Pandemic Population Shifts, Favoring Affordable Places
Stephan Whitaker listened as speculation that COVID-19 might kindle a profound exodus from urban America intensified as the pandemic dragged on. After all, tens of millions of people were forced to work remotely, leaving them less tethered to the workplace than ever before and freer to move. Whitaker, a policy economist at the Federal Reserve Bank of Cleveland, looked into it.
He found the biggest losers of residents have been large U.S. metro regions that are the most expensive to live in, while smaller places and more affordable large metro regions, such as Pittsburgh, are weathering the storm much better.
Such trends raise intriguing possibilities for Pittsburgh and other regions that struggled to draw people from other places long before the pandemic. “If remote workers in the coming years are able to, and desire to, follow these newly established migration patterns, there is an opportunity for lower-cost regions to attract them and boost their local economies,” Whitaker said.
On the move
Whitaker is among a growing number of researchers who are combing U.S. Census, Postal Service and other data sources for clues about how the pandemic is influencing migration patterns and population trends.
For his analysis, he looked at address changes among 12 million Americans that were reported in data collected by credit bureaus. Changes from April through December 2020 were compared with the average change over the same months in 2017, 2018 and 2019. Regions were grouped by the size of their populations and the cost of housing, using median list price per square foot as the measure.
Large, high-cost metro regions with populations of at least 2 million people continue to lose their luster, the Cleveland Fed analysis suggests. They’ve been losing increasing numbers of residents to other places for nearly a decade. But the pandemic accelerated the trend. And the affordability of other places appears to be an important reason why.
High-cost areas saw 5.6 percent more residents leave for large, low-cost metros last year compared to pre-pandemic years. They saw a 10 percent increase in residents who left and moved to midsize metro areas with populations between 500,000 and 2 million people. They also lost 9 percent more residents to rural areas and small metros with populations under 500,000.
Those who moved during the pandemic were overwhelming people who rent, rather than own their homes. They were mostly young adults. Most didn’t move more than 150 miles away. And most of those who moved did so early in the pandemic, with migration tapering off as the year wore on.
Large, high-cost metros have clearly borne the brunt of their pandemic migration pattern. “If you look the [population] flows to smaller or less-expensive regions, they are at least positive,” Whitaker said. “They may not be significant, but they didn’t go down. It speaks to something shifting during the pandemic that is favoring lower-cost, less populated areas.”
San Francisco and the New York City metro area are among the biggest losers so far. Not only did both lose at least 12 percent more residents to less expensive metro regions last year, they even lost more residents to other high-cost urban areas.
And greater numbers of people leaving were only part of the problem that large and expensive metro neighborhoods are experiencing. Fewer newcomers have been moving in. For most, the number of new residents has dropped at least 8 percent.
“But for the rest of the country — metro areas that are smaller and aren’t high-turnover places — there is a lot less going on,” Whitaker said.
That includes the Pittsburgh metro area.
Over the pandemic months of 2020, the region lost fewer people to those high-cost metros than in previous years. At the same time, fewer residents of those metros moved to Pittsburgh. By the end of the year, net migration showed a slight gain — about the equivalent of 0.20 percent of the region’s workforce, according to Whitaker’s analysis. Cleveland experienced similar trends.
“That is something we saw in past recessions for those metro areas,” he said. “I wouldn’t categorize it as an urban exodus.”
If the heaviest urban migration losses during the pandemic are mostly being felt by large, high-cost metro areas, what does that mean for the others? The answer could depend on the popularity of working remotely in the post-COVID years.
The ebb and flow of urban populations during the pandemic has been broadly influenced by trends in COVID cases and deaths, business closures and remote work, the Cleveland Fed analysis suggests.
The more deaths reported, the more people moved. Places with more small businesses that were able to remain open saw fewer people leave.
But the option for people to work remotely appears to be the most influential. Large, high-cost metro regions that had the highest percentage of workers able to work remotely had the biggest increase in residents moving out.
The likelihood that the surge in remote work during the pandemic will lead to a sustained exodus of workers from large, high-cost metros remains a topic of debate.
Some 17 million people in jobs that could be done remotely live in America’s large, high-cost metros, according to Cleveland Fed estimates. When those workers move, the money they spend moves with them, fueling the local economies in the places they land.
Whitaker constructed a couple of hypothetic scenarios to get an idea of the possible impact that less-costly regions could expect if they gained some of those workers. In one, he assumes a region manages to attract 2.5 percent of the remote workers living in large, high-cost metros.
Such a feat would be a boon to the Pittsburgh metro region, where employment growth was tepid before the pandemic and the labor force remains distressingly low. The number of remote workers moving into the region would equal 16.5 years’ worth of employment growth at the pre-pandemic rate, by Whitaker’s calculations.
So far, the number of people moving from high-cost places metros has been too small to make much of a difference in the places they move to. For most regions, Pittsburgh included, gains during the 2020 pandemic months equaled less than 1 percent of their workforce. “If this is going to be a major phenomenon, it is just getting started,” Whitaker said.