The Daily - America’s Big City Brain Drain

Episode Date: June 2, 2023

In recent years, well-paid and college-educated Americans have shed major cities like New York, San Francisco and Washington for places like Philadelphia or Birmingham, Ala.Emily Badger, who writes about cities and urban policy for The Upshot at The New York Times, explains what is driving the change, and what it means for the future of the American city.Guest: Emily Badger, a cities and urban policy correspondent for The New York Times.Background reading: Coastal cities have long been too expensive for low-wage workers. Now college graduates are leaving, too.More renters are moving out of big cities. But where are they going?For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

Hello? Hi, is this Laura? Yeah, this is she. Hi, Laura. This is Alex Stern from The New York Times. How's it going? Hey, going pretty good. How about you? Good. My name is Laura Newman. I am 33 years old, and I was born and raised in Brooklyn. I moved back to New York after graduating from college and I moved in with my mom because I could not afford even to have roommates in an apartment.

Or I guess I could have afforded it, but it was like I had this goal already of wanting to open a bar or restaurant and I knew that I had to be saving money. to open a bar or restaurant. And I knew that I had to be saving money. I was being paid $35,000 a year in 2012. And I was working 90 hours a week. I didn't want to give up on the stream. But every time I felt like my goal is to hit this amount safe. Every time I hit it, I would then check like real estate and other expenses of businesses and every cost would have increased so much that it was like I wasn't moving forward with the amount I was saving. Like I was keeping up with inflation and that was it. I was getting involved in bartender events that brought people in from around the country and encouraged networking. And I would talk to people that lived in other cities and we would start

discussing things like the cost of living in terms of what they were spending on rent, groceries, and it was mind-blowing to me. And I think that's when I started seriously considering leaving New York, even though as someone who was born in St. Vincent's Hospital, the idea of leaving New York City was like illegal. I currently reside in Birmingham, Alabama, and I currently own two bars. One is called Neon Moon, and it's kind of like a honky-tonk, five-star dive bar, like nightclub deal. The other one is called Queens Park, and it's a cocktail bar. It is funny, though, because there are a lot of New York transplants here in Birmingham,

and I pretty much constantly have people being like, I feel like I'm in New York when I'm in your bar. Thank you. In 2020, we purchased a historic 1910 Craftsman home. It has a swimming pool. I'm in the backyard right now sitting by the pool. It's like the most incredibly landscaped oasis. Trees everywhere. We have plants everywhere and this like gorgeous covered patio with like lights and fans. I have a fire pit. I own a car. We have four dogs, which I've always wanted. We're trying for kids, which I always wanted, but never thought I could afford living in New York. so it was something I just decided I would never have. After a lifetime of being in New York and imagining I would never be able to have things and just kind of writing

them out of my life plan, it's kind of awesome to have these things and have the stability of these things. From the New York Times, I'm Sabrina Tavernisi, and this is The Daily. In recent years, college-educated Americans have begun leaving big coastal cities like New York, San Francisco, and Washington, D.C. in large numbers. Today, my colleague Emily Badger explains what is driving this profound change and what it means for the future of the American city. It's Friday, June 2nd. Emily, welcome to the show. Yeah, thanks for having me, Sabrina.

So, Emily, you've just come out with a story about where Americans are moving and specifically how they're moving out of big, expensive coastal cities like the one I'm sitting in right now, New York City. Tell me what you found. What's the story? Yeah, so we're particularly interested in places like New York, Washington, where I'm sitting, San Francisco, Los Angeles, Seattle. These are major metro areas that have been sort of disproportionately responsible for a lot of economic activity in America. They have a ton of college-educated workers there. They're producing a lot of innovation. There's a lot of startup activity that happens in these places. They're very important for the American economy. And it's been clear for a long time that as these places have become more expensive, lower wage workers have been moving away from them. So, you know, if you're a bus driver or a janitor or a teaching

aide or a home health assistant, you know, those kinds of jobs that don't require a college degree, those people have been moving away from these places. And it makes total sense that they've been doing that. It's incredibly expensive to try to live in these communities on a relatively low wage job. But the thing that we see much more recently in the census data that we've analyzed, and the thing that's really sort of surprising to us, is that we're now starting to see college educated workers moving away from these places too. So now we're talking about lawyers, consultants, engineers, people who work for tech companies. They've been kind of the engine driving the economy in these big coastal metros. And they're incredibly important.

