There’s evidence of a talent shift from cities like New York and L.A. to large Sunbelt metros in red and purple states. But it will do little to ease spatial inequality.
Tax cuts are typically couched in economic terms, but they have clear political aims and implications. Much ink has already been spilled on how the Trump tax cuts are designed to undermine blue states and cities. Costs will rise considerably in these already expensive places since residents will no longer be able to deduct their high state and local tax bills and the interest on their mortgages for pricey homes.
In a recent New York Times op-ed, Will Wilkinson of the Niskanen Center argued that the long-term result of the cuts may be to unwittingly undermine the GOP’s advantage on the electoral map, by encouraging a new migration of talented people who will gradually turn red or purple states like Florida, Texas, Arizona, Georgia, and North Carolina into blue states. “The tax act’s ceiling on deductions is likely to make many blue-state metro areas even more expensive—at least in the short run,” Wilkinson wrote. “With the Republican changes to the tax code, the high-cost dynamic that has effectively redistributed some probable Democratic voters from left-leaning to right-leaning states will be thrown into overdrive.” This is compounded by the effects of the corporate tax cut, which could drive new investment and job creation in red states, where each dollar goes further.
The maps below from LinkedIn help provide an empirical handle on the issue. The first map shows the cities that gained the most workers in January 2018.
Large Sunbelt cities such as Houston, Dallas, and Phoenix are growing jobs and attracting workers at a much faster clip than New York or San Francisco, according to the report. But the biggest winners last year were Sunbelt knowledge hubs like Austin, Charlotte, Tampa, Jacksonville, and West Palm Beach, as well as blue-state cities like Seattle and Portland.
The next couple of maps track where red state–bound workers are coming from.
Let’s start with Atlanta. It saw its biggest gains from New York, and also drew workers from Chicago, Philadelphia, and Miami as well as smaller cities in Georgia and the Southeast.
Dallas gained workers from New York, Los Angeles, and Chicago, and also from Atlanta, Houston, Lubbock, and Bryan–College Station, not to mention Hyderabad, India.
But the story gets a bit more complicated when we look specifically at out-migration from big, blue, superstar cities. These workers are heading not only to other expensive blue-state knowledge hubs, but also to less expensive red-state cities.
Take a look at Los Angeles. L.A. has lost people to Dallas, Austin, Phoenix, Nashville, and Denver. The number-one place it has lost people to is Las Vegas. But numbers two and three are the liberal blue bastions of Seattle and even more expensive San Francisco. Interestingly, L.A. has gained the most workers from New York, Chicago, and Boston.
Next, consider New York. While its workers are heading to cities like Dallas, Atlanta, Raleigh, Charlotte, Tampa, and West Palm Beach, New York lost the most workers to other expensive coastal cities like L.A., San Francisco, and Seattle.
The chart below (also from LinkedIn) sheds additional light on the flows of people between blue-state and red-state cities today. The chart shows the top paths for highly skilled software engineers who have the potential to make a big impact on urban economies. These paths are essentially between the Bay Area, L.A., New York, and Boston. Simply put, when it comes to this prized talent pool, expensive blue-state cities “trade” a lot of workers with each other.
So what does this all mean?
Ultimately, there is some evidence of a talent shift from expensive coastal cities like New York, San Francisco, and L.A. to large Sunbelt metros in red and purple states. Over time, this transition may even be accelerated by Trump’s tax bill. Still, such a shift will do little to change America’s deepening spatial inequality.
Most of the shift is, and will continue to be, among big cities. It is either a trade from one big liberal city to another or to a booming red-state metro, such as Atlanta, Dallas, Miami, Austin, or North Carolina’s Research Triangle. Those areas may be less expensive for knowledge workers and professionals to live in than New York, San Francisco, L.A., Boston, or D.C., but they are not exactly bargains.
Indeed, some of them, like Houston and Austin, have levels of inequality and economic segregation—what I have dubbed the “new urban crisis”—that rival their expensive coastal peers. Not to mention that Miami, Atlanta, Houston, and Dallas are hubs of some of the largest megaregions in the world, with economies that rank among the 25 largest in the world, bigger than Australia, Switzerland, or Hong Kong.
The ultimate consequence of the Trump tax cuts will be to shift talent from large, super-expensive coastal metros to large, expensive, blue metros in red states. The map will look a little different, but it will still be incredibly uneven and unequal. In fact, the backlash that has already registered in our national politics is likely to cause an even greater earthquake in the politics of these increasingly cosmopolitan Sunbelt states in the future.