Movement of the World’s Most Precious Resource

Attracting and retaining top talent is essential to business success and local economic prosperity. Companies employ high-skill people for their technical expertise and leadership, key factors that boost innovation and productivity.² Maximizing a workforce’s productive potential, in turn, helps businesses expand, driving local and regional economic growth.³

Often called the world’s most precious resource,⁴ talent is so valuable in part because it is scarce: A finite number of skilled people are present at any place and time, and they are not evenly distributed. In fact, high-skill people tend to live in places with similar attributes. A city with a million residents will have only a fraction of that population of prime working age and an even smaller subset with skills that match the jobs demanded by the economy’s industries. Where there’s a talent shortage, which is common these days, government and business leaders must develop it from the available human capital, which can be difficult and costly, or recruit skilled people from elsewhere. Fortunately for those seeking talent, people are relatively mobile.

To attract skilled people, public and private sector leaders must understand the factors – economic, social and political conditions – that push and pull people and drive relocation, otherwise known as migration theory.⁵ Job opportunities, for instance, may pull workers to a location, while high crime or tax rates may push workers out. These factors have influenced historic migration trends, and they continue to sway where Americans choose to live and work.

In this article, we explore US migration trends in the context of an evolving economic landscape. Analyzing traditional push and pull factors, like job opportunities, social networks and cost of living, we examine dynamics that are particularly salient to today’s workforce, including inflation, housing affordability and the rise of telework. We investigate how these issues differently affect high- and low-income earners, discuss city-level strategies for talent attraction and retention, and emphasize the need for deeper quantitative analysis in a post-pandemic world.

Shifting Domestic Migration Patterns

In 2020, the COVID-19 pandemic disrupted domestic migration patterns – i.e., people moving within the US – which shifted from historic norms.¹ Out-migration from highly populated urban areas accelerated as Americans poured into smaller rural counties.¹ Migration from expensive cities (e.g., New York City and San Francisco) to less expensive metropolises (e.g., Dallas, Boise and Denver) was a distinct trend.⁶ These movements, however, decelerated in 2021 and 2022,¹ when migration from large urban areas to small rural counties slowed.

Relocation from affluent urban areas to rural counties and Sunbelt cities defined early pandemic migration patterns, yet talent pools in affluent urban areas remain comparatively large. Researchers at real estate services firm CBRE found that between 2020 and 2023, the net migration rate (the difference between the number of people entering and leaving divided by the total population) was -0.9% in San Francisco and -0.6% in New York City and Chicago, followed by Boston (-0.4%), Los Angeles (-0.2%) and Washington, D.C. (-0.2%).⁷ Conversely, cities in the Sunbelt, including Austin (4.1%), Tampa (2.6%), Charlotte (2.2%) and Raleigh (1.9%), experienced substantial gains in net migration. Even with positive and sizable growth, however, it would take over 80 years for the size of Austin’s talent pool to rival that of San Francisco’s.⁷

Net Migration Rate

Using US census data, we show that net migration remained negative in many highly populated, affluent cities in the Northeast and on the West Coast in 2023 (Figure 1). In fact, the net migration rate was negative for all our Extended Metropolitan Areas (EMAs) in California and New York, save Albany, NY (0.09%). Meanwhile, all EMAs with a net migration rate above 2% were in the Southeast.

Despite persistent negative migration rates, the pace of out-migration from many affluent urban areas has slowed. In the New York City-Newark EMA, for example, the net migration rate remained negative but improved from -1.25% in 2021 to -0.58% in 2023. This means that approximately 290,000 residents on-net left in 2021 but only 134,000 left in 2023. A similar trend was observed in the Los Angeles EMA, where the net migration rate improved from -1.01% (a loss of nearly 187,000 migrants) in 2021 to -0.57% (a loss of approximately 104,000 migrants) in 2023.

