How AI may benefit mid-size cities

Investment Analysis Clubs Macro Economic Trends and Risks
1

https://www.nytimes.com/2024/12/26/technology/ai-economy-workers.html

How A.I. Could Reshape the Economic Geography of America

As the technology is widely adopted, some once-struggling midsize cities in the Midwest, Mid-Atlantic and South may benefit, new research predicts.

By Steve Lohr, The New York Times, Dec. 26, 2024

…

The shared attributes of these metropolitan areas include an educated work force, affordable housing and workers who are mostly in occupations and industries less likely to be replaced or disrupted by A.I., according to the study by two labor economists, Scott Abrahams, an assistant professor at Louisiana State University, and Frank Levy, a professor emeritus at the Massachusetts Institute of Technology. These cities are well positioned to use A.I. to become more productive, helping to draw more people to those areas…

Already, predictions abound that generative A.I. will displace workers in call centers, software developers and business analysts…But exposure to A.I. does not necessarily translate to sweeping job losses. … [end quote]

The article describes innovative new companies that use AI to provide useful information to clients. The combination of a local labor pool, low housing costs and location on shipping routes gives them a competitive advantage.
Wendy

2 Likes
2

Here’s the relevant table of cities from the study:

image
image796×525 164 KB

3 Likes
3

There was an article yesterday in the NYTimes about these Central Washington State towns like Wenatchee who are selling their cheap Columbia River hydropower allotment to Microsoft and Google in the hopes of a few dozen long-term tech jobs. (A multi-billion dollar data center might have staff of 70 people once the construction is complete.)

The comments section to the article is filled with people who understand the arithmetic – the average rate payer will pay much higher electric power bills since future electric power needs won’t be filled with cheap hydro for THEM. {{ LOL }}

https://www.nytimes.com/2024/12/25/technology/ai-data-centers-electricians.html?unlocked_article_code=1.kk4.lWNk.ryQNSgyYEgk7&smid=url-share

intercst

1 Like
4

That is true Intercst, it might be even a smaller number than that. But the amount of people going into the data center to work each day would be 2 to 3 times that amount. The amount of revenue flowing through the data centers is amazing. i wouldn’t even know how to measure it but it’s huge.

5

It is huge. But outside of onsite payroll, very little of that revenue and or profit is flowing to the town. If these things were taxed like nuclear reactors, maybe then the town would see some benefit. But they’re largely sited on the basis of tax breaks and electric power costs.

intercst

1 Like
6

I am not sure how this will work out as far as jobs. I used to work in multiple data centers and had to visit them daily, although I wasn’t employed by the data centers. There were many of us continually working in them and the jobs paid well. Some of the ones I worked in also had their own solar fields. They actually went off the grid and the power companies were not happy about it.

2 Likes
7

I’ll take the other side of that bet. I’m sure there will be some exceptions, but they will be clustered around some valuable resource. It appears to me that the items listed in the chart upthread don’t really show a lot of variation. A few more or less educated people? OK. You need a real driver: an MIT, a Stanford, a Carnegie Mellon to make a difference. Taxes? Sure, but it hasn’t stopped California from being the hotbed of American economics for the past 50 years (it may, someday, but not so far.)

If anything, our economy is being more diffuse, with cities all over prospering, especially the SunBelt, where lower taxes, fewer unions, and better weather are attractive - but so far the benefits are being quite evenly deployed - even to large cities like Miami, Atlanta, even Charlotte.

I know I’m out of step, but thus far my experience with AI is unhappy and unproductive at best. If I spend another 5 minutes shouting “REPRESENTATIVE” into the phone trying to get a human who can understand my problem I will likely die of a stroke. And yes, I’ve done it with AI enabled. Siri sucks. Alexa sucks. Google sucks.

Like “Press 1 for our location” of an earlier era, AI seems to be pushing wasted time onto me rather than helping me. Amazon suggests products in which I have no interest. The Washington Post offers stories I have already read, or don’t care about. Heck, every time I open a new subject at the Fool I am greeted with “This is similar to another thread…” none of which have the remotest connection to what I am about to write. (Admittedly that’s not AI, it’s just a gripe that fits in here, kind of.)

Someday? Maybe. Not as soon as most think and not as well as most think - but to loop back to the original thesis: data centers? Big whoop. Sterile buildings with lots of electricity and heat, billions of electrons, and a few maintenance people (both physical and metaphysical.) Compare the employment with, say, a shopping mall or a transit system or a building full of insurance workers.

Bah. Maybe someday. Not in my lifetime.

3 Likes
8

I’m waiting to get my own AI to deal with all customer service issues. My AI can battle their AI until I get satisfaction. LOL.

Me: “AI, Xfinity charged me an extra $23 last month for no discernible reason. Please contact them repeatedly until they remove the inexplicable charge.”
AI: Starts the process by contacting Xfinity.

3 Likes
9

I’ll take the wishy-washy alternative and say it depends. If we make “Keeping America White” as our focus and mostly restrict immigration to a chosen few then I don’t think the midsize cities will prosper. The American population will age faster, resulting in a decline in housing demand and a drop in real estate prices in many areas.

The best example for this scenario is Japan, a highly industrialized and wealthy nation that takes in relatively few immigrants and is farther along in the aging progression than the USA. This article talks about the millions of abandoned homes in Japan.

