Pandemic pushes tech, other workers to less dense cities

 

A new migration analysis for 38 U.S. metro areas during the pandemic reveals what realtors know well: cities like San Francisco and New York are losing residents.

Meanwhile, cities like Salt Lake City, Richmond, Virginia, and Kansas City, Missouri, have gained net new residents since the pandemic last April, according to the analysis from LinkedIn Economic Graph.

To reach its findings, LinkedIn analyzed migration instances when a member changed location on their LinkedIn profile.  The analysis calculated the inflow-outflow ratio for 38 metro areas from April 2020 to February 2021, compared with that same period the year before.  LinkedIn has about 170 million U.S. members and 740 million globally in more than 200 countries.

The top 10 cities with net new residents and their percentages of adds from top to bottom were: Salt Lake (12.3%), Jacksonville, Florida, (10.8%), Richmond (6.1%), Sacramento, California, (6.1%), Cleveland (6%), Tampa, Florida, (5.7%), Milwaukee (5.1%), Kansas City, Missouri, (4.8%), Miami-Fort Lauderdale (4.3%) and Raleigh-Durham-Chapel Hill, North Carolina (4%)

The top-10 cities all have things in common such as manageable housing prices and open space (or less density), something people have cherished in the pandemic.

Three cities in Florida made the top-10, following a booming trend for years to move to the Sunbelt. Worker inflows in Jacksonville and Tampa surged to 40% or more above the rate of outflows as tracked by changes in LinkedIn profiles.

Among the losers along with New York and San Francisco in the bottom-10  were Chicago, Washington, D.C., Boston and Los Angeles. 

A Kansas City, Missouri, official quickly promoted the LinkedIn findings, noting the city’s efforts to attract tech talent.  Assistant City Manager Rich Usher posted on LinkedIn:

“Where are people moving in the #Covid19 Pandemic?  @KCMO makes the top 10 and #remotework #gigabitcity is a draw—check it out”

In an interview, Usher said KC doesn't currently have a formal campaign to attract workers although moderate housing costs are a great incentive.  

Usher is the “entrepreneur ecosystem builder” for the city of about 500,000 residents and has promoted for years the value of Google Fiber’s arrival there in 2011, making it the first city with such service in the U.S. 

"People that move here get a 25% raise" just because of the lower cost of living, he said. "It's pretty amazing how much people can save."

The city hasn't come up with gimmicks like offering $5,000 to newcomers as some other midwestern cities have. "We don't feel like we have to monetize the incentives," and would rather put the money toward propping up minority-owned businesses, Usher added.

"People come here because there's a vibrant downtown and the entrepreneur community is growing," he added. Living in KC means that a flight to either coast might only be three hours, an advantage to tech workers hoping to stay in touch with New York and San Francisco clients.

In 2016, Google Fiber stopped expanding to new cities, but still offers a $70 monthly plan in KC. Google Fiber serves the entire metro area, which spreads into Kansas City, Kansas, and affluent suburbs such as Shawnee Mission and Overland Park, Kansas.

A Cleveland Federal Reserve economist analyzed credit-card data to spot a trend of declining inflows of residents to dense cities. “There has been a rise in people moving out of urban neighborhoods and a steep decline in people moving into urban neighborhoods,” said the economist, Stephan Whitaker.

The outflow from dense cities has even been correlated with the chip shortage for vehicles. Chip analyst Dan Hutcheson at VLSI Research recently said after the pandemic drove car sales down last April as people stayed home, there was a strong surge in car sales in late summer as more families relocated to the suburbs and other locales that require cars due to the absence of mass transit.   

Car companies had stopped ordering the needed chips for cars and then could not get them again quickly when sales picked up, partly because it can take four months to produce the necessary chips from the time the chip is ordered until it is put in a vehicle, Hutcheson reasoned.

RELATED: Extreme auto chip shortage won’t return to normal until April-May, analyst says