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Richard Florida
+ Your AuthorsArchive @Richard_Florida University Professor @UofT, @rotmanschool, @UofTCities, Distinguished Fellow @NYUSchack, Co-founder & Editor at Large @CityLab Jan. 25, 2021 3 min read

1. Some thoughts on the question of clustering.

2. There is no doubt in my mind that clustering will remain critical to both innovation & productivity growth, even in the wake of COVID-19 and the rise of remote work.

3. Clustering has only become stronger in the wake of previous advances in "distance enhancing" technology. Not so obvious reasons why this time should be different.

4. But it does appear that both previous technologies & particularly the rise of remote work-enabling technology IS shifting the nature and type of clustering.

5. What we seem to be seeing is a shift from corporate or industry clustering to talent clusters. It is less necessary for businesses to cluster.

6. But what we seem to be seeing is continued & perhaps enhanced talent clustering, even as those talent clusters spread out.

7. In a recent piece @kimmaicutler shows data that more tech companies are located in the "cloud" than a physical place, increasingly populated by remote workers.

8. @IanHathaway finds an increase in "remote" investments by venture capitalists including those in the Bay Area.

9. This creates greater possibility for companies to locate their HQ (main base location) in a more diverse array of locations.

10. And we know from a large literature that HQs tend to locate where founders/CEOs want to live.

11. All of this is "good news" for rise of the rest lifestyle locations like Miami or Park City - a range of high amenity locations where founders/ CEOs may want to live.

12. But talent is not and will not spread out in a flat world pattern. Talent continues to cluster in select locations.

13. The pattern of talent clustering is a product of the external human capital economies identified as a main driver of innovation and economic growth by Jane Jacobs & later formalized by Robert Lucas, and shown empirically in studies by Ed Glaeser & others.

14. Simply put, the pandemic & the rise of remote technologies has shifted the balance of clustering from firms to PEOPLE.

14. There is a demographic and lifestyle divide in such talent clustering.

15. Young folks will continue to be drawn to cities for a combination of thick labor and more so mating markets ...

16. Older people with families will spread out in search of lower costs & certain kinds of amenity ...

17. This can be seen concretely by looking at the location of company employees. From what I am seeing they are not spread out evenly, but clustered in a fairly narrow range of locations.

18. Despite declines, there remains a critical mass in the Bay Area & NY. But other talent clusters are clearly emerging & not just in the Austins of the world, but in smaller places ...

19. I expect this hub and spoke pattern to grow, and for corporate location to become somewhat disconnected from talent location.

20. This means that it may well be easier for founders CEOs to build companies from lifestyle locations like Miami or Park City or Bozeman (i could go on).

21. But there is less reason for talent to necessarily cluster in those locations. A Miami or Bozeman startup for example can draw off talent clusters across the nation ... or world.

22. From an economic development perspective we may see a growing disjuncture or disconnect from "HQ places" where founders live & work - Miami Beach, Malibu, the Hamptons (for example), & talent clusters where professional & knowledge workers live & work.

23. One possible big implication of the pandemic then is an even more finely grained, uneven and segmented spatial division of labor ...

24. And that would be squarely in line with the evolution of advance capitalism which is toward ever more distributed & unequal geographies ...


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