The myth of the centralised urban economy


By Ross Elliott, cross-posted from The Pulse

“The great enemy of truth is very often not the lie–deliberate, contrived and dishonest–but the myth–persistent, persuasive, and unrealistic. Too often we hold fast to the cliches of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.”

That was from a speech by former US Democrat President John F Kennedy, while at Yale in 1962 and prior to entering politics. I came across it during a visit to the Kennedy Presidential Library in Boston a few years ago. How true it still is.

The myth of the centralised urban economy is certainly persistent, persuasive, and unrealistic. It qualifies as opinion unchallenged by uncomfortable thought. It is also subject to prefabricated interpretations. It goes something like this: CBDs are where the majority of people work. Therefore we need planning that reinforces a centralised economy and we need to prevent people living far away from CBDs, instead providing more housing nearer to the centre – because this is where the jobs are and where everyone wants to be if they could. Attracting more jobs to a metro region is best done by ploughing more taxpayer dollars into CBD amenity, or into transport networks that serve the inner city. That simplistic outline crudely (and sadly) sums up too much of what passes for urban planning orthodoxy.

Census after census has proven this wrong. In Australia, the CBD share of metro jobs in major cities is between 10% and 15%. In the smaller capitals it falls between 15% and 20%. (It is also shrinking because the suburban economy is growing faster than the CBD, thanks mainly to industries like health and education). How does our CBD share compare on a global scale? Some argue that Australian cities need more centralisation to be efficient. Compared with what?

Comparing Australian cities to some global benchmarks is an interesting exercise. A study of around 100 cities in Australia, Europe, Asia, Canada and the USA tallied more than 300 million metropolitan jobs. Of these, under 30 million were in CBDs. The average was 9%. But these were mostly 1990 data, and some of the cities were not very comparable to Australia. So I selected a slightly more comparable list and updated the data to around 2016 to 2020 numbers. For Australian cities, the CBD was the 2016 Census SA2 boundary while the Greater Metropolitan area was used for the whole. While the numbers will have changed, the proportions won’t have changed much, so it’s useful as a guide.


Based on this selection, the average CBD share of metro wide jobs for a city in a modern western economy is around 13%. Not 30% or 50% or 60% but 13%. Meaning globally some 87% of people living in cities of substantial scale and with substantial urban economies, do not work in the CBDs but are more likely to be found working in suburbs.

Sometimes, in efforts to bolster the numbers to favour the centralisation narrative, the definition of a CBD is enlarged to something like a 5 kilometre radius – which in most cities reaches very much into suburbia. While it is true that CBD boundaries don’t fully reflect the extent of near city employment, it is also true that metro boundaries don’t fully reflect the boundaries of suburban employment. Too often the inner city is broadly defined and the outer urban narrowly defined. Do both, and hey presto you can prove anything with statistics.


So the myth of the centralised economy lives on. It is an enduring urban fallacy which is rarely investigated. Increasingly, government budgets seem to favour inner cities over suburban domains where the vast majority of a city’s residents – more than eight in every ten – live, work and play. This is leading to a new class divide not based on occupation or education, but on geography.

Interestingly, the global data has also been pointing to an organic decentralisation of urban jobs that preceded Covid. Academics like Prof Ed Glaeser (Harvard), Prof Peter Gordon (Uni Southern Calif), Joel Kotkin (Chapman University), Alan Berger (MIT), Samuel Abrams (Stanford), William Frey (Brookings Institute), Schlomo “Solly” Angel (NYU) and others have all observed the data on jobs and housing was for some time prior to Covid saying something very different to the conventional narrative.

“The combination of city growth declines and higher suburban growth suggests that the “back to the city” trend seen at the beginning of the decade has reversed,” said Bill Frey. (Big city growth stalls further, as the suburbs make a comeback – Brookings Institute 2019).


“We found that, on average, only 1 out of 12 people live and work in the same community; only 1 out of 9 jobs is still located in the CBD; and only 1 out of 7 jobs is located in employment sub-centers outside the CBD,” said Schlomo Angel in The spatial structure of American Cities (Science Direct. Jan 2016).

“Contrary to perception, the nation is continuing to become more suburban, and at an accelerating pace. The prevailing pattern is growing out, not up, although with notable exceptions,” said Jed Kolko in an article entitled “The Myth of the Return to Cities” (New York Times, May 2017). Jed was last year appointed Under Secretary of Commerce for Economic Affairs by US President Joe Biden.

Covid, or more correctly government responses by way of lockdowns and work from home mandates, has evidently accelerated that movement of people and work toward the suburbs and regions.


However, don’t expect the myth to quickly evaporate. There is much at stake: professional and academic reputations, industry group agendas, government budgets, plus the beneficiaries of inner urban favouritism – the higher income earning inner city dweller who is now revelling in the ownership of the most expensive real estate surrounded by the best amenity, paid for by taxpayers, most of whom live and work in much less salubrious suburban or regional environments. Anyway, to actually think about things rather than look for confronting evidence and think it through, can be uncomfortable, as JFK observed some 60 years ago this year. And we all enjoy the comfort of our opinions more than the discomfort of thought.