In a recent article, I explored some of the implications of the social distancing measures introduced to stop the spread of Covid-19 on our cities and our workplaces. With remote working becoming the norm throughout 2020 there has been noticeable concern that people will abandon our cities for quieter, greener, and more affordable towns, as they no longer need the bright lights to secure the most attractive jobs.
While the transition has been self-evident, what is less clear is whether it will endure past the pandemic. Sure, we’ve seen a number of tech firms say that people will be working remotely for the foreseeable future, but across the wider economy the matter is still up for debate.
A recent paper from the London School of Economics attempts to explore the issue from an interesting angle by pondering what would happen if all of the things that cities have that contribute to our productivity and enjoyment were to vanish. Their hypothesis was that if these things vanish then our incentive for living in the city vanishes too, especially given the costs associated with big-city living, such as higher rents, pollution, and so on.
The bright lights
The researchers developed a dynamic spatial model that includes factors that contribute to higher wages (labor market agglomeration), higher rents, the costs associated with moving, and other locational preferences.
The team wanted to reflect the reality that we’re not some homogenous blob that all act in uniform ways, but rather unique individuals who will be attracted to certain types of living and working environments to varying extents. We’ve seen this during Covid, as while some people have happily exiled themselves to the suburbs at the first opportunity, others have stuck it out in the city.
In total, the model included data from around 30 million workers and 20 million housing transactions from across Germany, and the researchers model three distinct scenarios. The first of these removes any positive density effects on productivity; the second eliminates any positive effects on our quality of life from social interactions, and the third combines one and two.
On the move
In total, mobility predictions are made for 18 distinct groups according to age, gender, and skill, with a total of 141 labor markets covered across Germany, with each region divided into large (over 250,000 people), or small (less than 250,000 people).
The models suggest that the larger areas lose nearly 9% of their population, with the larger number of smaller areas rising by nearly 10%. The GDP of the larger cities was found to decline by 16%, but there was also a decline in GDP of 2.4% in smaller towns due to the decline in productivity experienced by people when they moved there.
To further explore the issue, the researchers examined the importance of quality of life in our decisions. They hypothesized that geotagged pictures that had been shared on social media could provide a useful insight into the quality of life in a location, as pictures are usually taken at places where social interactions occur, whether that’s a museum or a pub.
This analysis revealed that, unsurprisingly, big cities offered far more of these cultural and social activities, so moving to a smaller town would provide a jolt to our quality of life. What was perhaps interesting, however, is that the quality of life effect seemed much larger than the productivity effect. In other words, big city’s main allure seems to be less the productivity they provide (though that is still significant) and more the amenities they provide.
Stay or go?
So, it seems that both the social and economic interactions we find in cities are key to their appeal, and the diminishment of either would have negative effects on both large and small cities. The impact of any such diminishment would be larger in the big cities, however, at least according to the LSE modeling.
What is perhaps equally interesting is that our willingness to move is even greater when the idiosyncratic reasons that tie us to a particular city are removed from the equation. In such a scenario, people were found to be twice as likely to move from the large to the small city.
As such, it’s clear that as important as our professional gains are from living in a big city, it’s largely the social aspects that bind us to them. The authors argue that while it’s obviously crucial that we understand the impact of Covid on our professional lives, it should be of equal importance that we understand its impact on our quality of life.
Shifting sands
The pandemic has seen (and caused) profound movements of people, however, and these movements are not just within countries. For instance, whereas historically people have moved from eastern European countries to their wealthier Western neighbors, this flow has reversed during the pandemic, with an estimated 1.3 million Romanians, and 500,000 Bulgarians returning home. These people can often continue working remotely for western firms while being close to extended family leading to a much more international workforce.
“When I co-founded the company, I was in the Netherlands with co-founders in Manchester and Seattle,” Alex Nichiporchik, CEO of gaming company tinyBuild, told me recently. “The only real challenge during that period was one of coordinating timezones so that work was co-ordinated. Now we have teams as far away as Novosibirsk, Russia, which is 7 hours ahead of London, so that challenge has continued, but there is a world of talent out there so we think it’s worthwhile.”
This has seen many countries reversing the brain drain they had previously suffered from. For instance, more Estonians have been returning than leaving since 2017, with the number of Poles living abroad falling for the first time ever in 2018. This is transforming the way organizations approach recruitment and talent management.
“Hiring has definitely become easy, as before the pandemic we’d take people on a few months probation as they work remotely before flying them into Amsterdam or Riga, which would require visas and a lot of paperwork,” Nichiporchik continues. “We have had to improve our hiring processes, however, as while the talent pool has expanded, the vetting of those people is a bigger challenge. What’s more, the onboarding of new recruits is that bit harder when done virtually.”
Data from employee engagement platform TINYpulse highlights the challenges found in onboarding virtual employees, but the researchers believe that these challenges are surmountable, and with good communication, mentoring programs, and a doubling down on culture-reinforcement organizations can thrive in this newly remote world.
While the changes to migration and mobility have been significant during the pandemic, the LSE model highlights that, far from some of the dystopian pictures presented in the media of mass urban flight, any shift in population patterns will be a gradual trickle rather than a mass migration, with changes measured in decades rather than months. With vaccines being rolled out, it’s clear that the picture is not going to remain static, but equally, it’s clear that cities will remain important places for some time to come yet.
The best organizations will be those who can not only adapt their horizons to this shifting landscape, but also adapt their processes to help remote workers be onboarded successfully.
