Are “urban villages” living in the past?

The Premier wants a Melbourne which encourages the transformation from a mono-centric to a multi-centred city, “so that people can work closer to where they live”. He goes on to laud Melbourne as “a city we’re all proud of – ‘a city of villages’, a whole that is greater than the sum of its parts.”

I’m not completely sure what he intends but I wonder if he’s thinking about “urban villages” where the great bulk of jobs are filled by local residents who live at density and walk to work. This is an old idea in planning and the Victorian planning department ran strongly with the idea in 1996.

Kogarah Town Centre

Whether or not “employment self-sufficiency” can be achieved in practice depends on the level of geography. If we look at Melbourne from a regional perspective, most people already work in the same region in which they live (other than for jobs in the CBD)  – see this paper by Kevin O’Connor and Ernest Healy. The median journey to work time in Melbourne is consequently a reasonable 30 minutes by car (55 minutes by public transport, reflecting longer trips to the city centre).

However achieving something like “self-sufficiency” in employment at a smaller geographic level is hard. There are a number of reasons for this.

One is the increasing complexity of households. In two income households both parties frequently work in separate locations, so they either elect to live near one member’s workplace (and if so which one?) or they select a compromise location. Children who continue to live at home after they’ve entered the work force have no flexibility to live closer to where they work. If changing jobs involves a change in job location then that adds another layer of difficulty.

Another reason is that the journey to work has declined in importance as a determinant of where people live. It now accounts for only one fifth to one quarter of all trips, as people travel a lot more for other purposes than they used to. There is now less reason to live near work. Other factors like the level of local amenity seem to be an increasingly important determinant of the residential location decision.

A further reason is that many workers are in relatively specialised occupations. The productivity advantages of specialisation are one of the key reasons people live in cities. An experienced theatre nurse, for example, can only find work in a limited number of locations – his optimum strategy is probably to find a compromise location that gives fair access to a number of hospitals rather than be tied too closely to a single employer.

The classic example of specialisation is the CBD, which has 14.5% of all Melbourne’s jobs but 50% of jobs in the Finance and Insurance sector. If you have a high-skill, high-pay job in finance – especially one with a high strategy content – you’ll almost certainly work in the city centre (if you’re very specialised in Finance you might only earn what you’re worth in Australia by living in Sydney).

Yet another possible explanation is that many people simply can’t afford to live near work. For example, lower pay workers who support the high skill CBD “symbolic analysts” in more menial occupations like hospitality and cleaning cannot afford to live locally. I’m aware that in some places – for example, Sydney’s wealthy North Shore – businesses like nursing homes have difficulty attracting nurse’s aides and other lower pay staff because they tend to live outside the region.

But perhaps the key reason most workers don’t live cheek by jowl with their workplace is that the cost of transport in Melbourne is relatively low, especially for car-based suburban trips. If they want to, people with ordinary occupations can travel 5-10 km in the suburbs to find a job that suits them. It might be a job that pays a little better but even if it doesn’t, it could be a more prestigious employer, or have nicer co-workers, or be handier to mum and dad. The limiting distance seems to be the regional level.

A worker in any occupation, no matter how menial, who has superior skill and experience will only be fully remunerated if he or she has a choice of employers and hence almost certainly a choice of locations. Likewise, employers want a reasonably large catchment to obtain the best staff.

But isn’t the inner city clear evidence that people prefer to live close to where they work? Not really. The majority of inner city residents do indeed work in the inner city, but they account for only 10% of the metropolitan population. What isn’t always appreciated is that the vast majority of CBD workers actually live in the suburbs, well away from where they work (a key reason for that is the radial rail, tram and freeway systems).

People tend to live and work in the same region. The idea they can live and work in the same locality is unrealistic and worse, inefficient. Probably the best that can be done – and it would be a big improvement – would be to implement road pricing in Melbourne. Workers who travel long distances to work would pay the social cost of their travel; employers who want specialised employees could compensate them for their extra travel cost (incidentally there’s an extensive literature on wasteful commuting that might interest some readers).

One Comment on “Are “urban villages” living in the past?”

  1. […] too bad. And they’re all the more reasonable when account is taken of the fact that, as I discussed here, households choose a residential location having regard to a range of factors, such as the job […]

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