Perhaps you’ve seen the pitches and even considered them yourself.
Newton, Iowa, is offering new home buyers $10,000 cash and a welcome package worth more than $3,000. The fact that the median price of a Newton home is about $105,000 compared to $670,000 in New York City and $1.35 million in San Francisco might make a coast dweller pause for thought.
Newton is one of only several U.S. cities and states that are offering incentives to remote workers to move. Would you consider Tulsa, Okla., ($10,000 incentive and $1,000 housing stipend)? Vermont ($10,000 for relocation expenses over two years)?
The narrative in the media has been that the Covid-19 pandemic and mandated remote work encouraged and enabled a trend of workers moving from expensive cities to less densely populated and more affordable regions of the U.S.
In July, CNBC proposed the “10 best states for remote work,” with North Dakota and Nebraska topping the list. Will there be a sudden rush for the Great Plains of North Dakota?
Unlikely, says a recent report from the Brookings Institution, entitled “Remote work won’t save the heartland.” The death of big cities has been greatly exaggerated, the authors find.
Outbound moves, yes, but not to the heartland
Citing an analysis of U.S. Postal Service data by the real-estate group Coldwell Banker Richard Ellis (CBRE), the Brookings authors note that while there were increased migrations from metro areas in 2020, the rates were modest in most cases, with the exceptions of the Bay Area, New York and Seattle.
And most of the moves were not long-distance moves to the heartland but often to nearby counties.
The authors looked more closely at the San Francisco and San Jose, Calif., metro areas and found that while outbound moves from the Bay Area were up by more than 200 percent from the previous year, only 12,000 address changes were filed to classic heartland states. (They define the heartland as 19 mostly inland states: Alabama, Arkansas Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee and Wisconsin.)
“These 12,000 moves do not seem nearly enough to significantly revitalize the region,” the authors noted.
Likewise, migrations out of New York, Los Angeles, Washington, D.C., and Seattle went up in 2020, but only about 4 percent were to heartland states, even adding Mountain West states to the list.
“And even these modest gains could be eroded or outright eliminated by continuing outflows from the heartland and Mountain West to superstar metro areas, including workers who only moved temporarily and now are returning to the coasts,” the authors said.
Indeed, there is evidence that some workers moved out of urban centers only temporarily. In January 2021, The New York Times trumpeted, “They Can’t Leave the Bay Area Fast Enough,” a story about the supposed flight of the area’s tech companies and workers.
By July, the Times was telling another story: “Tech Workers Who Swore Off the Bay Area Are Coming Back.”
“I think people were pretty noisy about quitting the Bay Area,” Eric Bahn, a co-founder of Palo Alto, Calif.-based Hustle Fund, told the Times in July. “But they’ve been very quiet in admitting they want to move back.”
“I felt like I was getting back to my life,” one young tech worker, who moved back to the Bay Area after decamping to Sacramento, told the newspaper.
Secondary tech hubs
Though tech companies and remote workers may not be migrating en masse to the wheat fields of Kansas anytime soon, there are signs that tech firms are moving to what the Brookings authors call “secondary tech hubs.”
Google and Apple are opening engineering centers in North Carolina’s Research Triangle and Tesla is building a manufacturing center in Austin, Texas. The authors also note some movement to smaller tech hubs like Cleveland; Boise, Idaho; Madison, Wis.; and Jackson, Miss.
Still, the Brookings researchers point out that these areas had already been showing dynamism and are far from being distressed areas.
So-called attraction strategies seem like a long shot for the places most in need of growth as the pandemic eases and remote work declines, they said. “Communities across the country should instead focus on the kind of basic block-and-tackling that will lead to more robust growth overall and a higher quality of life for residents.”
What declining areas must focus on are building growth sectors, educating a skilled digital workforce, creating a reliable transportation infrastructure and supporting families with investments in such areas as education, childcare and universal paid sick and family leave.
“It doesn’t look like the remote work explosion is going to magically transform the nation’s interior,” the Brookings authors concluded. “Instead, regional leaders will need to continue making the kind of conscious, long-term investments that have long been the drivers of local economic growth and high standards of living.”