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Market-Based Solutions to Vital Economic Issues
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May 1, 2019

Institute Insights: Migration Dividends: From Driving Economic Development to Creating Equitable Gains

By James H. Johnson, Director of the Urban Investment Strategies Center, and William R. Kenan Jr. Distinguished Professor of Strategy and Entrepreneurship at UNC Kenan-Flagler Business School

North Carolina is a migration magnet. In 2018 alone, more than 87,000 people moved into the state.1 The majority were from affluent urban areas like New York, Seattle, Cambridge and Austin.

This influx of highly educated, comparatively wealthy individuals has changed the landscape of North Carolina, particularly along the urban crescent spanning from Johnston County to Mecklenburg County. Perhaps the most stunning example of how migration has transformed the state is the city of Durham, a once-gritty town that made its name in tobacco and textile manufacturing.

The Durham of the late 20th century, with its abandoned storefronts and empty downtown, since has been transformed into a chic urban landscape of stylish bistros and gleaming high rises. But at what cost?

Some of the recent newcomers have brought substantial migration dividends to Durham, according to Internal Revenue Service (IRS) data that tracks the annual migration of U.S. income tax filers. A migration dividend accrues when the household income of in-migrants from a specific community of origin is greater that the household income of the typical Durham resident. Recent movers to Durham from New York, Boston, and San Diego, for example, had per-capita adjusted gross incomes ranging between $30,000 and $55,000 higher than the typical Durham household.

Sounds like a good thing, right? The influx of cash from this dynamic group of higher-income individuals is largely responsible for downtown Durham’s transformation. Migration dividends have spurred a burgeoning entrepreneurial and creative economy, and allowed the city to make over its moribund commercial center into one of the most sought-after places to live in the country.

But there are also drawbacks to this migration dividend. As newcomers flock to Durham, they are pricing out many of the city’s long-term residents. Not surprising, perhaps, for those on the lowest rungs of the economy or in historically disenfranchised groups.

What is surprising, however, is the growing number of housing insecure and homeless individuals among the working poor. Many are civil servants – teachers, firefighters, police officers – who can no longer afford to live in the very city in which they serve.

These working poor have “played by the rules,” in expectation of living the American dream. Yet the rising cost of housing puts that dream out of reach. Increasingly, Durham’s public servants and lower-wage workers are being priced out of housing into homelessness.

Thus, the challenge facing Durham (and other cities that have seen migration dividends) is not just how to address housing accessibility for the non-working poor, but also for the working poor. And, if real estate prices continue to rise, perhaps for the middle class as well.

The answer, I believe, lies in working to develop an integrative strategy that both celebrates and takes advantage of Durham’s migration dividend and balances it with more inclusive and equitable development. Durham’s renaissance can be considered a success only if it ensures a shared prosperity that benefits all.

1Source: Carolina Population Center, University of North Carolina at Chapel Hill

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