Stephan Whitaker listened as speculation that COVID-19 could trigger a profound exodus from urban America intensified as the pandemic progressed. After all, tens of millions of people were forced to work remotely, leaving them less job-related than ever and able to move around more freely. Whitaker, a political economist with the Federal Reserve Bank of Cleveland, looked into it.
He found that the biggest losers of residents were the major U.S. metro regions, which are the most expensive to live in, while smaller towns and more affordable large metropolitan areas like Pittsburgh weather the storm much better.
Such trends open up fascinating opportunities for Pittsburgh and other regions that struggled to attract people from other locations long before the pandemic. “If teleworkers are able and willing to follow these newly established migration patterns in the years to come, there is an opportunity for lower-cost regions to attract them and boost their local economies,” said Whitaker.
Whitaker is among a growing body of researchers searching the U.S. census, postal services, and other data sources for clues about how the pandemic is affecting migration patterns and population trends.
For his analysis, he looked at changes of address of 12 million Americans reported in credit bureau data. The changes from April to December 2020 were compared with the average change in the same months of 2017, 2018 and 2019. Regions were grouped by population size and housing cost, using the mean list price per square foot as a measure.
Large, expensive metropolitan areas with populations of at least 2 million people continue to lose shine, according to the Cleveland Fed analysis. They have been losing more and more residents to other places for almost a decade. But the pandemic accelerated the trend. And the affordability of other places seems to be a big reason for that.
In high-cost areas, 5.6 percent more residents moved to large, inexpensive subways last year than in the years before the pandemic. They recorded a 10 percent increase in the number of residents who moved to medium-sized metropolitan areas with a population between 500,000 and 2 million people. They also lost 9 percent more residents to rural areas and small metropolitan areas with fewer than 500,000 residents.
Those who moved during the pandemic were overwhelming people renting their homes instead of owning them. They were mostly young adults. Most moved no further than 150 miles. And most of those who moved did so at the beginning of the pandemic, with migration easing as the year progressed.
Large, expensive metros have clearly borne the brunt of their pandemic migration pattern. “If you look [population] flows into smaller or less expensive regions, they are at least positive, ”said Whitaker. “They may not matter, but they did not go under. It speaks for something that will change during the pandemic and favor cheaper, less populated areas. “
San Francisco and the metropolitan area of New York City are among the biggest losers so far. In the past year, both lost not only at least 12 percent more residents to cheaper metropolitan areas, but also more residents to other expensive urban areas.
And a greater number of people leaving the country was only part of the problem facing large and expensive metro districts. Fewer newcomers are moving in. For most of them, the number of newcomers has decreased by at least 8 percent.
“But for the rest of the country – smaller metropolitan areas and not high-volume places – it’s a lot less going on,” said Whitaker.
This also includes the greater Pittsburgh area.
In the pandemic months of 2020, the region lost fewer people to these expensive subways than in previous years. At the same time, fewer residents of these subways were moving to Pittsburgh. By the end of the year, net migration had increased slightly – about 0.20 percent of the region’s workforce, according to Whitaker’s analysis. Cleveland saw similar trends.
“That’s something we’ve seen in previous recessions for these metropolitan areas,” he said. “I wouldn’t categorize it as a city escape.”
What does that mean for others when the biggest losses in urban migration during the pandemic are mainly felt by large, costly metropolitan areas? The answer might depend on the popularity of remote working in the post-COVID years.
The ups and downs of the urban population during the pandemic were largely influenced by trends in COVID cases and deaths, business closures and remote working, according to the Cleveland Fed analysis.
The more deaths reported, the more people moved. Places with more small businesses that could stay open have fewer people leaving.
Most influential, however, seems to be the ability for people to work remotely. Large, high-cost metropolitan areas with the highest percentage of workers who could work remotely saw the largest increase in population.
The likelihood that the surge in teleworking during the pandemic will result in continued brain drain from large, expensive subways remains a topic of debate.
The Cleveland Fed estimates that around 17 million people who could do jobs remotely live in America’s large, expensive metropolitan areas. When these workers move, the money they spend moves with them, boosting the local economy in the places where they end up.
Whitaker constructed some hypothetical scenarios to get an idea of the potential impact that less costly regions could expect if they attracted some of this workforce. In one, he assumes that a region will succeed in attracting 2.5 percent of the remote workers who live in large, expensive metros.
Such an accomplishment would be a boon to metropolitan Pittsburgh, where pre-pandemic job growth was tepid and the workforce continues to be shockingly low. The number of teleworkers moving to the area would be equivalent to 16.5 years of pre-pandemic employment growth, according to Whitaker’s calculations.
Until now, the number of people who have moved in from high-cost subways has been too few to make much of a difference in the places they move to. In most regions, including Pittsburgh, growths during the 2020 pandemic months were less than 1 percent of their workforce. “When this becomes a big phenomenon, it is only just beginning,” said Whitaker.