Of the world’s ten most productive cities, six are located in the United States. Matt writes:

I don’t have a huge policy point to make about this, but I will note that people sometimes wonder why the high-tech economy doesn’t create broadly shared prosperity. Part of the answer has to be that the specific places in the United States where high-tech industry is concentrated are, in fact, among the most propserous places in the world. It’s just that relatively few people live in them.

I’ll volunteer a policy point: (a) we should make it easier for more people to live in these cities by easing zoning restrictions and licensing restrictions that raise the cost of construction, transportation, etc., a cause that Matt Yglesias and Ryan Avent have skillfully advanced, building on the work of Edward Glaeser, Donald Shoup, and others; and (b) we need to recognize that service work, and more specifically the outsourcing of household production, is an effective channel both for increasing overall productivity and for facilitating sustainable job creation.

In the past, I’ve framed this as “in the future your children will be servants and nannies,” a provocation that gets to a deeper truth: the most problematic geographical mismatch we face in the U.S. is that large numbers of relatively poor, less-skilled individuals live in rural areas and urban and suburban areas that don’t have good transportation links to affluent, high-skilled households that spend much of their income on high-touch services. Despite, or perhaps reflecting, the popularity of Downton Abbey, many of us are fundamentally scandalized by the idea of serving others, despite the fact that most of us make a living by serving others, whether directly or indirectly. And so we fetishize manufacturing jobs in which the fact that we are serving others is mediated by the fact that we are assembling physical objects designed to serve others. 

I’m inclined to consider this geographical mismatch a bigger deal than most, though of course I don’t attribute today’s stagnant labor market to this factor as such. Taking this mismatch somewhat more seriously raises the importance of the zoning reform agenda and other measures designed to lower transportation costs.