The hope that globalization and technological progress would generate a world that is flat, in which opportunity is spread more evenly, has given way to a realization that far from the death of distance, globalization and technological change have made place more important than ever. The world is not flat–it is increasingly spiky.
Highly paid jobs in legal, financial, consulting, and associated professions are clustered in a small number of cities. These are unaffordable to ordinary people, who are being squeezed out by gentrified inner cities. In the past, well-paid jobs were more distributed geographically, as industries and firms clustered around natural resources such as waterways, coal mines, or agricultural centers. These natural attributes no longer matter as firms are attracted to cities where footloose knowledge workers congregate. And knowledge workers want to congregate where similarly aged like-minded professionals live, in gentrified downtown areas or suburban neighborhoods that offer an abundance of entertainment, food, health, and other options. This is leading to a great inversion, in which poor people and artisanal businesses are being pushed out of inner cities with their homes and workshops being converted into homes for young professionals. The inner cores of these superstar knowledge-based cities have flourished. So too have the cities that have thrived by connecting professional services, such as Singapore or Dubai.
Remote work has disrupted these trends. While this has long been possible, the pandemic allowed old rules around regular hours to be jettisoned. In the U.S., U.K., and much of Europe, those not required at a workplace now commute on average three days a week, typically Tuesday to Thursday. The collapsing commitment to offices is proving to be highly disruptive for cities. Commercial real estate is suffering, municipal taxes are declining, and the viability of businesses that depend on intense footfall–from barbers to baristas–is being undermined. Public transport systems are in a similarly precarious position, hemorrhaging cash.
The benefits of remote work were immediately apparent in greater flexibility and billions of hours in saved commuting time and carbon emissions. However, the short-term productivity gains may well be illusory. Creativity thrives on physical interactions and serendipitous encounters. Most jobs are really apprenticeships. Skills, behaviors, and business cultures are learned through informal interactions which cannot be taught on Zoom or Teams. By bringing diverse people together, workplaces also help build social cohesion and reduce isolation and loneliness. Flexible hours can enable people to meet commitments outside of work and enjoy a better work-life balance and less stressful commuting, among other potential benefits. However, remote work needs to be managed more carefully to ensure that it does not undermine the longer-term prospects for individuals, firms, and the cities on which we all depend.
A society without dynamic cities would be less productive, less cohesive, and less creative. Thriving cities are the engines of our economies and the places where the solutions to our greatest challenges are to be found. To ensure that the benefits of these cities are more widely shared, we need more affordable homes and effective public transport systems, schools, and other services. However, successful cities are becoming unaffordable, due to the soaring salaries and wealth of those who have high-paid jobs and increasing competition for accommodation.
The inability to afford homes, the time and cost of commuting, and the shortage of school and elderly care places have put flourishing cities out of reach for many working people. The difficulties of moving from one city to another means that people are half as mobile as they were a generation ago, locking individuals and communities into places that have fading prospects.
The rise of generative AI is likely to compound this divide as automated systems increasingly substitute for a widening range of repetitive human tasks and increase the wealth for those at the frontier of technology, law, and financial services. Rising incomes and changing demographics will accelerate changes in consumption and choices. As expenditure shifts from manufactured goods, such as cars and stoves, to services such as massages and restaurants, the magnetism of dense and diverse cities grows. As the age of marriage and having children rises, a greater share of income and time is spent enjoying the diverse pastimes that dynamic city neighborhoods offer in abundance.
The growing inequality within and between dynamic cities and other places means they are the target of a growing populist backlash against metropolitan elites. The answer to the growing divide is not to undermine the success of dynamic cities. Rather, it is in making them more affordable and accessible. This means investing in public housing and transport and in creating cleaner, walkable cities. We need to move away from the outdated model of sterile central business districts of offices that lay empty at night to create vibrant mixed residential, office, and entertainment neighborhoods. The conversion of surplus offices into residential accommodation offers an opportunity to fast-track these developments. The experience of extreme floods, fires, and heat in many cities also highlights the urgent need for transforming cities into our sustainable homes for the future.
Cities, with their unbounded creative potential, provide a source of hope for the future. By working together to improve them, we can realize their potential to create a better life for all.
Ian Goldin is a professor at Oxford University and together with Tom Lee-Devlin a co-author of Age of the City: Why Our Future Will be Won or Lost Together.
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