Photo: Manhattan InstituteAllison Schrager is a senior fellow at the Manhattan Institute, a City Journal contributing editor, and a regular contributor to the Economist, Reuters, and Bloomberg Businessweek, as well as the author of An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk. She recently spoke with Daniel Kennelly, associate editor of City Journal, about gig work, how the pandemic is shaping the economy in New York City and the nation, and the road to recovery.

Is the remote work economy here to stay? If so, how can cities like New York adapt?

Yes and no. The pandemic will speed up existing trends, and more people were already starting to work from home—often one or two days a week. The trend started because of technology, but the pandemic forced most people to try it. It made employers more open and comfortable with it, but ultimately people will return to work. Perhaps more people will work from home one or two days a week now.

Some firms, like Microsoft, are offering all-remote work. But people do like to be together. For young people starting their careers, especially, face-to-face interaction is important for skill development and for finding mentors to help move their careers forward. I suspect companies that offer in-person workplaces, with some flexibility, will be at an advantage when it comes to talent if they have a culture where people come into the office.

This does have implications for New York, since companies will need smaller offices. But that needn’t mean less office space in aggregate. It may attract companies that couldn’t afford to be in the city before. New York will also have an appeal to workers. In the height of a pandemic, working from home in the country is appealing, but if you’re working from home in the future, you’ll need more social interaction and networking outside of work, which is easier in a big city. That doesn’t mean that New York doesn’t need to adapt or that it can rest on its laurels as a hub of high-skill talent. Big cities have their appeal, but it is now easier to be a smaller, less expensive city.

What kinds of investments or policy shifts should New York City be making for the post-pandemic recovery?

To keep its edge, New York needs more flexible zoning and friendlier policies for small and medium-size businesses, while also encouraging big companies to come here.

Are you upbeat or downbeat about the prospects for workers in the gig economy?

I am upbeat. I think the trend is a long time coming. I’ve always thought being tied to a single employer was overrated. Pre-industrialization, something closer to gig work was the norm. The employer model evolved because, in an industrial economy, firm-specific skills became very valuable. That’s less true now; individual skills useful in multiple firms command a larger premium today. The problem is that our economy is still structured on the employer model.

What is the least appreciated economic shift of 2020?

The increase in new business applications. Deep recessions are normally a great time for entrepreneurship. The next Airbnb or IBM may have been started in the last several months. Or, more people could be turning to contract or consulting work because they lost their jobs. In a more flexible economy that allows for remote work, this may turn out to be a better arrangement for them—even as the economy recovers.

What are you reading?

Casey B. Mulligan’s new book, You’re Hired! Untold Successes and Failures of a Populist President.

Photo: tarabird/iStock


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