Traditional Drivers of Talent Migration

There is an extensive literature on the determinants of talent migration. Local labor market conditions, such as employment and wage level, have an important role in the decision-making process, but other factors matter, too.⁸ Highly skilled workers, in particular, show preferences for amenities such as cultural opportunities (e.g., theater and museums), restaurants and shopping.⁹ Research has shown that as incomes rise, people value amenities more than raises.¹⁰ A young family earning an income in the high six figures would therefore be more likely to prefer a locale with nice parks, safe neighborhoods and organic grocery stores rather than a 5% increase in wages. In recent years we observe how an area’s climate also influences migrant decisions, as many Americans move to cities with year-round warmth and sun, and an agreeable climate seems to matter more to highly skilled migrants than low-skilled migrants.¹¹

Social networks influence people’s decisions to settle permanently¹² by attracting migrants and contributing to their sense of belonging in a community.¹³ The composition and the number of social ties in a destination city also influence migration decisions. Blood relatives matter more than other types of social linkages, and these connections are a bigger consideration for highly skilled migrants than low-skilled migrants.¹²

“Quality of life” is a catchall phrase that encompasses cost of living, crime rates, quality of public schools and transportation systems, and it has a decisive influence on decision making.¹⁴ Two iconic American cities, New York City and San Francisco, lost talent during the pandemic due to quality of life issues.¹⁴ In a June 2024 survey conducted by Redfield and Wilton Strategies, 34 percent of New Yorkers considered leaving the city, and more than two-thirds of those contemplating a move were motivated by suboptimal quality of life.¹⁵ In the city of San Francisco, the median home price reached approximately $1.4 million in 2019, making it one of the most expensive housing markets in the country.¹⁶ In the first eight months of the COVID-19 pandemic, telework options became more popular, and 90,000 residents, or 10% of the population, opted to relocate.¹⁴

Among the many financial motivators, tax rates have commonly influenced migrant decision making.¹⁷ Recent academic literature indicates that state income taxes are an important predictor of where people live and work. Evidence from 1900 to 2010 shows that the piecemeal introduction of state income tax in the U.S. precipitated substantial out-migration of middle- and high-income individuals from states that implemented the tax.¹⁷

The quality of a new job is an additional consideration for would-be movers. First, candidates seek jobs that offer a salary commensurate with expectations and experience. While job offer packages signal information about an organization’s values and practices, other factors, like benefits and flexibility (e.g., flexible working hours and health insurance) also matter. In December 2023, remote jobs made up 10% of job openings but received 46% of applications.¹⁸ The interest in remote positions was almost five times that of nonremote roles.

Generational Preferences on Where to Settle

Migration patterns and the factors driving these trends differ by generation. Research based on US census data found that Gen X and millennials are fleeing large metropolises like Washington, DC, New York City, and Los Angeles, while Gen Z is moving in.¹⁹ New York City was a top destination among millennials in 2012, but a decade later, more millennials are leaving than arriving.¹⁹

Generational preferences can be attributed in part to life stage.²⁰ Large cities that offer abundant professional opportunities and amenities appeal to Gen Z, while millennials prefer tech hubs and midsize cities that offer a calmer pace of life for young families. Gen Z’s top three destinations in 2022 – Washington, Chicago and Boston¹⁹ – all boast an active nightlife, as well as ample opportunities for networking and professional growth. Top millennial destinations, on the other hand, include tech hubs and less densely populated cities, like Seattle, WA; Austin, TX; and Nashville, TN.¹⁹

The Role of Changing Economic Conditions

Changing economic conditions, including the rise of telework, have contributed to new migration patterns in the US.²¹ The remote-capable share of American workers in remote positions climbed to 70% by Q2 2020, before gradually declining in 2021 and 2022, and plateauing around 27% in Q3 2023.²² While the popularity of remote work declined, the share of workers in hybrid positions increased, reaching 53% in Q2 2024.²²

A Bank of America report explains hybrid work’s significant influence on migration,²³ as flexible work practices contributed to a rise in suburban living across the country. "We expect the ability to [work from home] to remain an incentive for young families to seek out more remote suburban and rural markets where housing may be more affordable," the report contends.

