCAPE FROM NEW YORK")

LEE VAN CLEEF: (As Hauk) You go in, find the president, bring him out in 24 hours, and you're a free man.

KURT RUSSELL: (As Snake Plissken) Twenty-four hours, huh?

VAN CLEEF: (As Hauk) I'm making you an offer.

RUSSELL: (As Snake Plissken) Bull****.

VAN CLEEF: (As Hauk) Straight, just like I said.

RUSSELL: (As Snake Plissken) I'll think about it.

MALONE: This movie was part of, like, a whole genre of dystopian New York City movies that came out in the '70s and '80s.

GLAESER: And it really felt as if the age of the city had come and gone and was not going to come again. And that was really the backdrop. That was the world that I grew up in. And from that perspective, the comeback of cities feels fairly miraculous.

ROSALSKY: The reason cities came back is because there was this whole wave of jobs that came in the '90s and the 2000s. They were all part of what economists sometimes call knowledge work.

MALONE: Yeah. Think, like, finance, biotech, coding. Instead of making a new physical object with your muscles, this is the kind of job where you give the world a new idea with your brain. And these types of jobs, Ed Glaeser says, thrive in dense, urban areas.

GLAESER: This old urban edge of enabling us to get smart by being around other smart people - that old urban edge became more valuable. And it was on that advantage that cities found themselves coming back.

ROSALSKY: There is a stunning statistic in Glaeser's book about this modern economy. Glaeser found that Americans who live in big metropolitan areas are 50% more productive than their smaller-town equivalents.

MALONE: And Glaeser, along with a lot of economists, have spent decades trying to figure out why this is. Like, what exactly is the magic of a city? And he says, for sure, some of it is this self-selection, where you've got high achievers trying to make it in the city.

ROSALSKY: But Glaeser says even when you take that into account, there's something about a city that seems to make workers better at their jobs.

GLAESER: So the key point is that all of human creativity is based on the bedrock of human interaction, right? Almost everything of what, you know, I know I've learned from people around me. Physical proximity speeds the flow of ideas. And cities have been enabling the collaborative chains of creativity that have powered humanity's greatest hits from Athenian philosophy to Facebook. So cities are fundamentally enablers of human creativity.

MALONE: Now, it's not like every city in the country has rebounded from the '70s and '80s the same. And this is why you'll hear economists talk about so-called superstar cities, the rare economic term that sounds like it should be a song from the band Poison.

ROSALSKY: Superstar cities are these places like San Francisco, New York and Seattle - places accounting for a disproportionate share of our country's economic growth. Over the last decade, our biggest cities have accounted for over 70% of the nation's job growth.

MALONE: In other words, these cities aren't just driving our economy. They are kind of becoming our economy.

ROSALSKY: All right. So are we ready to go?

DAVID AUTOR: Yes.

ROSALSKY: OK.

MALONE: This is David Autor. He's a labor economist at MIT.

AUTOR: I'm also the co-director of the MIT Work of the Future task force.

ROSALSKY: David told us another reason why cities are great. It's that when you look back through history, they've had this incredible power to give opportunities to people.

MALONE: Even workers who did not have specialized skills or a college degree. For these types of workers, David says moving to the city would actually change the kind of work you do.

AUTOR: As you sort of went from rural areas to suburbs to metro areas to cities, there's a kind of an occupational escalator that noncollege workers rode up.

ROSALSKY: This is the classic start-in-the-mailroom-and-work-your-way-up story. The data showed that if you moved to a city, the odds of this happening were just way better. You leave a small town and step onto this big city career escalator, and workers would benefit with or without a degree.

AUTOR: They would arguably be building more skills and developing a, you know, a specialization that would make them more productive, that would cause their wages to be higher and that would give them more potential job security over time.

MALONE: And, look; I'm from a small town in Pennsylvania, and this is exactly what I grew up assuming to be true, assuming that the quickest path to upward mobility was packing my bags and moving to a big city.

AUTOR: I actually think - I think most economists assume that, too. That is the conventional advice.

MALONE: Is that what you think?

AUTOR: That's what I thought, you know, up until six months ago.

