The Jobs That Are Getting Priced Out of Superstar Cities

Recently, I emailed a carpenter to ask him to repair some minor damage to the roof of our Toronto home, inflicted by the harsh winter. He told me he’d had it with Toronto’s high housing prices and had moved back to the West Coast.

Then, when I asked a friend of mine if there was someone he would recommend, he told me the roofer he used had just moved to Ireland. He’d signed off his last email: “Nobody can afford to live in this city!”

My experience in Toronto is far from unique. In fact, it’s in line with an intriguing new study about the jobs that are missing from large and pricey metropolitan areas. The study is by Jed Kolko, chief economist of the employment site Indeed.

Kolko looked at all the jobs posted on Indeed in 2017 in 51 metros that each had at least 1 million people. He compared the 10 most expensive of these metros with the other 41, and found that entire categories of jobs are missing from high-cost areas such as Los Angeles, New York, Miami, Washington D.C., and San Jose. However, the same kinds of jobs are common in other large—but less expensive—metros, like Dallas, Atlanta, and Cleveland.

The missing job categories relate to housing, construction, and landscaping; trucking, freight, and logistics; administering and processing transactions; and over-the-phone and online work in customer service and call centers. Such jobs may not pay enough to cover the cost of living in a high-priced metro, but they are also simply less common there.

However, other types of jobs are massively overrepresented in expensive metros. These jobs span three types, as the table below shows. One is high-paying tech, science, and managerial jobs. Data scientists, for example, are nearly four times as likely to be located in expensive metros.

The same is true for certain creative jobs, such as creative directors and artists. A third category of jobs also shows up in expensive metros: fitness managers, pastry cooks, soccer coaches, dog walkers, and similar. Basically, these are the high-end service jobs that support the knowledge economy. Take ABA (advanced behavior analysis) therapists. They are more than 1,200 times as likely to be found in pricey metros than in more affordable ones.

Kolko identifies several factors behind these trends. Professional and creative jobs benefit from extreme clustering. These are high-productivity, high-paying jobs that tend to require considerable face-to-face contact. And of course, the more educated, affluent populations in these expensive metros increase the demand for certain kinds of amenities and personal services. Conversely, it makes little sense for employers to locate lower-paying, more routine jobs in customer service, insurance, and call centers in expensive metros.

There are also significant demographic differences between the people who live in expensive metros and those who live in more affordable places. These differences, in turn, result in demand for different types of services. Expensive metros tend to have younger adults, more residents with bachelor’s or graduate degrees, and fewer kids. This is part of the reason that there is higher demand for fitness professionals in these places.

Housing and land are more costly in pricier metros, which means that there are fewer single-family homes and more condominiums and apartments—reducing the demand for lawn technicians and groundskeepers. New development is much slower in many expensive metros, a factor that contributes to their high prices. Last year, expensive metros grew about half as fast as other large metros.

This, according to Kolko, means that construction-related jobs are sparse for concrete finishers and cable installers (and perhaps for carpenters and roofers, too). And since the more affluent residents in these metros are apt to live close to work or near transit instead of commuting a long way by car, that means less demand for auto mechanics and related jobs.

Geography itself also plays a big role: The 10 expensive metros are all on the coasts. This makes them less attractive for logistics and distribution operations, which are more likely to locate in the middle of the country.

Another recent study published in Plos One provides a similar explanation for the missing jobs of expensive places. Larger, more expensive metros benefit from “thicker” occupational networks, which lead them to specialize in high-paying creative and knowledge jobs, especially ones that are rare in other places. The more traditional jobs that go missing in these places, like in construction and landscaping, are the ones that are priced out by the high cost of housing, brought on at least in part by the concentration of high-end jobs.

Ultimately, people aren’t just priced out of cities because housing and land are increasingly expensive—although that is certainly a significant part of the equation. Entire categories of jobs are being edged out of expensive cities, too. The reason that large cities have become hubs of innovation is precisely because they encompass a broad diversity of people, jobs, and skills. That expensive cities can no longer hold onto the skills they need may well be the ultimate expression of the New Urban Crisis.

Learn more at CityLab