May 8, 2021 - Economy

The wealthy exodus from superstar cities

Pandemic-induced remote work is chipping away at a recent trend of Americans staying put — but only for the well-off.

Why it matters: Telework has been lauded as a geographic equalizer, allowing talented people from all over the country to go for jobs in superstar coastal metros. But the benefits have largely been limited to wealthier workers — so far.

What’s happening: Researchers analyzed around 100,000 moves over the last year and found that high-income individuals — those earning more than $100,000 a year — accounted for less than half of all movers, but made up 75% of those who said they were moving because of telework opportunities.

“Reasons for moving are very different among high-income households and low-income households,” says Peter Haslag, a professor at Vanderbilt who led the study.

  • As the pandemic has dragged on, high-income households are moving out of cities like San Francisco and New York to places like New Hampshire, Arizona and Florida, primarily for the natural beauty and lifestyle, says Haslag. They cite the pandemic as the main reason for moving.
  • Low-income households' destinations are more scattered, and their reasons for moving are related to work or cost-of-living, as was largely the case before the pandemic.

But, but, but: These moves could still contribute to a more geographically equitable economy, says Susan Wachter of the Penn Urban Institute.

  • Higher-income workers are the vanguard of a new "distributed urbanism," she says.
  • If the migration out of big cities continues, more and more people — across all income levels and job types — could join the trend.
  • Wealthier people moving to new regions bring with them capital that can revitalize those places, spurring new businesses and jobs. And continuing movement out of the superstar cities may push more companies to move to all-remote models, making it possible for even more people to leave.

The bottom line: "The movement out of San Francisco and New York is extraordinary," Wachter says. "I don’t see it as a one-time phenomenon. I see it as a years-long trend that’s just beginning."

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