This relationship seems to hold across a remarkable range environments. In the ancient times, in modern times, in the Renaissance, in American, in Europe, in Asia, in the first world, in the third world, and so on.
This is what makes bootstrapping a new city so difficult. Let's say your economic metro has 10 million people. even if you manage to coordinate 100 thousand leaving together, the new city will still have nearly 50% lower productivity than the old mega metro.
Density seems to boost productivity by making it easier to quickly spread innovations. Think about Silicon Valley. There are hundreds of tech companies in a single job market. New technologies and approaches. Employees switch companies every six months and bring the best practices to their new firms.
Take those same companies and disperse them across the continental US. Workers don't move firms because relocating is expensive, unpleasant and risky. Instead of bouncing between jobs every six months, people stay "loyal" to their local employer for decades at a time. Every time a new innovation is discovered at one firm, it takes orders of magnitude longer to diffuse across the industry.
Think of the major improvements in software engineering during our lifetime. Things like devOps, test driven development, microservices, rigorous source control, code review, open source, containerization, and the like. Silicon Valley adopted all of these practices years, if not decades, before the average IT department in Tulsa or Jacksonville.
Great comment, but... that's a bit of an exaggeration! The rest of us read HN and mailing lists and web sites and whatnot, and technology does tend to spread faster thanks to it, these days.
> … in contemporary US cities productivity increases by about 11% with each doubling of their population.
People can’t live here without both husband and wife working full time. Now to move to a different city or state, both husband and wife needs a job there or the new salary + cost of living must equal the other person quitting their job. That is just a difficult mental model to get over. It will happen, but only at the breaking point
As for companies moving, there is good and bad about your hq being located close to other hqs and good and bad locating away, but there is generally far more good in locating together. Shared talent, shared training...
It’s also worth noting that this is true for people who are well past the “foot in the door” segment of their careers — even if one is able to move to a low CoL area thanks to remote-friendly policy at their current company, by doing so they’ll likely be locking themselves to said company for an indefinite period and greatly diminishing their chances at getting raises. Of course that doesn’t matter to everybody, but generally speaking it’s against one’s best interest to move away from the city despite savings on housing, commute, etc.
If a software company did this, my guess is all development would cease for a long time and you may exceed the “bus factor” and permanently kill a large portion of projects. In fact I’m aware of management at one company winding down projects by moving the skeleton crew who agrees to leave to a lower COL city.
This is not much different from outsourcing to a lower COL country.
Yes, it's pretty strong.
Employers want to be where the employees are, and employees want to be somewhere where there are other jobs.
The Bay Area is a hub because it's where the industry was born. People who have deep knowledge in the industry are here. If you want to grow your startup somewhere else, you can. I think the problem is that you might eventually hit a wall as you grow. You'll need to pull in UX research, or a PM, or grow a legal team. In most places in the country, these roles just won't exist, or there won't be any domain knowledge to build them out from scratch.
Also, just like the film/tv industry, tech workers want to move around a lot. Unless you're in a hub like Seattle, NYC or the Bay Area, your options to move around are limited.
Remote cities can work if all the stars align or someone finds a company that lets them remote work. However, once you leave the job after 4 or 5 years, you will have to find another remote working position.
Of course plenty more from later years offset that.
My (bay area) college class was half from CA, half from the northwest. About 50% of those from the northwest moved 'home' after school. Is that a revolving door? Did they get sick of the area? Or did they never intend to stay?
[1] https://source.wustl.edu/2015/12/most-americans-live-surpris...
EDIT: I was wrong about this.
Or you have multiple kids and you sell the place and split the cash... nice windfall, taxes or no.
Meanwhile, the people whose parents DIDN'T leave them one of those houses are still way worse off...
To an outsider like me, this seems like one of the worst features of Prop 13. Over time it separates people into two classes: those whose family has owned property for a long time, and everyone else who can't afford to buy a house because the taxes are prohibitive. (Even if you're very rich, it will make more sense to rent than to trigger tax reevaluation.) Call it neo-feudalism.
But that's also largely a factor of mostly high-income people moving in, while mostly lower-income people are moving out. Keep up the business climate that fuels the inward funnel of money, and you'll keep prices high. Even if you reduce restrictions to building supply, you'll have a game theory bit of not lowering prices in any hurry since people can so clearly afford them and are so clearly willing to pay them.
Prop 13 benefits corporations, long term property owners, and people that inherit property. At the expense of renters, new home buyers, and beneficiaries of public goods and services.
They have to live in their fabulously high priced and undertaxed home to enjoy the benefits. They can't move to another town or maybe not even take a job in the other side of town.
https://en.wikipedia.org/wiki/1978_California_Proposition_13...
Now let us look at it from the other side
1. The family, probably unfairly, benefited from not having to pay the full tax for so long.
2. In scenario that you mentioned the kid just inherited a $1m+ house. What part of it makes him poor that he can't pay the new property taxes? Sure, they might choose to cash out and go live somewhere else because it makes financial sense for him, but that is not `an unfortunate` situation at any stretch.
3. I know there are significant cost-basis advantage here, in additional to all the wealth just inherited, but I don't know enough about it yet.
[1] https://en.wikipedia.org/wiki/Economies_of_agglomeration
The people at risk of homelessness lack the resources to move; the people with the resources to move have, on average, far less incentive to want to.
For a lot of people the Bay Area is maximizing this. But we're taking a huge social loss (as a nation) by making it so expensive to live in the area that offers the greatest opportunity.
It seems like people from Silicon Valley are moving to Portland and Seattle specifically: https://www.forbes.com/special-report/2011/migration.html
Not necessarily the best or most up-to-date sources, but I'm only going to bother spending so much time on this.
I mean, historically speaking, yeah.
Company isn't a person. It can't think for itself.
Here are the reasons company choose to not move:
1. The powerful executives are often the people who existed since beginning. They've had invested their compensation in the city where the company's headquarter is and now they are permanently part of the city's influencial people with ties in government, law and more.
So you want them to leave and become no one in some new city?
Their old connections and knowledge of the city will become worthless - they made all those connections and acquired that knowledge when they were young and now those executives might be in 40s or 50s and might not have same drive to earn all of that back
They profit from rents, they profit from sale of property in the their city. They profit in lots of ways.
When you acquire new talent, you recognize majority of the compensation goes towards "rent" and that rent end ups in the pocket of successful city dwellers (aka executives at the said company)
When decision makers in the company benefit from this. You can't build a rival company with lower costs unless you can somehow make it run without these executives.
2. Employees will not move that easily because in big cities employment market is efficient, switching to another company is easy and most new players will he dying to snatch those freshly laid off employees.
huh?
the I-25 corridor north of Denver is sprinkled with towns and such that were nothing but an intersection and a gas station 20 (15?) years ago. right now they're bedroom community type things, but they've got some big box stores. they'll keep growing.
are they big cities right now? no. (was your claim very specific? nope.)
The other thing that confuses me is why companies aren’t moving either. It’s been a long time since a "new" city was created, but we have plenty of land available, and a lot of it is in pretty (but not natural park) locations. Is there that much of a network effect with talent being in one region that companies would rather pay a 4x compensation premium than relocate to new or lower cost locations? Are there any examples of big companies that have relocated their HQ to lower COL locations and then failed because they couldn't attract talent to move there, or is it just conjecture that this would occur?