Not all workers, however, have the option to work from home. White-collar workers – who make up about 40% of total payrolls – are more likely to telework than their blue-collar compatriots.²⁴ A study from Pew Research Center found that those with lower incomes and without four-year college degrees were less likely to have jobs that could be done remotely.²⁵

Rising inflation and skyrocketing housing prices also heightened the allure of low-cost communities. A Gallup survey from spring 2024 found that the share of workers who named inflation as their most pressing financial problem increased from 3% in 2020 to 41% in 2024.²⁶ Further, 21% of adults under age 50 listed housing or rental costs as their primary financial concern in 2024. For remote workers in cities with exorbitant housing costs, like San Francisco, relocation provides an improved quality of life through price relief.¹⁴

Out-of-town homebuyers inadvertently contributed to another migration trend: the forced relocation of many middle-class workers.²⁷ As remote workers moved into small and midsize rural communities, middle-class residents such as nurses and teachers were forced to find housing further from their places of work.²⁸ The influx of newcomers has abated since the early pandemic, but the effects of city-to-rural migration persist: Middle-class households were able to afford about half the homes on the market in 2018 but fewer than a quarter of available homes in 2023.²⁹

How Cities Can Attract and Retain Talent

Cities have little or no control over some of the factors that help to attract and retain talent, such as the local climate or the strength of prospective migrants’ social ties to the area. There are perennial opportunities, however, to create environments that broadly appeal to highly skilled workers. Implementing a mix of solutions, cities can cultivate communities that meet the needs of cost-conscious, amenity-seeking Americans, many of whom telework full or part time.

First, cities need to address housing affordability. The quarterly median sales price of homes skyrocketed during the COVID-19 pandemic, reaching record highs in late 2022. The growth of home prices has since decelerated, but steady demand and limited supply have kept costs high.  In spring 2024, 50% of American homeowners and renters struggled to afford their housing payments.³⁰

One key avenue to keep housing prices in check is to build midsize, medium-density housing options (e.g., townhouses, duplexes and apartments) for cost-conscious workers. This type of development can be streamlined by speeding up permit approval times, promoting inclusionary zoning practices that allow medium-density homes to be built in suburban areas, and ensuring that a portion of homes is sold below market value. Access to affordable, appropriately sized, quality housing is especially important for remote and hybrid workers, who spend a substantial amount of time working from home.

Cities can also accommodate talent by strengthening transit options. For the many workers with a hybrid schedule, inexpensive, reliable transportation is essential to their lifestyle. This means having access to well-connected highways and affordable public transportation, especially for those that commute to city centers for work.  

With a rise in suburban living, and a growing number of highly skilled millennials in search of family-friendly communities, cities would also be smart to prioritize neighborhood amenities. These services include opportunities for cultural consumption (e.g., theater and museums), dining establishments and shopping. Desirable features also include green spaces that appeal to parents and their young children. The town of Cary, NC, for example, a suburb of one of the fastest growing economic regions in the country (Raleigh-Durham, NC), recently opened Downtown Cary Park, a seven-acre public space featuring a variety of activities, catering to the community’s highly educated transplants and their children. Likewise, Grand Rapids, MI, a city that’s seen more population growth in recent years than many of its regional peers, is developing a riverfront walkway and park, complete with an amphitheater and retail space.

These strategies provide guidance on how cities can boost local talent, but additional research is needed to determine the dynamic demands of young, high-skill workers. Traditional push and pull factors, like social networks and the quality of a job offer, will always play a role in the decision making of prospective migrants. Yet more analysis is needed to understand the importance of other factors, like hybrid work and elevated housing costs. As part of the American Growth Project, we will address this gap by assessing cost of living, housing affordability, job opportunities, tax policy and other economic factors and their roles in determining where top talent choose to settle.

---

---

• Keyword(s):
• affordable housing 22
• american growth project 46
• migration 16