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Will Remote Working Kill NY? Reports Exaggerated: NYC Remains Attractive

Covid-19 lockdown has spawned theories on NYC’s future and remote working, but this has already been shown to be non-competitive: businesses love the City

New York (Photo by Terry W. Sanders)

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If New York City could speak, it would probably quote Mark Twain: “the reports of my death have been greatly exaggerated.” For weeks, in fact, there has been a lot of talk about the present and the future of the Big Apple, both painted in dark, almost apocalyptic tones. I’ve actually become convinced that many of these negative opinions have been cast, almost entirely, in the wrong perspective and in the process, they have ended up turning contingent, short-term, issues, into long-term scenarios.

Although today the virus in New York is generally under control (34 cases per million people, compared to 600 in mid-April), and despite the various reopening phases that have followed one another from May onwards, it is certainly undeniable that the city is currently facing a very challenging time: offices are still mostly empty, some residents have “fled”, tourists continue to be scarce and the city finances, consequently, are crumbling (with significant repercussions in terms of the cleanliness and safety of the city). But thinking that there is no light at the end of the tunnel, and that this is actually the “end of New York City”, as some have argued, is grossly exaggerated and misleading.

New York during the pandemic (Photo: Terry W. Sanders)

New York’s detractors argue that the current city’s “emptiness” is here to stay for good; those who have left the city will not return, being able to work remotely from “elsewhere” (read: a place where the cost of living is much lower than the one in New York City) and the same goes for commuters, who no longer need to go to the office, being able to work from home. On top of this, they assume that the vast majority of corporations will adopt, from now on, organizational models based on remote working, similar to what they’ve been doing in recent months.

All this, however, is not obvious at all; there are indeed many companies in the United States and elsewhere, that in recent years, well before Covid-19 hit, have tried to introduce organizational models based on remote working, and quite often ended up scaling back to more traditional “office-based” models. The most significant example is IBM, a global pioneer in remote working, so much so that in 2009 the share of “remote workers” accounted for roughly 40% of its total work force. Well, just a few years later, in 2017, IBM ruled that model as no longer good, and even blamed it for the decline in productivity recorded by the company. The only options offered to many of those employees? Either moving to one of the company’s physical offices or be fired. All this, in order to improve interpersonal collaboration and increase efficiency.

A view of Manhattan

Only a few years earlier, in 2013, it was Yahoo that backtracked from remote working and after that, Bank of America and Aetna did the same.

On the other hand, just a few days ago, JP Morgan called many of its senior managers back to its New York offices, after months of remote working, and pharmaceutical giant AbbVie, noting that working at the office is a “critical part of the company’s collaborative cross-functional culture” did the same. Almost simultaneously, companies such as Twitter and VMware announced that employees who opted for remote working and fled the Silicon Valley, could suffer a salary cut of up to 18%.

In short, the idea that once the pandemic is over nothing will ever be the same again and we will all continue to work from home seems more a product of our imagination than reality. Otherwise, it would be hard to explain why in August Facebook announced that it had signed a new 730,000-square-foot lease in Manhattan and Tik Tok inked a 10-year lease for 232,000 square feet of New York office space in Times Square. Around the same time, Amazon also announced 2,000 new hires at its New York office (purchased just a year ago for $978 million), in addition to its 24,000 employees currently employed in the city.

Times Square before the pandemic

And if working from home was really so widely efficient and convenient, it would also be hard to explain the pre-pandemic success of many shared workspace companies, such as WeWork. It is indeed interesting to note how, even freelancers, who by definition could easily work from home, preferred to surround themselves with other people and reduce their social isolation.

Nobody questions that in the wake of what we all experienced in recent months, the share of remote workers may increase in the coming years, but to call this the “end of New York City”, intended as a whole urban model, is just plain wrong. Fairly recent studies have, in fact, put in clear correlation concepts such as high population density and high human capital (characterized by good levels of health and education), with greater productivity–especially for industries such as information, finance, arts, entertainment and professional services–all sectors that favor creativity and the sharing of ideas. From this point of view, New York has always been a clear benchmark.

Also, a study conducted by the University of Pennsylvania in 2012 showed that companies are more productive, on average, in larger cities. With respect to this, two main explanations have been offered: one linked to “competition” (larger cities strengthen competition, allowing only the most productive companies to survive) and the other one related to the so-called “agglomeration economies” (larger cities promote interactions that increase productivity, as explained in the previous paragraph), possibly reinforced by “localized natural advantages” (think for example of Silicon Valley, for the development of new technologies or Wall Street, with regards to finance and access to capital).

When people say that in New York there is an energy that is different from any other city in the world, these are the elements that justify such a bold statement and it is therefore reasonable to expect that once the pandemic is over, New York City will fiercely regain its role of “capital of the world”.

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