Are Big Cities Overrated? Economists Say Yes, In Some Cases

It's long been popular wisdom in America that if you want to make it, you should pack up and move to the big city. But new research from economists offers caution for a huge segment of the workforce.

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The old line goes that if you want to make it in America, you should pack your bags and move to the big city. But new research from economists offers caution for a huge segment of the workforce. Planet Money's Greg Rosalsky has the report.

GREG ROSALSKY, BYLINE: Not long ago, Planet Money got this lively letter from a listener named Dennis Simpson (ph). His argument had a lot to do with where he lives - Hot Springs Village, Ark.

DENNIS SIMPSON: It is 26,000 acres of complete awesome.

ROSALSKY: Hot Springs Village has nine golf courses. It's got 11 lakes. It's got clean water and little crime or traffic. And on top of all this, Simpson says, the town is dirt cheap, especially when compared to our nation's big cities - which brings us to his argument.

SIMPSON: Cities are overrated. Big cities simply aren't worth the cost.

ROSALSKY: Simpson's argument that big cities are overrated, it flies in the face of the standard advice from economists. They've long argued, move to a big city if you want a more prosperous life. That's because, historically, cities have been these incredible launching pads for upward mobility.

DAVID AUTOR: That's what I thought, you know, up until six months ago.

ROSALSKY: That's David Autor, an economist at MIT. His epiphany on cities, it occurred after he was invited to give this prestigious lecture in Atlanta. It was at the annual meeting of the American Economic Association. And on his big day, he stepped to the podium.

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AUTOR: Thank you.

ROSALSKY: The room is filled with the nation's top economists, and Autor tells them he's done this new research and he no longer believes the conventional wisdom about cities.

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AUTOR: So when I started this project, it was my assumption that, you know, cities are lands of opportunity.

ROSALSKY: Once upon a time, Autor says, big cities were lands of opportunity. And this was true even for those without specialized skills or a college education.

AUTOR: As you went from rural areas to metro areas to cities, there's a kind of an occupational escalator that non-college workers rode up.

ROSALSKY: The data showed that if workers without a college degree moved to the city, the odds of going up this career escalator were just way better. But, Autor says, over the last few decades, this escalator has been collapsing.

AUTOR: So that by 2015, that escalator had completely leveled out.

ROSALSKY: And so the big question is, what happened to upward mobility in cities? And the answer has to do with something that Autor has actually been looking at for a long time. Our country's labor market has been splitting into two tiers. Tier No. 1 - you've got high-paying knowledge work, like in finance, tech or advertising. It's the type of work that people with a college degree do.

Then there's Tier No. 2 - low-paying service sector jobs, which don't provide much upward mobility. The jobs in the middle tier, which used to provide opportunities to less educated people, those are the jobs that have proved easy to automate with technology or outsource overseas.

AUTOR: The set of jobs that people without college degrees do has really contracted.

ROSALSKY: And so the question that started this story - are cities overrated? We put it directly to David Autor.

AUTOR: Depends for whom. They're overrated for adults without college degrees. They're probably not overrated for highly educated adults.

ROSALSKY: So what should you do if you don't have a college degree? A new study by economists at Cleveland's Fed says, basically, you should not move to big expensive cities like New York or Seattle. Instead, they say, it's actually mid-sized cities where you should go, mainly because they have a much lower cost of living. In other words, big cities are overrated. Greg Rosalsky, NPR News.

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