They're sort of the lifeblood of these places. And to see them starting to move away, it's both sort of surprising and it also kind of bodes badly for the future of these places. And when we talk to some of those people who have moved away and ask them about, you know, what's causing you to leave, so many of them describe the cost of living, describe the cost of housing in particular. And that sort of suggests that these big, expensive metros have kind of reached this tipping point where even people who have really good jobs, even people who earn six figures, are starting to feel like they can't live there comfortably anymore. So this is actually a phenomenon that I've noticed in my own life, in my own friend circle.

People leaving New York, you know, going to other cities like Philadelphia, like Houston. But I noticed your story and thought, okay, this is actually a national thing. It's not just people in my own friend circle. So I want you, Emily, to really take me through what you found. Like, what exactly is going on here? And when did it start? So if we think about the kinds of cities that I'm talking about, economists call them superstar cities, sort of alluding to the fact that they have this kind of disproportionate economic might. They became that way over time because they developed these

sort of economic hubs and specialties. So, you know, if you're a college graduate graduating from school in Iowa or in Illinois and you want to work in finance, you move to New York. If you want to work in the tech industry, you move to San Francisco. Maybe you move to Seattle. If you want to be a defense contractor or work in government, you move to Washington. And that very concentration of college graduates is part of what makes these places so economically powerful. Economists would argue that, you know, when we have all of these workers located in the same place, they become more productive. They trade ideas with each other. You know, they invent things

together that they might not have invented if they were, you know, sitting back home working by themselves in Iowa. Right. So basically, there's a multiplier effect about these superstar cities, as you're calling them, right? You know, they're cities that are greater than the sum of their parts. Totally. And it's not good just for the cities. It's also good for the whole economy of the United States. That is exactly how economists think this works. So when do we see this start to change based on your reporting? So let's use San Francisco as an example. We start to see this shift happen about a decade ago. These college-educated workers in San Francisco who we've been talking about are starting to move away in larger numbers. Every year, more and more of them are moving away.

They're still moving into San Francisco because San Francisco remains a magnet for workers like this, but increasingly they're moving away until we sort of reach this point where now more of them are moving away than moving in. Got it. A tipping point so that there's actually a net loss. In other words, more people leaving than coming.

Yes. The San Francisco area becomes a net exporter of college graduates to other parts of the country. And, you know, if this were happening in like a Rust Belt community or a smaller community in Middle America, we would call that brain drain, right? Right. We're not accustomed to thinking of these big, powerful coastal metros as experiencing brain drain, but that's basically what we see in this migration data. So if these big cities are exporting these people, who's importing them? What places are they going to? Places like Salt Lake

City, Austin, Houston, Dallas, Tampa, Atlanta. You know, these places that are growing, they're still prosperous. You've got relatively good job prospects there. But crucially, they're more affordable than these big coastal cities. But why are people actually making this move from these coastal cities in this moment in particular? I mean, housing prices have been very high for a long time in New York and San Francisco and all these places, right? Like, is it a pandemic thing? So the pandemic arrives and it really kind of supercharges these patterns that we have seen building over the past decade or so. And I think one of the big reasons why that happens is that a lot of these college-educated workers in expensive coastal cities are given this new option for the very first time of working remotely.

And, you know, for many people, that means working remotely permanently, that you could totally relocate to another part of the country and keep your job. And for some workers, you know, this means they now have this new amazing deal they can take advantage of, which is collect a San Francisco paycheck, but pay a Dallas mortgage, you know, pay a Phoenix mortgage. And that's an incredible deal if you can get it. Right. Like who wouldn't want to do that? People were doing these arbitrage things with their paychecks and their mortgages during the pandemic. We watched it even among our own colleagues. Yeah. I mean, the circumstances of the pandemic and the rise of remote work are sort of perfectly tailored to take this trend that had been building over the past decade and just make it take off. Austin is a great example of a place that's been a beneficiary of this trend.

