Without Systemic Change, Remote Services Will Significantly Impact Urban Life
Nobody knows exactly when coronavirus will subside, but we have already seen the impact the pandemic has had on urban ecosystems. Hundreds of thousands of businesses have permanently closed (with millions more businesses at risk of shutting down); building vacancies are approaching 10% in many areas; urban mobility services have faced major social and economic struggles all around the country. As a result, cities have begun to fear the future.
Restaurants that previously operated on razor-thin margins — even during mass capacity — have suffered precipitously without in-person dining. Venues that host mass social gatherings — like bars, stadiums, amusement parks, halls, and ballrooms — cannot function without densely packed crowds, leading to financial hardships all around the country. Other non-essential services prevalent in dense regions — salons, gyms, museums, and churches — have all had their struggles dealing with the lockdowns.
As virus-induced issues have heightened a growing divide economically, socially, environmentally, and culturally, a new world has emerged — the rise of remote services.
Working-from-home, e-learning, e-commerce, telehealth, at-home fitness, and streaming services have exponentially grown in 2020. As connectivity has consistently improved the speed of communication between people and devices, several businesses that require no in-person presence (and the reduced cost of capital associated with it) have emerged and supplanted long-established incumbents in such a short amount of time. Technology has made several different systems and processes obsolete — especially the ones that require high human and physical capital.
The increasingly interconnected world, though, comes at a major cost. With automation taking over several repeatable human tasks — like manufacturing and storage of information — jobs have transitioned; some for the better — by reducing the need to hire people for mundane or risky tasks — but some for the worse, as those who drive the culture of a community have been pushed out of work. This presents a major problem for municipalities.
Remote Salaries Do Not Support Local Economies
Urbanization thrives on people presence and culture — combining food, music, art, nightlife, events, and other activities — which drive the pulse and identity of the region. Without people regularly occupying dense regions, a ripple effects persists throughout any specified area. Empty real estate leads to fewer foot traffic, which leads to less economic activity within an area, which leads to business/building closures, which turns entire regions into ghost towns.
With the rise of digitalization, several companies have increasingly outsourced labor to other regions — such as Uber hiring developers in Asia — to reduce liabilities. Forming virtual teams from all over the world has grown in prevalence, especially during the pandemic, which have allowed virtual communication platforms like Microsoft Teams and Zoom to reach unprecedented levels of growth and other virtual systems and services to thrive in the current environment. People have begun paying through digital currencies, in which no central governing authority like the IRS has control over monitoring these transactions.
A democratized playing field — where organizations can choose to assemble groups of people from anywhere in the world — comes at a price; if the strong earners flock dense regions — like in New York City, San Francisco, Chicago, Seattle, and Los Angeles — less money is distributed for local economic activity, which makes it that much harder for these businesses to survive. A person living in rural Texas working for a San Francisco-based company will use his salary to spend on essential services near his Texas area rather than support the Bay Area economy.
Remote work also jeopardizes a $30 trillion commercial real estate market — with high-rise office buildings and urban shopping centers occupying the heart of many cities — as skyscrapers bring large groups of people together in condensed areas, which spurs local economic activity. Without this presence, local food, drink, and retail orders drop precipitously, making it difficult for many businesses to survive.
Culture Drives Tourism
Without an attractive local culture, outsiders have little reason to visit a particular region. Live events, historical monuments, the food scene, the nightlife, unique architecture, nature, and the arts all attract visitors to come spend time and money into a particular region. In places like New York City, tourists bring in over $40 billion in total annual spending, contributing to almost 400,000 jobs and bringing in over $10 billion in tax revenues to support the local infrastructure. Other American cities boosted from tourism attractions include Las Vegas and the Strip, Philadelphia and its foundational American history, Orlando and Disney World, and New Orleans and the French Quarter.
Culture is not restricted to urban metropolitan areas; a place like Green Bay in rural Wisconsin generates over $150 million in local economic activity from 10 Packer home games — eight regular season and two preseason home games — and increases by over $20 million for each playoff game. SEC, Big Ten, Big 12, and ACC collegiate football games all receive a major spike in economic activity from gameday football weekends. As for the music industry, Live Nation concerts generating almost $10 billion in 2019 while concerts brought in hundreds of millions of dollars to several small towns all over the country.
Bridging In-Person and Virtual Experiences
COVID-19 has disrupted every in-person experience and has rapidly transformed a world in which people are globally connected to each other but are physically isolated from one another. Cities have suffered tremendously as a result, with the threat of evictions and foreclosures looming large for tens of millions of Americans and hundreds of thousands of businesses shutting down for good. As a result, social unrest has taken place all over the country, which has severely damaged some of the most pristine urban ecosystems.
Urban life and the infrastructure surrounding it have entered a major crossroads. The world has changed significantly in such a short amount of time, and cities have not had the time or resources to adjust to these drastic changes. Digitalization will only grow in prevalence as connectivity and processing power continue to grow — a trend that has accelerated from changes in consumer behavior resulting from pandemic-induced lockdowns, social distancing measures, mask mandates, and regular hygiene protocols.
Remote services and automation in every sector are here to stay, so cities have no choice but to adjust to the changing reality. SMART Cities Initiatives with advanced multi-modal transit systems, clean and safe neighborhoods, integrated services, and self-sustaining energy grids are aimed to improve quality of life for both residents and visitors of a particular region. However, these projects can only work with a strong cultural influence that makes a region worth living and visiting. These SMART City projects are aimed to enhance experiences — but empty buildings, business closures, and economic wealth distributed away from a particular region do not contribute to the well-being of the local economy.
No easy answer exists. Transitioning from old methods to new ones comes at a price; in America’s free market economy, everybody has a skin in the game and adamantly acts according to their own individual interests rather than the whole. Landlords need their rent to pay off their mortgages and earn a living; workers need their benefits; businesses need to maintain fiscal responsibility; people have bills to pay and possessions to preserve.
Capitalism has spurred innovation that has attracted foreigners to enter the country and unleash their talents to make a name for themselves and develop something valuable for the world. This comes at a cost, as the pandemic has exposed America’s free-mindedness with an inability to cooperate with each other to mitigate the virus, which has led to an increasingly divisive environment — particularly in densely populated regions.
Culture and experiential services — from bars and restaurants to concerts and events to monuments and exhibits to coworking collaborations— define the identity of communities within dense regions. While remote services have provided much-needed benefits during the current pandemic, humans naturally crave social belonging; a mental health crisis has resulted from less direct human interaction, as humans are not built to remain in isolation for an extended period of time.
Now, cities must proactively modernize their systems and processes to accommodate the technological revolution and keep up with the pace of innovation, a staple of American society. Right now, municipalities have not kept up with the rate of change, and the equitability of these regions has significantly suffered as a result of the slow action.
In addition to taking damage-control actions until the virus subsides, cities must induce regulations with remote work to ensure more local benefits for a region and more equitable and long-lasting measures for in-person businesses to restore local economic activity. Remote services, automation, and technological advancements will only grow from here on out; cities must adjust to this new reality and utilize these innovations to restore and enhance their cultural identities. Otherwise, residents will continue to flee these regions while visitors will have less reason to spend time in these places.
