When COVID-19 started making headlines, I didn’t think much of it. A new virus makes the headlines every few years. But when governments started using COVID-19 as a justification to implement severe restrictions, I started to wonder if we were on the cusp of a major shift in the status quo. Now that we’re several months into the restrictions put into place to “flatten the curve,” I’m all but certain that we’re in the midst of major changes.
One major shift that has come of government COVID-19 policies is the worker migration from offices to home. Before the lock downs were implemented a lot of companies were still skeptical of the work from home model. At the beginning of the lock downs those companies were forced to either shutdown or transition to a work from home model. Now that those businesses have been operating on a work from home model for several months many of them are starting to question the old model. Consider the cost of maintaining a large office in a central hub for your employees. There’s the cost of the building itself. It’s either owned; in which case the costs of the building, upkeep, and property taxes are incurred; or it’s rented; in which case the monthly rent is incurred. Then you have the cost of municipal services such as electrical power, water, and sewer. Most offices offer employees some amenities such as coffee, snacks, etc. Often forgotten are the costs of added risks such as employees being injured or killed during their commute, employees coming in late or being unable to come in at all due to weather, and business being disrupted by power outages, civil unrest, etc. And then there are future costs to consider such as likely tax hikes as various levels of government scramble to make up for lost revenue.
It should come as no surprise that businesses are looking at the current landscape and questioning whether they should flee their expensive central hubs now that many of their employees are working from home:
A new survey by the Downtown Council shows 45 business owners say they are considering leaving downtown – citing the lack of people working or socializing downtown – and the idea that the police department could be dismantled.
“We are seeing business owners wanting to eliminate the overhead, especially in a world where it looks like there’s going to be a more hybrid approach happening – and people are going to be working from home – business owners and companies are looking to downsize,” he said.
Keep in mind that these are 45 business owners that bothered to participate in a survey. The overall number is almost certainly higher.
This exodus would cause a domino effect. If major companies begin to flee a city, supporting companies usually follow. What’s the point of operating a restaurant or a bar in a city if nobody is eating or drinking there? Likewise, employees that moved to the city because they wanted a short commute may begin looking for a place that’s cheaper and/or nicer. Minnesota is already seeing this as people working from home ask themselves why they shouldn’t work from lakefront property (or in my case, why not work from the woods).
Besides work the other major attraction of large cities has traditionally been big events. Concerts, sports, festivals, etc. usually happen in large cities. But those also vanished when the lock downs were implemented. Downtown Minneapolis is currently a ghost town compared to a few months ago and the same is probably true of other major cities.
We may be witnesses the beginning of the end of a system that really took off with the Industrial Revolution: population centralization. The Industrial Revolution brought factories and factories needed a lot of manpower so they tended to be built in existing population centers. Those factory jobs tended to pay better than farm work so laborers started to migrate from rural areas to those population centers. There was a cycle where factories went to where laborers could be found en masse and laborers started migrating to where factories could be found en masse.
A lot of labor is no longer physical and the Internet provides a mechanism for nonphysical labor to be done remotely. Thus the groundwork exists for the Industrial Revolution cycle to be broken. Employees can live in the boonies and work for a company whose nearest office is several hundred miles away or even across the globe. Many other city attractions also disappeared or went remote.
I think we may be at the beginning of an exodus away from cities. If it occurs, this could end up being another epoch like the Industrial Revolution.