ROSALSKY: After the break, what David Autor learned six months ago.

Last year, David Autor got an invitation to give what was probably one of the biggest speeches of his life.

MALONE: Every year, the president of the American Economic Association - this is the main professional organization for U.S. economists - he or she selects a big-shot economist to give this lecture.

AUTOR: That's the Richard T. Ely lecture. And Ben Bernanke, who's the incoming president, selected me - invited me to do it, which is a huge honor.

ROSALSKY: Yeah.

AUTOR: It was also - it was incredibly intimidating.

MALONE: Ben Bernanke is the former chairman of the Federal Reserve.

AUTOR: He sent me an email.

ROSALSKY: He sends you an email.

AUTOR: Yeah.

ROSALSKY: He's like, I want you to give this prestigious lecture. Where does your mind go?

AUTOR: So you know, the first place my mind went was, can I delete this email and pretend that it has never come...

(LAUGHTER)

AUTOR: ...Because this is going to be really hard?

(SOUNDBITE OF ARCHIVED RECORDING)

BEN BERNANKE: Hello, everyone. I'm Ben Bernanke. I'm the incoming...

MALONE: Of course, David Autor did not delete this email from Ben Bernanke.

(SOUNDBITE OF ARCHIVED RECORDING)

BERNANKE: What I'd like to do now is introduce our Ely lecturer, David Autor.

ROSALSKY: I was actually there for the speech. It was in Atlanta. It was a huge convention room full of hundreds of economists. And David Autor takes the stage kind of nervously smiling.

(SOUNDBITE OF ARCHIVED RECORDING)

AUTOR: Thank you. It is an overwhelming honor to be here.

ROSALSKY: And then he starts talking about how he's starting to rethink the popular wisdom on cities.

(SOUNDBITE OF ARCHIVED RECORDING)

AUTOR: So when I started this project, it was my assumption that, you know, cities are lands of opportunity. We know that productive wages are rising. That's where everyone should go. Why isn't everyone moving to the city?

MALONE: Remember, moving to the city got you access to that career escalator. And for this speech, David did some new research. And the first big surprise was that this career escalator - it had been flattening out for decades.

AUTOR: In other words, it was steeply upward-sloping in the 1970s and 1980s. Starting in the 1990s, it starts to rotate downward, further still in 2000, further still so that by 2015, that escalator had completely leveled out.

MALONE: Moving to the city, David found, is now more like one of those moving walkways at the airport. There is no moving up like there used to be. And so the big question is, why is this? What changed?

ROSALSKY: And the answer has to do with something that David had actually been looking at for a long time. Our country's labor market has been splitting into two tiers.

MALONE: Tier No. 1, you've got high-paying knowledge-based jobs. Tier No. 2, low-paying service-sector jobs. And the stuff that used to be in the middle tier - that is the stuff that has proved easy to automate with technology or offshore with, you know, free trade.

ROSALSKY: But this was just a general national trend. For this fancy speech in Atlanta, David decided he wanted to see how this was unfolding across America. Where exactly in the country are these middle-tier jobs disappearing? He expected to see them disappearing everywhere, but especially in rural areas and smaller, declining cities, like those in the Rust Belt, places that were obviously suffering.

MALONE: David assumed the exception to this would be in our superstar cities.

AUTOR: That's where all the benefits of, you know, Silicon Valley or finance or Los Angeles are spilling over to everybody. You know, just get there. The cup runneth over, and everyone is part of this concentrated prosperity.

MALONE: But what David had found, and what he was presenting in his speech, was the exact opposite.

ROSALSKY: This job polarization, this division of the labor market into high-paying and low-paying tiers, is now happening more in superstar cities than anywhere else in the country.

(SOUNDBITE OF ARCHIVED RECORDING)

AUTOR: This job polarization is disproportionately an urban phenomenon, something I was not aware of until about 72 hours ago. (Laughter) I have been telling people, we got to get everyone to move to cities because that's where the opportunity is. I'm less certain of that than I was 72 hours ago.