“It’s not just rural in terms of countryside,” Stockermans says. “It’s medium-sized cities—150,000 or 300,000 population towns—where these homes exist as well. There’s no jobs in these satellite cities for young people. Everyone wants to live in Tokyo, because that’s where the jobs are.” https://www.fastcompany.com/91153794/japan-affordable-housing-akiya

Aging demographics tends to consolidate populations to optimize services for the elderly and jobs for the young. I think that trend is more powerful than any dispersal tendency imposed by AI.

The alternative scenario is that we hold true to our American traditions and embrace immigrants as a tool for renewing our society. This would mitigate the aging trend, with immigrants moving to population centers with attractive housing costs. In this case, I can see how midsize cities might benefit with lower cost of living being the primary catalyst.

The widely ignored elephant in the room though is the rapidly growing global need for elder care, which is one of the lowest paying professions. We are going to have to figure out some way to transfer some of the wealth produced by AI and robotics to all those human care givers taking care of old folks. Even so, these will still likely remain at the low end of job ladder. We can either have immigrants do it or if we continue our paranoia about losing our White culture, we can go the Japanese route of using robots, though there seem to be hiccups in the technology.

3 Likes
10

I recently spent 9 days in the hospital after my open-heart surgery. Almost all the caretakers were from the Global South, many from Africa. They often had families back home. They were happy to have the job because it paid multiple times more than they could earn at home. Many were friendly and quite willing to discuss their lives and families. This was a nice social distraction while sitting in a hospital room.

The answer to elder care is immigration. Many Americans consider the pay to be low and the work to be menial and that’s why few will do it.

Wendy

5 Likes
11

Make immigration to the US–by being caretakers to the elderly here–a viable route to obtaining US citizenship. Time period? Ten year commitment is reasonable. No rational person has an argument it is not a valid option. No need for a degree from some higher education school. Probably need to turn away most applicants because there would be so many who would be able/willing to do it.

1 Like
12

Which is why rural continues to die, and mid-size cities sit in stasis. Not that it has to be that way forever, but I find no logic as to how “AI” is going to change that. Sunbelt, nice weather? Sure, I get it. Jobs? You bet. AI and data centers? Hmm, count me skeptical.

Har har, that’s the funniest thing on the internet today. Sad, of course, but still hilarious.

Revenge fantasies are the best. That’s why the “Taken” series was so popular. I bet there could be a whole movie about my AI versus your AI. It’d be like “You’ve Got Mail” except with less likable characters.

I like this proposal a lot. Good show!

13

I applaud this idea! I wish that there was political support for it – but unfortunately the reverse is true.

Based on the actual people I met doing this job in the hospital with no path toward citizenship…if your idea became reality there would be literally hundreds of millions of applicants. The third world is full of hard-working people who would leap at this opportunity!
Wendy

2 Likes
14

Twenty years ago, when the US army was having trouble recruiting enough cannon fodder for Iraq, “Plan Steve” called for sending recruiters to Latin America, with the promise of honorable service putting recruits on the fast track to US citizenship.

The US army used to put legal US immigrants on a fast track to citizenship, but they don’t anymore. They don’t even want foreigners to enlist. From TFG’s last stint. If immigrants aren’t white enough for the army, they probably aren’t white enough to be nursing home aids.

https://www.nytimes.com/2017/09/15/us/fast-track-to-citizenship-is-cut-off-for-some-military-recruits.html

1 Like
15

Another possible partial solution is to require a year of mandatory national service for kids during or after high school, with one service option being elder care.

Might improve the character of the nation while having a common service experience might reduce political polarization. Seems to be broadly popular.

Today, fully 75 percent of all young people aged 18-24 — those in the group most affected by the proposal — support that idea. People slightly older (25-37) support it even more: 80 percent are in favor. Older adults are also in favor. Sixty-two percent of people 38-44 — the largest group of parents of those expected to serve favor it, and 56 percent of people 45-64 are in support as well. No demographic reflected a majority in opposition. https://thehill.com/opinion/campaign/4253664-americans-support-mandatory-national-service/

16

Maybe so, but it keeps right on flowing back to someone else. It’s not like a local store where a decent part of the transaction remains in the community and waters the local flowers.

But I am thinking that AI is in for a rude awakening because they are taking everyone else’s product and using it for training. It’s a little sketchy because humans also use different products for learning and no further royalties are required. But in this case it’s a corporation making profits off another’s work.

For instance, if I take all your copyrighted photographs to generate my own profit making photographs, do you not deserve some kind of compensation? Copyright allows original owners to control (at least in some respects) derivative works, yet AI skips merrily thru the tulips without paying a penny to anyone. I think this will be resolved by negotiation, and if not by the courts. (It’s also possible that the pro-business courts will say “doesn’t count” in which case my entire evaluation changes.)

3 Likes
17

Almost none of the hospital aides were white.
Wendy

2 Likes
18

I am trying to remember the staff at the nursing home where my mom was, and the retirement community where my aunt lived her last few years. I remember the staff being mostly white. Kalamazoo’s population is only 65% white.

But in this context, I am talking about people being recruited outside the US, with a promise of citizenship for comping to the US to empty bedpans.

Steve

19

In Venezuela no one notices that.

The Captain

20

I posted, years ago on TMF, the need for a “gap period” between high school and further education/training. I recommended a 3-year period, where all new grads were required to perform three years of public service with the others of the same age. They work as a group, not individually. Upon completion, each person has earned the right to vote. This idea has been around for a long time (“Starship Trooper” and more books by various authors).

3 Likes