Knowledge economy should evolve beyond Industrial Age Ver. 2.0

As much of the economy becomes more knowledge-based it continues to retain a key feature of the Industrial Age: geographic concentration in urban centers. That’s according to this piece recently appearing in Governing. Instead of a post-industrial economy, the economy is being rebooted as Industrial Age 2.0. As in ver. 1.0, work is centralized. Or clustered or agglomerated as it’s termed in the article. Less so in manufacturing plants but in office towers and sprawling info tech industry campuses requiring knowledge workers to show up there every workday just as in the industrial economy.

But that has distorted housing markets, driving up home prices and making nearby housing unaffordable for many. That in turn is expanding the geography of metro areas as knowledge workers seek more affordable housing in communities distant from the office towers and tech campuses in their centers. That drives a level of commuting to work metro areas’ 20th century transportation systems were not designed to handle, creating congested and unbearable “super commutes” that suck hours from each work day. Clustering and the agglomeration run up against fundamental limits. There is only so much residential real estate for knowledge workers to live on adjacent to the office towers and campuses. The law of supply and demand dictates only a limited amount will be affordable.

Analysts such as those cited in the Governing article contend the holy grail of the knowledge economy is the same as that of the offices and assembly lines of industrial economy: proximity. “You wouldn’t actually get the innovation if you took the people working on those things and spread them around the country,” Salim Furth, director of the Urbanity project at the Mercatus Center at George Mason University, told the publication. “We rely on face-to-face contact to come up with great innovation and changes.” Buy does that hold true most the time for most knowledge workers? Likely not. Knowledge work is both an individual and collaborative effort. And not all collaboration nor even the most productive must occur in same physical location. Lots of it can be done virtually using today’s information and communications technology.

The knowledge economy should evolve beyond Industrial Age Ver. 2.0 amid rising concern over the environmental impact of commute transportation demand, housing affordability and declining population health status (long commutes have a deleterious impact).

New generation of policymakers, planners needed to solve metro area traffic congestion

Liccardo, who also sits on the commission board, said reducing traffic congestion in the South Bay will require cities to add more housing units instead of simply focusing on job growth, and it might require regional incentives and penalties on cities.“We need to get people living closer to where they work,” Liccardo said.

Source: Highways to hell: Bay Area’s worst commutes ranked by MTC –

True for those who must be on site for their work. Not true for most knowledge workers who thanks to today’s information and communications technology — much of it innovated in the Bay Area. A new generation of policymakers and planners is needed that recognizes the potential of ICT to reduce the need for daily commute trips that substantially contribute to the enormous transportation demand that’s choking the Bay Area and other metros.

ICT to reduce commute trips and associated vehicle emissions takes on greater urgency as U.N. report calls for “aggressive action” to cool global climate

Not long after the first Earth Day in April 1970, a Los Angeles aerospace engineer as engineers are wont to do saw a problem and came up with a solution to fix it. The problem Jack Nilles saw in his daily drive to the office was bumper to bumper traffic and bad air quality. His solution: substituting telecommunications for commute induced transportation demand by establishing satellite offices in “bedroom communities” where people lived to avoid the trip to centralized commuter offices. The environmental benefit of the solution Nilles proposed nearly five decades ago takes on increased urgency with the publication of a report issued today by the Intergovernmental Panel on Climate Change warning of rapidly accelerating global warming.

Absent aggressive action, many effects once expected only several decades in the future will arrive by 2040, and at the lower temperature, the report shows. “It’s telling us we need to reverse emissions trends and turn the world economy on a dime,” said Myles Allen, an Oxford University climate scientist and an author of the report.

To prevent 2.7 degrees of warming, the report said, greenhouse pollution must be reduced by 45 percent from 2010 levels by 2030, and 100 percent by 2050.

Turning the global economy on a dime is challenging to say the least. Cutting motor vehicle emissions associated with commuting is one measure that could be implemented relatively quickly, especially considering today’s information and communications technology is far more advanced than when Nilles first came up with his idea in the early 1970s, thanks to the proliferation of Internet protocol-based telecommunications.

Telecom critical infrastructure for 21st century as knowledge work is decentralized


But the goal of the “Tri-Gig High Speed” initiative is to offer a broadband infrastructure that is as affordable as possible and will meet the technological needs of businesses, public and educational institutions, and local residents, said Jane Nickles, chief information officer for the city of Greensboro. The Triad is one of several regions across the country striving to offer high-speed gigabit Internet access as a way to attract and retain businesses.“This is really an economic development initiative,” Nickles said. “Businesses are going to want to locate where they can get the high-speed broadband access and where their employees can get it because it opens up those possibilities of things that can be done outside of the office and done from home.”