You know, about a third of the workers who move into Austin during the pandemic in this migration data say that they are working remotely now that they've moved there. I mean, that is an incredible number of people who are basically remote work migrants. That's amazing. A third of all workers who moved to Austin. Yeah. And what's been happening in Austin to attract all of these workers

is basically the other half of the story of these migration trends that we're looking at. So we see on the one hand, these incredibly expensive coastal cities are sort of pushing people away. But then we see places like Austin and Salt Lake City that are attracting them. And something has been changing in those places too over the past decade, over the past 20 years even. I mean,

they have redeveloped their downtowns. You know, they have added new restaurants. It is now possible to get, you know, really good Thai food in lots of other communities in America. They have developed their own little kind of tech hubs so that if you're a tech worker, it's totally plausible that you could find a job in Austin. It's plausible that if you decide you don't want to do that job in Austin, you can find another job in Austin doing the same thing because there's a lot of that kind of stuff there now. But probably the single most important thing that this next tier of cities are doing, you know, and the thing that comes up the most often when I interview people who've made these moves and I ask them about why they've moved is affordability and housing

affordability in particular. I mean, you will hear tech workers, engineers, consultants say, I wanted to become a homeowner and I would never be able to do that in San Francisco. As of this spring in the San Francisco metro area, you know, the median cost to buy a single family home is like $1.25 million. Wow, the median cost, so the typical home. The typical home, and it's probably a tiny home, and it has like one bathroom and maybe two bedrooms. Thanks, San Francisco. Again and again, people bring up housing affordability, and that is fundamentally an incredibly important advantage that this next tier of cities has over the San Francisco's, the New York's, the Washington's. Their housing is much more affordable and it's more affordable because they've been building a lot of it.

And that's simply not true of San Francisco. Yeah. I mean, I was in Phoenix at some point last year and I was just amazed at like how much was going up in the suburbs and around the city. The metro area was just booming with building. Yeah, these are places that are growing, and they're happy to have people coming, and they're working very hard to accommodate more population that are moving in. So it sounds like cities like Phoenix are, in effect, solving San Francisco's affordable housing crisis. That is exactly what's going on. San Francisco's affordable housing crisis. That is exactly what's going on.

So this is great for places like Austin, Nashville, Salt Lake City. But it's not so great for San Francisco or Washington and New York. All of this movement of college-educated workers away from those places is also going to bring with it some big problems. We'll be right back. This is Diana Nguyen. I'm a producer on The Daily at The New York Times. I guess just to start, could you say your name and your age and your job? So my name is Eduardo Lero. I'm 45 years old. I work as a consultant. I feel like I lived many lives in New York over the time that I was there. But really, the last seven, eight years of my life in New York was spent really as a doctoral candidate and then as a teacher in the New York City public schools. I've never hated New York a day in my life, and I still don't.

I was the only place in the world that I felt where I naturally fit. There's a part of me that is only ever calm in New York a day in my life and I still don't. I was the only place in the world that I felt where I naturally fit. There's a part of me that is only ever calm in New York. Partly because I'm a gay man and we're completely safe for the most part and assimilated. I'm a museum junkie and I go to all the shows

and the galleries. I love the art of New York, the culture of New York, the incredible diversity of New York City. Like, I lived in Queens, and on my block, I mean, there are 20 languages, and it was a short little block. You're always, like, aware that it's a cost-benefit analysis,

that everything in New York that you love comes with a really steep cost. And what happened to me over time was that I became increasingly unwilling to pay those costs. And when I say cost, I don't necessarily only mean economic costs in terms of dollars. I mean like the grueling grind of like, let's say laundry. So what does it feel like for a 40 year old person to walk up and down three flights of stairs to schlep their laundry to the laundromat three blocks away, like in the rain or the snow or whatever. And it's sort of the same schlep going to work. It's the same schlep going to the grocery store. So in order to live in New York, you have to do, and if you don't have money,

like a lot, a lot of money, every single thing that a regular American would be able to outsource with like a washing machine or a dishwasher or any of the amenities that people just kind of have, all of that labor is on you. Can you tell me about when you started really entertaining the idea of moving and what put me in that headspace? Well, it was actually really, really sudden because I had thought about it. Like every summer I would go, like, or whatever, I'd always visit my family. I'd be like, oh, I miss them. Oh, Minneapolis is so nice. And then we go back to New York and I'd be like, oh, you're crazy, girl. You can't go back there. But then what happened was that I got this job at the firm that I'm at now. And basically, it was really easy to move around. And I was working

remotely. And they were like, yeah, sure, you can live where you want to live. So I live in Minneapolis and I work remotely. And so do I miss the city in so many ways? Yes. that I have a lot more time to be a human being in my own life and body when I'm not in New York. I just wrote a novel. I always wanted to write a novel. I wrote a novel. Why is this important? Because while you're grinding it out in New York, what are you not doing? You're saying you wrote a novel in Minneapolis because you have time. Yes.

