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A Leisure Deficit Is Killing Suburbia

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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It's possible the biggest cause of gentrification in formerly depressed urban areas is that today's skilled workers can't spare the time to commute. If true, this has implications for businesses ranging from real estate development to tech -- and raises the question of why companies still insist that white-collar employees come in to work.

Lena Edlund and Michaela Sviatchi of Columbia University and Cecilia Machado of the Getulio Vargas Foundation wondered why the relationship between housing prices and distance from the center of major U.S. cities has reversed since 1980. That year, prices were higher in the suburbs, and urban centers were going to seed. In the next 30 years, prices within three miles of the central business districts of the 27 biggest cities in the U.S. more than doubled. Within a radius of three to 10 miles, they increased by 60 percent. Further out, they only grew by 6 to 10 percent.

"The price profile flips," the economists wrote in a recent paper. "In 1980, prices in the periphery are 50 percent higher than in the center. By 2010, prices in the center are 40 percent higher than in the periphery."

This is a good way to quantify gentrification. In previous decades, the relatively affluent people who have now colonized the city centers would have headed for the suburbs as soon as they had steady partners and plans to start families. Now they stick around even once they have children, completely transforming their once-gritty urban neighborhoods and bringing on real estate price hikes.

Edlund, Machado, Sviatchi, 2015

Edlund, Sviatchi and Machado hypothesized that this was because high-income households have faced a shortage of leisure. "This time scarcity," they wrote, "has propelled centrality to the top of the local amenities list."

Indeed, since 1990, the number of skilled people working long hours -- 50 a week or more -- has been growing. There are often two such people to a relatively affluent household, and they know a long commute is not an option: It doesn't just leave little time for fun and family life, it's downright bad for one's health. A 2012 paper showed that increasing the daily commuting time from 62 minutes -- the average for Americans living in urban areas -- by another 60 minutes leads to a 6 percent decrease in health-related activities and so contributes to obesity. Short commutes that can be made on foot or on a bicycle actually increase a worker's life satisfaction because they're healthy and they provide a cushion between home and work life. 

Edlund, Sviatchi and Machado went to a lot of trouble to eliminate all possible objections to their hypothesis. They took into account every imaginable external factor -- changes in crime rates and the racial makeup of the urban areas, improvements in school quality, the effect of New York City with its huge finance industry on the entire data set. The relationship between rents and the share of educated people working 50 hours a week or more held. 

This poses a few problems. As central areas are gentrified, their poorer residents are pushed out into the suburbs and forced to make longer commutes. The steadily rising rents in cities are overtaking salaries, even for skilled employees. This isn't only happening in the U.S.: European cities such as Paris and Berlin are also undergoing "bourgeois bohemian" revolutions with similar effects. There, too, houses in the suburbs can maintain their value as second homes -- or fall behind the general price increases.

One way to keep the suburbs relevant is to make the commute more enjoyable. For example, self-driving cars could do it, letting people travel in relative privacy and work or enjoy themselves as they do. Yet they wouldn't fix the leisure deficit, which is the ultimate reason hardworking, smart people head for city centers. 

Telecommuting is the obvious solution to the leisure deficit problem. If applied in all white-collar businesses, where there is no real need for people's presence in an office if they can use videoconferencing for meetings and all kinds of software for online collaboration, it might halt the rent increases in urban centers, reduce congestion and cut commuting times for those who do have to go to work, such as people in the service sector. Yet it's taking inordinately long to catch on. According to a recent Gallup survey, 37 percent of U.S. workers work from home from time to time, up from 9 percent in 1995 -- but they only do so two days per month on average. They have the technical capability not to come in to work, but they still do.

I can see no reason for this other than employers' inertia. People's need to socialize isn't a good excuse: If they stop commuting, they'll only have more time for social life. Actively getting people to stay at home for work could pay off for cities and families, and it would do companies no harm. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Tracy Walsh at twalsh67@bloomberg.net