ROSALSKY: This was pretty bonkers to hear live. And, you know, it wasn't like Ben Bernanke was spitting on his drink and the audience was sobbing uncontrollably. But David Autor was onstage challenging this decades-old economic truism, go to the city if you want to make it. He was saying that simply isn't true for a huge segment of the workforce. It was kind of jaw-dropping.

AUTOR: I'm glad your jaw was slightly on the floor. Mine was, you know, like, I couldn't get off the floor for weeks at a time.

(LAUGHTER)

AUTOR: As I was putting that together, I was so surprised.

MALONE: And David paints, like, sort of a dark picture of what's going on in superstar cities. You have this top tier of jobs doing better and better. And then you have that lower tier of jobs.

AUTOR: Noncollege workers are primarily there to see to the care and comfort and feeding and security of the more affluent. They have been reshuffled into these jobs that use arguably more generic skill sets, and that's why it's hard for them to command high wages because the set of people who can do many of those tasks is abundant.

MALONE: And since David Autor gave this speech and revealed these findings, there has been a wave of follow-up research. Most recently, a group of economists at Cleveland's Fed tried to calculate where you should go live depending on what you do for a living. And what they found is that if you do not have to be in a superstar city to do your job, you probably should not go to a superstar city.

ROSALSKY: And so the question that started this entire episode, how cities become overrated - we put that directly to David Autor.

AUTOR: Depends for whom. They're overrated for adults without college degrees. They're probably not overrated for highly educated adults.

MALONE: David says that means cities are overrated for just about 1 in every 3 workers. For about a third of the country, cities are now a lousy deal.

ROSALSKY: But there's still the other two-thirds.

AUTOR: At the moment, there is a lot of opportunity for, you know, skilled, specialized, creative work in dense, urban areas that are just not yet nearly as available in Hot Springs, Ark., although I'm sure Hot Springs, Ark., also offers many wonderful things that are not available in New York.

MALONE: Nine golf courses, 11 lakes, water as pure as the driven snow.

SIMPSON: Well, and hang on. Three, two and one. Yeah, that'll be good.

ROSALSKY: Dennis Simpson, the listener who started this whole thing by claiming cities are overrated - we called him back. And we explained, basically, he was right. If you don't have a diploma or some specialized in-demand skill set, cities are not the place to go.

SIMPSON: I'm actually kind of letting that process just a minute.

MALONE: The thing about Dennis Simpson, though, cities probably are not overrated for him personally because what Dennis does for a living is run a tech business.

ROSALSKY: In your line of business, like, wouldn't coming to the city make a lot of sense? Wouldn't you make a lot of money?

SIMPSON: Oh, yeah. Oh, yeah. Yeah, no question. I've never argued that point. And for 15 years, I had, like, the third-largest IT company in Little Rock. And my joke was I had 16 employees and 17 headaches. I didn't miss any part of that. No part of that whatsoever do I miss.

MALONE: We could not convince him.

ROSALSKY: He just doesn't like cities. He wants something, as he puts it, holistic.

SIMPSON: Holistic is getting up in the morning, walking outside and seeing the bald eagle in the tree literally 15 feet from my deck

MALONE: There are bald eagle sightings in New York City, although we looked it up and the last story we could find about a sighting was 2015.

ROSALSKY: And it was in Staten Island.

MALONE: Yeah.

(SOUNDBITE OF EMANUEL KALLINS AND STEVE SKINNER'S "TALK IT OUT")

MALONE: PLANET MONEY has a brand-new newsletter, if you are not aware. And, in fact, Greg Rosalsky is the brains behind the newsletter. Greg, it comes - what? - once a week.

ROSALSKY: Comes once a week. It's usually about some big thing in the news or some big economic idea. You should totally subscribe - npr.org/planetmoneynewsletter.

MALONE: Today's show was produced by Sally Helm. Alex Goldmark is PLANET MONEY's supervising producer. And Bryant Urstadt edits the show.

ROSALSKY: And if you want to support PLANET MONEY, one way is to leave us a rating or review in your podcast app. I'm Greg Rosalsky.

MALONE: And I'm Kenny Malone. This is NPR. Thanks for listening.

(SOUNDBITE OF EMANUEL KALLINS AND STEVE SKINNER'S "TALK IT OUT")

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