What is it about? It's, well, okay, so this is going in the... Yeah, so actually, here's the tagline. It's Jane Austen for gay people. And the ultimate version of reality where there's no homophobia. There's no homophobia. What are the things that you love about where you live? So this weekend, I rode like 150 miles on my road bike.

And it was like pure bliss and peace. I had people over to my house twice this weekend. I don't think I ever had a guest in New York, like a dinner guest. Right, like I have people over at my house now and they have parking. Tell me about your apartment. It's a condo that I bought two years ago. I think it's like 1,400 square feet, which when I left, I was like, oh my God, it's so big. Now I just feel like I need like twice as much space. But that's what happens when you leave a kennel. You eventually just want

to run free. I don't have to be constantly engaged in a high level of intense stress and anxiety just in order to sort of get through the day. So it's calm, it's clean, it's beautiful. And I have a lot of amenities. So Emily, people are really liking their new lives in these smaller cities. But you mentioned that this new migration pattern was creating problems for the bigger cities that they left behind. What are those problems? So big cities around the country

have basically been competing to lure these workers for the last two generations or so. To now be losing that competition in San Francisco, in New York, in Washington means that there's economic activity that you're going to be losing out on. It's tax revenue you're going to be losing out on. And the money that highly educated people spend is money that lower-wage service sector workers earn in restaurants and in bars and things like that. And so to start to take away these people who, as we previously

talked about them, they're the lifeblood of the economy of these places. Economic development officials really don't want to see this. Mayors really don't want to see this. Right. If you're the mayor of New York or San Francisco, this is very worrying. Yes. What are they doing about it? Like, what action are they taking? So the single most important action that they could be taking,

because so many of these people are citing the cost of housing as a reason for why they're leaving, is that these places could be building a lot more housing. And fundamentally, at the end of the day, that's not really happening. They're not doing that. The state of California is trying to do some things in order to solve its housing crisis, but for the most part, you know, these places for decades have not been building enough housing, and there's very little to suggest that all of a sudden they're going to correct for that problem. But why are they not taking action? I mean, it kind of goes against all sense, right? The politics of housing in America in some ways don't make sense. And part of that is because if you're already a homeowner in the San Francisco area, you have made a ton of money off that housing market that I described has doubled in value over the last decade. And you don't want a lot more housing

to be built because you want to maintain the value of your property. And so kind of baked into the politics of housing in these places is a lot of incumbent homeowners and incumbent voters who simply are opposed to building more housing. They elect people who don't want to build more housing. You know, New York State has been having a big conversation about this these days. You know, the governor had proposed a number of ideas in her budget this year that would have encouraged local communities to build more housing in order to solve this housing crisis. But there was too much opposition and all of those ideas basically sort of died in the state legislature this year.

So what does this add up to, Emily? Like, where does it leave us? So one of the things that happens is that geographic inequality in America gets worse. And basically what that means is that the inequality between places is widening. New York is pulling away from other parts of the country. San Francisco is pulling away from other parts of the country because increasingly only the richest of the rich can really afford to live there and be comfortable. And economists are very concerned not just about inequality between people, but inequality between places. And why? It's just not healthy for the country to have so much affluence clustered in a small number of places and only a small number of people get to take advantage of all of the resources that are produced from that affluence. You know, only a small number of people get to go to the cultural institutions that New York has,

get to take advantage of the hospitals that New York built, get to take advantage of the restaurant industry that New York has. To come back to the sort of economist argument about what's happening in these places with the multiplier effect that they have, you know, an economist would say that we are better off if as many people as possible can live in the most productive, most prosperous places. Like, literally, the American GDP gets larger if more people are working and producing things in the most productive places. But also, we've just spent the past 20 minutes talking about how that's not possible because no one can afford to live in those places. So respectfully, economists, by that logic, couldn't all the people moving to Austin and Denver and Nashville create more of these

productive hubs in other places? And wouldn't that be good for the economy? Like, why does it have to be these super cities? Yeah, no, that is a really great question. And I think it is entirely possible in the years to come that Austin, Denver, Phoenix, that they may come to occupy the same kind of special role in the economy that New York and San Francisco and Los Angeles have occupied for generations. You know, they may be the new engines of the American economy, and they will have stronger and stronger multiplier effects in the years ahead. And that would be good for the country. I mean, it would be good for economic activity and educated workers to sort of disperse to more places, to move away from the coast, to move into the interior,

you know, for more parts of the country to feel like they're benefiting from the prosperity of this kind of knowledge worker economy that college educated workers are driving. So all of that would be good, but it would be a lot better if it weren't a housing crisis that was driving that growth in these other places. I mean, we would be much better off as a country if we were both fostering greater prosperity in more parts of the country and enabling more people to move into the places that are already prosperous. And Emily, what about the question of affordability in a Nashville, for example, after all of these tech workers have moved in? I mean, presumably, for example, after all of these tech workers have moved in? I mean, presumably, they bring some of these problems with them, right? Like, they're exporting the same things that are plaguing New

