Future Cities: Jobs And Social Capital

Brian Lee-Archer

If work isn’t the cornerstone of our society, then why is there so much focus on the jobs of the future and the impact of the digital economy?

Labor mobility is a characteristic of a modern thriving economy. Jobs might attract people to a community, but livability makes them stay. Bill Clinton’s famous slogan from the 1992 U.S. presidential election, “It’s the economy, stupid,” is a poignant reminder that sustainability within our communities is contingent on a level of economic activity.

Jobs and livability go hand-in-hand. Economic activity within a community underpins investment in social capital-related initiatives. Strong social capital is a stabilizer to the negative effects of economic cycles. Improving livability and economic activity can trigger a virtuous circle effect leading to sustainable communities.

On the other side of the coin, if economic activity slows and jobs disappear, investment in livability may decline and put community sustainability at risk. Communities often have limited capacity to influence the macroeconomic issues that determine labor markets and attract jobs.

However, they have a level of control over livability factors such as open space, public safety, and recreational activities.

In periods of economic slowdown, the focus on social capital-related initiatives contributes to resilience, thereby increasing capacity to influence economic activity.

The new economy is putting a spotlight on the concept of tradable and non-tradable jobs, as Enrico Moretti explains in his book, The New Geography of Jobs. A tradable job creates goods or services that can be exported to other regions—for example, knowledge or manufacturing jobs.

Non-tradable jobs are usually local jobs that support people in tradable jobs—for example, retail, health services, and education. According to Moretti, “A healthy traded sector benefits the local economy directly, as it generates well-paid jobs, and indirectly, as it creates additional jobs in the non-traded sector.”

At the macro level, attracting traditional tradable industries such as manufacturing is beyond the reach of many communities. While communities may offer incentives to attract investment, it comes with risk.

However, the new economy provides opportunities to attract or upskill to a new class of tradable jobs at a lower investment risk – the knowledge workers. Knowledge workers have higher average incomes, are mobile and well-educated, and have a life perspective beyond the community they live in. Knowledge workers create the potential to leverage existing social capital assets of the community to enable innovation, leading to new jobs with higher levels of job satisfaction.

Increasing the pool of knowledge workers within a community lifts demand for local services in the non-tradeable sector – the multiplier effect.

By virtue of their mobility, knowledge workers have the opportunity to exercise choice in where they live. Communities can leverage livability factors to retain newly upskilled workers and attract new knowledge workers.

A three-year study (2010-12) conducted by Gallup and the Knight Foundation of 26 communities across the United States, The Knight Soul of the Community, examined the factors that bond residents to their communities and the role of community attachment in an area’s economic growth and well-being.

This study revealed three dominant factors: aesthetics, openness, and social offerings.

Kick-starting a virtuous circle of growth in employment and livability is contingent upon a rich source of data and the capability to turn data into information for business insight.

Information informs community leaders in making targeted investment decisions addressing social capital factors proven to have a positive impact on tradable job prospects.

Community leaders face a unique challenge: The levers they have most control over are not necessarily the most direct in terms of creating jobs. However, the livability levers they do control can have a significant impact on creating the environmental conditions for innovation among knowledge workers.

The economic value created will empower communities to invest further in social capital initiatives.

For more on how technology drives social capital, see Smart Investments Create Smart Cities.

This article was originally published on InnovationAus.com.


Brian Lee-Archer

About Brian Lee-Archer

Brian Lee-Archer is director of the SAP Institute for Digital Government Global (SIDG). Launched in 2015, SIDG is a global think tank that aims to create value for government by leveraging digital capability to meet the needs of citizens and consumers of government services. In collaboration with government agencies, universities and partner organizations, SIDG facilitates innovation through digital technology for deeper policy insight and improved service delivery.