From the WaPo (click on link to see some good comments too):

Americans have been migrating from coastal states such as New York and California to Sunbelt mainstays such as Texas for quite some time now. But why? Are wealthy New Yorkers fleeing from oppressive tax rates? Are poorer residents in cities such as San Francisco being priced out?

Alon Levy sifts through the IRS data to get a better sense of who are actually packing their bags. And most of the migration, it turns out, appears to involve middle-class families who are seeking affordable housing: “The people moving to the Sunbelt,” he concludes, “really are being priced out.”

A few noteworthy tidbits in Levy’s data: First, richer coastal residents, when they do leave, tend to migrate to other coastal states, not to the Sunbelt, suggesting that high taxes aren’t necessarily scaring them off.

Second, in a state like California, the households that depart tend to be slightly bigger than households coming in—but still much smaller than the average household. As Levy notes, “This is only partially consistent with the explanation that those regions attract singles and [childless couples] and turn away families.”

Still, the main conclusion seems to be that housing policies on the coasts that make it harder to build and hence keep prices high are driving middle-class families southward. But why should California care?

Ryan Avent, whose new book, “The Gated City,” makes the economic case for less-restrictive housing policies, offers a case study. In the 1990s, sky-high home prices appeared to have put a major crimp on the dot-com boom in Silicon Valley, as housing costs rose faster than wages and forced workers to leave the area. That, in turn, “reduced the potential economic impact of the tech boom” and—because those tech workers were unlikely to be quite as productive outside Silicon Valley—“reduced national productivity.”


Click here: a case study, for an excerpt from his book. Here’s an excerpt from the excerpt:

And what did that mean for the American economy? The workers that moved elsewhere didn’t give up working. They found employment in other metropolitan areas, many of which developed thriving tech sectors. Those sectors weren’t fallow fields for new firm creation; entrepreneurship rates, remember, were higher nationally than in the Bay Area. But what the economics of metropolitan geography tell us is that many small collections of firms will often be less productive and less innovative than fewer, larger firm clusters.

The forces that repelled workers from Silicon Valley, which was the intellectual heart of the country’s tech industry, reduced the potential economic impact of the tech boom. And in a not unimportant side effect, it reduced national productivity and total compensation in the economy.

During one of the great innovative periods in America’s recent history, high housing costs poured a bucket of cold water on the nation’s entrepreneurial capacity. That’s a problem. And what’s especially troubling about this example is that it wasn’t an isolated incident.

On the contrary, the same forces that drove workers away from Silicon Valley during the tech boom appear to operate in a systematic fashion, undermining the productive potential of America’s great cities and holding back the country’s job creation machine. For two decades now, the country’s internal migration has amounted to a move away from productivity, and toward stagnation.

By now, the American economy should have come farther, developed more online business models, and created more jobs. The internet has been underexploited, if you can believe it. We have been wasting years and opportunities — in part because of things like the price of a 3 bedroom house in Santa Clara.

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