GE’s affection for its old home in Connecticut was no doubt weakened by the state’s decision in 2015 to raise business taxes by $750m.Boston provided an estimated $145m in incentives to secure the deal.Still, something is clearly changing in America’s older cities.They are much less crime-ridden than before, thanks to a combination of better policing and demographic change.The homicide rate fell by16.8% from 2000 to 2010 in big cities.
Now these urban centres are magnets for millennials fresh from university and with few responsibilities.Young professionals are reconquering former no-go areas and shifting the problem of urban blight into the suburbs.Hiring such people in Boston, GE reckons, will help it shift its focus from hardware to software and from selling things to offering services over the internet.Yet the new downtown headquarters are very different from the old ones, and not just because they are open-plan and trendy.
They are far smaller.Often, firms are moving their senior managers to the city along with a few hundred digital workers.Moving back to Chicago’s centre has usually involved downsizing.Motorola Solutions’ HQ shrank from 2,900 to 1,100, and that of Archer Daniels Midland from 4,400 to 70.Many companies are deconstructing their headquarters and scattering different units and functions across the landscape, leaving most middle managers in the old buildings, or else moving them to cheaper places in the southern states.
Aaron Renn of the Manhattan Institute, a think tank, reckons that head offices are splitting into two types: old-fashioned “mass” headquarters in the sunbelt cities, and new-style “executive headquarters” of senior managers and wired workers in elite cities such as San Francisco, Chicago and Boston.That suggests there will be no return to the broad-based urban prosperity of America’s golden age.San Francisco could be the template of the future.Its centre is divided between affluent young people who frequent vegan cafes and homeless people who smoke crack and urinate in the streets.Long-standing San Franciscans resent the way that the urban professionals have driven up property prices.And those young workers may fall out of love with the city centre when they have children and start worrying about the quality of schools and the safety of streets.
The best book to read if you want to understand corporate America’s migration patterns is not Mr Florida’s, but a more recent study, Bill Bishop’s “The Big Sort”.It argues that Americans are increasingly clustering in distinct areas on the basis of their jobs and social values.The headquarters revolution is yet another iteration of the sorting process that the book describes, as companies allocate elite jobs to the cities and routine jobs to the provinces.Corporate disaggregation is no doubt asensible use of resources.But it will also add to the tensions that are tearing America apart as many bosses choose to work in very different worlds from the vast majority of Americans, including their own employees.