Where The Jobs Aren't

The AI revolution is putting the Suburban Workshop at risk. Place your bets on the Urban Hotels like Orlando and Las Vegas.

Ever since the beginning of the pandemic, we’ve been obsessed with the impact of remote work. Knowledge workers have been moving out of large urban centers and relocating to the metropolitan fringe or smaller cities. Everybody’s been wondering whether the result is a temporary dislocation or a tectonic shift.

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But the whole discussion about remote work is based on an assumption that that while the jobs may move around, they will still exist. But with the advent of AI, we can’t make that assumption anymore.

A lot of white-collar jobs aren’t going to move. They’re going to go away. And that’s going to reshape cities and metropolitan areas in the United States (and elsewhere) in unpredictable ways.

Las Vegas is the classic “Urban Hotel”

For decades, we’ve seen automation of blue-collar tasks, with the resulting loss of blue-collar jobs. (Indeed, the loss of manufacturing jobs in the United States has been only partly about jobs moving to Mexico and China; in part, it’s because automation has reduced the number of manufacturing jobs worldwide.) And there have been various predictions that automation will eventually come after white-collar jobs as well.

With AI, this transition is now likely to happen – with significant geographical consequences. A new analysis from Brookings Metro, using data from OpenAI, tries to measure what this geographical shift is going to look like. And the results are revealing.

Which Cities Are Vulnerable To AI?

The Brookings analysis is not an analysis of jobs likely to be lost. Rather, it’s an analysis of work tasks likely to be transferred from human workers to AI. Specifically, it’s an analysis by county of which percentage of work tasks are likely to be transferred from at least half of the county’s workforce to AI. This shift could, of course, lead to a loss of jobs but also to a reallocation of human brainpower to higher-level tasks.

Take a look at this map Brookings made of what the researchers call “AI exposure” – that is, the percentage of work tasks likely to be taken over by AI. It’s basically a map of metropolitan areas. It’s easy to see the Northeast, coastal California, South Florida, the Texas Triangle, and other big cities, where AI is likely to have greater influence. (They’re the darker colors.) The location most at risk is the Bay Area and Silicon Valley – the most prosperous region in the country but the one most dependent on tech workers.

In other words, wherever there’s a city, the AI exposure is higher.

That’s because – in spite of the remote work trend -- knowledge workers are still mostly concentrated in cities and metro areas, and they’re the ones whose tasks AI is most likely to take over.

But if you look closely at the map, there are two important cities that are outliers: Las Vegas and Orlando.

The Urban Hotels

A few months ago on The Future Of Where, I laid out what I believe will be the new typology of work geography in the United States: the Urban Hotel, the Suburban Workshop, and the Exurban Metropolis. Everyday “knowledge work” will take place in the suburbs, in small office parks or at home (the Suburban Workshop), while downtowns and dense business districts will only succeed if they can pivot to activities that require face-to-face contact (the Urban Hotel).

And Las Vegas and Orlando are the biggest Urban Hotels in the country. At their core, they are tourist economies – places that depend for their prosperity on drawing people to in-person activities. As an offshoot of the tourist economy, they are also gigantic convention cities. Though McCormick Place in Chicago is the largest convention center in the United States, Las Vegas and Orlando are No. 2 and No. 3, and many conventions that meet annually go back and forth between Las Vegas and Orlando because they’re too big to go anywhere else.

I think the lesson is, if you want your city to prosper in the future, bet on being an Urban Hotel.

Of course, there’s a downside to being an Urban Hotel, which is that hospitality jobs tend to pay less than knowledge jobs. Brookings also published this chart showing the relationship between AI exposure and the trend is pretty obvious: Higher-wage cities are more at risk, while lower-wage cities (such as Las Vegas) are not.

(One interesting sidelight is that while Silicon Valley is at highest risk while Visalia, California, is at lower risk. Those of you who might have read The New Geography of Jobs will recall that the author, Enrico Moretti, used these two locations in his introductory set-piece, noting that in 1970 the economic difference between Palo Alto and Visalia was minimal, whereas today it’s huge.)

It's also worth noting that blue-collar cities with immoveable assets are likely to do well in this new era. Houston, for example, has a gigantic energy and petrochemical infrastructure that’s not likely to go anywhere. along with a lot of good blue-collar jobs. So as the Brookings analysis shows, Houston is much less at risk from AI than tech-driven Austin.

What Happens To The Suburban Workshop?

The Brookings analysis helps reveal that what’s really been going on in the trend toward remote work is that the Suburban Workshop has been moving around. The white-collar workshop used to be in downtowns, then it moved to the suburbs, and now it’s dispersing all over the place – to the great benefit of places like Bend and Boise.

But what happens if the Suburban Workshop stops moving around and withers, much as manufacturing did? It’s possible that some of these tech workers in Boise and Bend will get laid off and start their own businesses, which would help to diversify the local economy and ensure that those locations are no longer mere economic colonies of Silicon Valley.

Which Suburban Workshops will become Pittsburghs, and which will become Detroits?

But in the short term, AI’s likely to disrupt those communities pretty substantially. Just as the decline of manufacturing divided the world into Pittsburghs and Detroits – cities that figured out how to make it to the new economy and those that didn’t – the AI shift will reveal that some Suburban Workshop cities have underlying assets they can exploit to make the transition and some do not. As usual, changes in technology will create winners and losers among cities, and the future belongs to those who are nimble and know how to take advantage of what they have.

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Tomorrow I’ll be doing a webinar with the American Planning Association on how to use economic development tools in Texas. If you’re interested, you can sign up here.