York and San Francisco to some degree. Yeah, I mean, we've mostly been talking about how it's good for Nashville or Austin or Salt Lake City to be receiving these college-educated workers. But there's an asterisk to that. And that's that as those higher income workers who have higher paying jobs are moving in, they're adding to the pressure in the local housing market. They are pushing up the price of housing. And so if you're a college educated worker in New York and you're looking at Nashville, you're thinking, oh my gosh, it's so much more affordable for me to live there. But if you are a longtime resident of Nashville and you are watching that New Yorker move in with their New York salary that they're bringing to the local housing market, you're thinking, oh my gosh,

you know, my community is becoming more expensive. It's potentially going to become unaffordable. Right. New Yorker, get out. Yeah. Yeah. I mean, it's true that this group of people brings both a lot of benefits and they bring some challenges too. But it's not inevitable that, you know, Nashville acquires all of the affordability problems of New York or San Francisco. This next tier of places has basically reached a crossroads where now the mayors and the public officials and the voters there, they have an opportunity to decide, we don't want to be the next San Francisco. And, you know, the first question is like, okay, well, how do you do that? A big part of the answer to that is like, well, make sure you continue to make room for more

people to come in. And that's going to mean building more housing. It's going to mean thinking about building explicitly affordable housing. And then as for the workers themselves who are making these moves, you know, the people that we're talking about at the end of the day, like they're not making these moves thinking about this necessarily the way mayors are going to need to think about it or the way economists have been thinking about it. I mean, they're talking about these really kind of intimate, lovely details about quality of life and what it means for them to have quality of life. You know, they're talking about things like, I finally don't have to share a bathroom with other people anymore. I don't have to have roommates. I can have big Texas-sized furniture, which I could never have in a New York apartment. Or, you know,

just sort of these other little details like, you know, knowing your neighbors in a way that they didn't in these big cities or having access to peace and quiet or having spare time for hobbies. All of these sort of little details that add up to people feeling like they just have a better quality of life than they did in these really expensive places. So to hell with efficiency. We want to be in a place that gives us joy. Yeah. And increasingly, these college-educated workers have more choices of where they could go in order to find that.

Emily, thank you. Thanks for having me. We'll be right back. Here's what else you should know today. On this vote, the yeas are 63, the nays are 36. The 60-vote threshold having been achieved, the bill is passed. On Thursday night, the Senate passed a bipartisan bill to lift the debt ceiling and avoid an unprecedented default by the U.S. government. The vote mirrored that in the House, which approved the measure on Wednesday, with Democrats pushing it by the U.S. government. The vote mirrored that in the House, which approved the measure on Wednesday,

with Democrats pushing it over the line. Despite the fact that it was a Republican bill, 44 Senate Democrats backed it, compared with just 17 Republicans. Now, Democrats are feeling very good tonight. We've saved the country from the scourge of default, even though there were some on the other side who wanted default, wanted to lead us to default. President Biden is expected to sign the bill before Monday, when the government is scheduled to hit the debt ceiling and run out

of money to pay its bills. And Arizona has determined that there is not enough groundwater for all of the housing construction that has already been approved in the Phoenix area and will stop developers from building some new subdivisions. The decision by state officials is a sign of looming trouble in the West, where overuse, drought and climate change are straining water supplies. water supplies. Phoenix is currently the fastest growing metro area in the country, and Maricopa County, where Phoenix is located, gets more than half of its water supply from finite, precious groundwater. Today's episode was produced by Nina Feldman, Alex Stern, Diana Nguyen, Carlos Prieto, and Muj Zaydi. It was edited by Lisa Chow, contains original music by Dan Powell, Marian Lozano, Sophia Landman, and Alicia Baitube, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Lansford of Wonderly. That's it for The Daily. I'm Sabrina Tavernisi. See you on Monday.