Source: Triad cities, universities seek contractors to provide high-speed Internet access – Greensboro – Triad Business Journal

Nickles’ comments illustrate the very important role of telecommunications infrastructure in the 21st century. It’s as critical to the 21st century economy as transportation infrastructure was to the previous one. Particularly as performing knowledge work — centralized in metro centers in the 20th century — becomes decentralized and often performed outside the centralized commuter office and at home as Nickles notes. An added benefit is reduced transportation demand at the same time much of the transportation infrastructure is aging and in need of major overhaul.

The post-Industrial Age live-work future

Over the next couple of decades, expect a post-Industrial Age live-work residential settlement paradigm to establish itself. A hallmark will be the diminishment of daily commuting to work by knowledge and information workers. Instead, they will live in close proximity to their work.

Those with cosmopolitan tastes and able to afford downtown living are looking to live in urban centers and will continue to do so, sparking demand for central city housing. They will live within walking distance or a short bus ride from their offices.

Others will prefer small town living closer to nature and outdoor activities, residing on the fringes or outside of major metropolitan areas in smaller communities of 50,000 or fewer residents. Rather than the transportation infrastructure and automobiles that brought people to work in distant communities, they will rely on telecommunications infrastructure to bring their work to the communities where they live.

The trend will also affect suburbs that were built up in the drive-to-work post-World War II period. Suburbanites will increasingly work in their residential communities some or all of the workweek in home offices and shared co-working centers. That will significantly reduce rush hour transportation demand, taking cars off overburdened highways that cannot efficiently move large numbers of workers to centralized, commute in offices. And not a moment too soon since they are reaching a major maintenance interval, decades after they were first built.

Moving information — not transporting workers — is the new model for the 21st century

In fast-growing metropolitan areas like the Bay Area, Boston and Seattle, sub-par infrastructure and pricey housing threaten to put the brakes on rapid economic growth. In struggling areas, infrastructure can be an important obstacle to growth. In either case, as these studies argue convincingly, coordinated regional strategies that include private participation would offer an important competitive advantage.

Source: Infrastructure and the Need for Regional Clout

The meta story here is the Industrial Age, metro-centered model is hitting the wall. As the Bay Area Economic Council report referenced in this article points out, housing market economics work to push people to the far reaches of ever-expanding metro areas. That in turn drives transportation demand and lengthens commutes. In response, regional and transportation planners keep looking for transportation-oriented solutions to bridge the widening time and distance gap. But they cannot work because the underlying template is fundamentally broken, having reached the point of diminishing returns.

The good news in the new century is information and communications technology (ICT) is permanently disrupting this struggling model and its time and life sucking daily commutes to distant, centralized commute-in offices over congested highways and inefficient public transit systems. It’s no longer necessary to move people back and forth daily between home and the CCO. Workers can now easily leverage ICT to work at home or in regional co-working centers located in their home communities. Their work gets done, they can skip the daily commute and pressure on the overburdened transportation system is relieved.

Conversation with Michael Shear on distributed office spaces

Much of the discussion around the decentralization of knowledge work out of centralized commute-in offices is on telework — which for many connotes working from home. But that’s just one way today’s advanced information and communications technologies (ICT) can be utilized to manage transportation demand and traffic congestion, particularly for those who lack suitable home office space or don’t wish to work at home. Another is distributed office spaces located in communities where knowledge workers live offering social interaction, professional collaboration and IT support without the long commute and the stress and wasted time of rush hour traffic. Instead of thinking of access to centralized commuter offices via transportation infrastructure, a new way of thinking is emerging that flips the focus to providing access to knowledge workers where they live via ICT infrastructure.

Michael Shear heads the nonprofit Broadband Planning Initiative and Strategic Office Networks LLC (Website). He works with communities and organizations through public-private partnerships to establish and manage distributed workplace networks. These benefit knowledge workers by making work more accessible and employers by providing access to a broader labor market and better staff retention. Communities also gain “gas dollars” that would otherwise be spent on commuting and related costs by keeping them in the community. With increasing traffic congestion and reduced proximity to jobs in many metro areas as well as concerns over natural and human caused events in urban centers posing a disruptive threat to organizations, Shear believes a tipping point for broader adoption of distributed community office spaces is at hand. He has written several LinkedIn posts on the topic that can be viewed here.