Cities Are No Longer Escalators of Opportunity, MIT Study Finds

(Bloomberg Businessweek) -- “Superstar” cities aren’t all they’re cracked up to be, especially for Black male college graduates, says a new study from Massachusetts Institute of Technology. And Covid-19 could make matters worse.

Cities such as New York, San Francisco, Chicago, and Houston are still good places to work for people in high-paid professions such as banking, but they’re no longer good for people in middle-paying jobs, finds the new study, “The Faltering Escalator of Urban Opportunity” (PDF), by MIT economist David Autor. It was released on July 8 by MIT’s Task Force on the Work of the Future, which Autor co-chairs.

In an interview, Autor says, “I was as surprised by my findings as anyone else.”

The conventional wisdom in economics is that cities provide opportunities that aren’t available in suburbs or rural areas, says Autor. Harvard economist Edward Glaeser wrote in a working paper this year that “cities have been an escape route for unemployed residents of rural areas, such as the African-Americans who fled north during the Great Migration.” The policy implication: If cities are so valuable to workers, then government should focus on removing barriers, such as the high cost of housing, that make cities unaffordable.

But Autor says the conventional wisdom is wrong. The problem with cities isn’t just that they’re unaffordable, but that they’re also not very desirable to workers in middle-paying occupations. Administrative and clerical jobs that provided a solid middle-class life in cities have been automated out of existence. And manufacturing, which once supplied a lot of decent jobs in cities, has mostly shut down or moved to less densely populated areas. The remaining jobs in cities are mostly either high-paying ones for highly skilled, specialized workers in sectors such as banking, or low-paying ones in food service, cleaning, security, and the like.

“Most disconcerting is the experience of Black male college graduates,” Autor writes, whose share of middle-paying jobs fell by 7 percentage points from 1980 to 2015, while their share of low-paying jobs rose by 5 percentage points. For Whites, only people without college degrees found urban jobs less lucrative, but for Blacks, college grads did as well. In an interview, Autor says that Black male college grads were less likely than White male college grads to work in high-paying professions and more likely to work in fields such as government and manufacturing, so they were more vulnerable to setbacks when the pattern of urban employment shifted. “They were more in harm’s way,” he says.

Covid-19 is wiping out lots of low-paying jobs. Mathematically, that reduces job polarization, because there are fewer workers on the bottom end of the pay scale. But it’s hardly a good result, Autor says, because the low-paying jobs aren’t being replaced with better jobs. They’re just going away.

One solution to the downward mobility, says Autor, is to raise minimum wages in cities, which would raise the living standards of low-income workers “at little cost to their employability.” Another is to rethink the concept of Moving to Opportunity, which helps poor families move to better neighborhoods within cities. Some families might be better off moving out of cities entirely, he says.

Autor concludes the policy brief with “some reasons for tempered optimism.” If some less-skilled people move out of cities because of a lack of opportunity, employers will be forced to raise pay for those who remain, he says. And the aging of society will create more opportunities for decent-paying jobs, “including in-person care, transportation, repair, and other services for the elderly.”

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