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Opinion | Pandemic-related migration from major cities is helping the US economy

Bigger is better. For decades (some would say millennia), young people have been moving to big cities because they are centers of talent, money and jobs. From an economic perspective, this is an extremely positive trend. Big cities are innovation centers. Their economies are growing rapidly because there are many benefits (and cost savings) to having so much labor and capital in one place.

However, the pandemic forced a major rethink of this “bigger is better” concept. Suddenly living close together also had disadvantages and many people were able to do their work remotely. Megacities are not dead, but they have lost some of their luster.

Most Americans moved south

during the pandemic

Population changes in the district

from April 2020 to July 2022

Los Angeles County lost the most population;

Maricopa County in Arizona, where Phoenix is ​​located

located, won the most.

Most Americans moved south

during the pandemic

The county's population changes from

April 2020 to July 2022

Los Angeles County lost the most population;

Maricopa County in Arizona, where Phoenix is ​​located

located, won the most.

Americans largely moved south during the pandemic

The county's population changes from April 2020 to July 2022

Cook County,

Illinois

Kings and

Queens County,

new York

Los Angeles County lost the most population;

Maricopa County in Arizona, where Phoenix is ​​located

located, won the most.

Americans largely moved south during the pandemic

The county's population changes from April 2020 to July 2022

Cook County,

Illinois

Kings County

and Queens County,

new York

Los Angeles County lost the most population;

Maricopa County in Arizona, where Phoenix

lies, won the most.

Millions of Americans have moved in recent years. The movers were mostly college-educated people, especially millennials with young children, many of whom wanted more space for less money. There was mass relocation from expensive coastal cities – particularly New York and San Francisco – to cheaper places like Phoenix, San Antonio, Jacksonville and Charlotte.

According to conventional wisdom, this great move should have been terrible for America. So much talent — and money — left the “superstar cities” and morphed into what the real estate world calls “second-tier cities,” or small beach or mountain resort towns. According to traditional economic thinking, this is likely to lead to lower growth and lower productivity for years as a well-educated workforce and capital are spread too thin. However, there is reason to believe that the conventional view is wrong.

Follow this authorHeather Long's opinions

First, remote workers are still connected to New York, San Francisco, and other major cities. Video technology is now good enough – and accepted enough – to enable virtual brainstorming and networking. People don't have to live in the same zip code to exchange ideas and benefit from proximity to one another.

Second, America's largest cities do not have enough housing. This is a crisis. And that's why people were migrating to lower-cost areas, especially in the South, even before the pandemic. Millennials' actions during the pandemic helped alleviate some of the housing shortage in cities. The moves also freed up a lot of money. People who have moved can now use some of the money they spent on high rents and expensive mortgages to start businesses, invest or consume more.

Third, many people moved to cities that I would describe as rising stars. Phoenix (1.6 million inhabitants) and San Antonio (1.5 million) were already among the ten largest cities in America. Jacksonville and Charlotte each have almost 1 million residents. These places largely have the same creative and energetic atmosphere as megacities. There is no exact threshold of people or money that a city reaches and then magically provides an additional boost in productivity. But it's becoming increasingly difficult to argue that someone who lives in Brooklyn is more productive and valuable to the U.S. economy than someone who lives in Charlotte.

Additionally, increasing government and private investment in semiconductors and green energy is bringing more capital to places like Phoenix and Austin. It's a mistake to ask, “Which city will replace Silicon Valley?” The ideal is to spark niche innovation across the country.

“We are experiencing an entrepreneurial boom in the South and the Sun Belt,” said economist Benjamin Glasner of the Economic Innovation Group. “People move to new places and see opportunities.”

Additionally, Americans in general are more satisfied with their jobs than they have been in decades. Many used the Great Reassessment to change their careers and find higher-paying jobs that better fit their skills and interests. Those who have moved or are working remotely at least some of the time generally report a better work-life balance as they spend less time commuting. All of these can help increase productivity.

The pandemic has changed society in ways that we are only just beginning to recognize and understand. This led many people to take risks in order to live more fulfilling lives. Americans are opening businesses at a pace not seen in decades. Despite high interest rates, growth was surprisingly strong. And there are early signs of a productivity boom similar to that of the 1990s. Productivity could be increased by artificial intelligence, but the impact of happier workers and potentially the big move cannot be ignored.

That doesn't mean everything is rosy. Some people now regret moving abroad. And the housing shortage and steep rent increases that were once a problem especially in New York City and San Francisco have become commonplace across the country, especially in Florida.

But the secret power of the U.S. economy has long been its adaptability. This country has emerged from crises stronger than many other places because American workers and companies transition more quickly. Now it turns out that remote work and the big move are expanding the benefits of megacities across the country. Imagine an era of rising productivity – and better lifestyles – in many more places.

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