The Mystery of the Missing Jobs

Dog walkers are easier to find in New York and Miami than Cleveland.

Who you can hire depends on where you live.

A Geography of Jobs

In expensive cities like Miami and Los Angeles, the people are younger with fewer kids and more education. There is more of a chance that you won’t find them in a single family dwelling or commuting to work in a car. Their neighborhoods have less housing development. There is a smaller middle class.

The result? We have less demand for auto mechanics and jobs that relate to construction. There are fewer concrete finishers and cable installers, roofers and carpenters. Call centers also have no reason to be situated in a pricey city since they could be anywhere and lower earners cannot afford them.

In addition, location makes a difference. Situated close to a coast, the “superstar” cities attract fewer logistics and transportation companies. Instead, the heartland is their logical home.

Meanwhile, professional and creative jobs in areas that include science, technology, and high-end service gravitate to the most expensive metro areas. An easily accessible population facilitates the jobs that require face-to-face contact and those that thrive in clusters. They in turn have the affluence to hire therapists, fitness experts, pastry chefs, soccer coaches, and dog walkers.

The employment site Indeed created this list of jobs in high cost-of-living cities:

Our Bottom Line: Labor Markets

An economist might say we are looking at labor markets.

Shown on a circular flow model of the market system, labor markets are located in the lower loop. Below you can see that labor is a factor resource (with land and capital) that households provide to businesses in return for wages and salaries:

At this point, an economist could also point out that the demand for labor in labor markets is similar to and different from other markets. As always, a market is a process through which supply and demand create price and quantity. But for labor, the good or service we want or need creates the demand. Called derived demand, the labor we are willing and able to pay for is based on whatever they produce. It is derived from that good or service.

And that returns us to the occupations in expensive metro areas. It takes us to the derived demand for the scientists and dog walkers and pastry chefs that live and work there.

It also solves the mystery of the missing jobs.

My sources and more: I recommend this City Lab article on jobs in pricey cities. It was the perfect starting point for a look at urban labor markets. Then, for more detail, you might want to continue with this Indeed article. My favorite though, from 2012, was Enrico Moretti’s book The New Geography of Jobs.