During the COVID-19 pandemic, it seemed like everyone knew a colleague fleeing the Bay Area.
Now a new report from the Federal Reserve Bank of Chicago shows how the exodus is growing.
Only Illinois ranked worse than the Golden State in moving pickup trucks heading to the border during the pandemic, according to the report, which focused on moving company data United Van Lines. In 2018-2019, 56% of moves to California were from families fleeing the state. In 2020-2021, this figure has increased to almost 60%.
The state that was by far the biggest draw for California residents? It was Texas, the destination of more than 7,500 California families over the four years of the study, perhaps unsurprising given that Silicon Valley tech giants like Oracle, Tesla and Hewlett Packard Enterprise also moved there.
California also continues to lose residents to Washington, Florida and Virginia, while still attracting fewer movers from those states.
“Our cities have always competed with the suburbs for residents, but now they’re competing with every other part of America,” said Matthew Kahn, a USC urban economics professor and book author. recent on the remote economy. “It’s San Francisco versus Boise, Idaho, or Bozeman, Montana. We have never seen this before.
California’s largest cities have been hemorrhaging regularly since the start of the pandemic. For the first time since 2013, San Jose’s population has fallen below 1 million, and San Francisco’s population has dropped more than 3% in the past two years. Even Los Angeles has seen its population steadily decline during the pandemic. A continued exodus from these cities, experts say, could eventually result in a major upheaval in housing markets, demographics and business landscapes.
Attracting residents from other states isn’t just about bragging about the increasingly bitter rivalry between California Governor Gavin Newsom and the red-state governors of Florida and Texas. It’s about increasing tax revenue, securing more federal funds, and winning seats in Congress. While California lost one congressional seat following the 2020 census, the Lone Star State gained two and the Sunshine State added another.
California’s struggle to keep its people off the road is nothing new. But the acceleration is the product of a series of pandemic-related changes in the job market that have seen an increasingly flexible workforce disperse across the country, said Daryl Fairweather, chief economist of the real estate brokerage firm Redfin.
Tech hubs like Silicon Valley are at the center of the crisis, she said, as remote work opportunities coupled with rising housing costs drive young workers away. In Santa Clara County, soaring rents have not been stemmed by the pandemic, rising another 6.3% in 2021, according to a report by the California Housing Partnership.
“For a very long time, Silicon Valley was where tech workers could earn the highest pay,” Fairweather said, pointing out that unique job opportunities help offset exorbitant housing costs. But once employees start leaving, she says, the effects can intensify. “When your colleagues start working remotely, the benefits of a networking and interaction perspective diminish, and that’s what we’re starting to see.”
While high-profile corporate exits from companies like Oracle and Tesla have grabbed headlines, the most lasting market impacts will come from larger-scale changes to how and where people work. When Twitter announced in March that its more than 5,000 San Francisco-based employees would have the option of working full-time from home “forever,” it confirmed what many experts had already suspected: remote work is here. to stay.
The tech workforce in places like Silicon Valley is most exposed to change. According to a Stanford report by economics professor Nick Bloom and Arjun Ramani, these workers are behind a “doughnut effect” migration that has emptied many major cities, including San Francisco and San Jose. The edges of the doughnuts – the suburbs around cities and the smaller metropolitan areas nearby – are now occupied by hybrid and fully remote workers, who combine to represent half of all employees.
“If you are a technology company and you are hiring, it is very difficult to convince people to work for you. The tech job market is really tight,” Ramani said. “Being remote full-time can be a competitive advantage for many companies that really need it right now.”
An accelerated exodus could also force the hand of California officials who will have to find new ways to attract residents, according to Kahn.
“In the past, job opportunities anchored these cities,” Khan said, pointing to the company’s physical infrastructure and employee travel. “But when workers pull away from corporate headquarters like this, cities need to up their game.”
To stay at the top of the food chain, Kahn said these cities will face broad quality of life challenges, from public safety to pollution to homelessness.
If large-scale releases from the Bay Area continue to gather pace, it could serve as a reset for a region that some say is going through an identity crisis. Once a youth hub, the Bay Area is now grappling with an aging workforce — the median age in Santa Clara County, 37, and San Mateo County, 40, are both significantly higher than in Austin, Texas, where the median age is 34. And despite shifting demographics, housing and rent prices are once again approaching all-time highs in the Bay Area, alienating service workers and fueling the exodus of middle- and upper-income workers.
But the road to establishing sustainable accessibility in the Bay Area, even in the midst of a transformation like this, is long and winding, according to Matt Schwartz, president and CEO of the California Housing Partnership, a group of advocacy dedicated to expanding affordable housing options across the state. Since the population leaving California is mostly high-income tech workers, he said, the only people who will be able to fill their vacancies will be other middle- and upper-income residents.
“It’s easy to assume that just because we have fewer people competing in the rental market as a whole, prices will come down low enough,” Schwartz said. “But for people on fixed incomes, that’s not how things work.”