As the COVID-19 pandemic swept through the Bay Area, it seemed like everyone had a coworker who had fled.
According to the Federal Reserve Bank of Chicago, the exodus is increasing momentum.
As a result of United Van Lines data, only Illinois was worse than California when it came to pandemic-related cross-border moving vans, according to the report. In 2018-19, 56% of California’s movers were moving their families out of the state. By 2020-21, that percentage is expected to soar to about 60%.
What was the most popular destination for Californians? Over the four years of the study, more than 7,500 California families chose Texas as their new home, which may come as no surprise given that some of Silicon Valley’s most prominent tech companies, like Oracle, Tesla, and Hewlett-Packard Enterprise, have also made the shift.
Losing residents to other states like Washington and Florida while getting fewer newcomers from other states has been a constant problem for California.
This is the first time in American history that our cities are competing with every other place in the country for citizens, according to a professor of urban economics at USC and the author of a recent book on the remote economy. “It’s either Boise, Idaho, or Bozeman, Montana, against San Francisco. “This is something we’ve never seen before,” he says.
Since the beginning of the pandemic, the population of California’s main cities has steadily decreased. San Jose’s population has fallen below 1 million for the first time since 2013, while San Francisco’s population has fallen more than 3% in the last two years. During the epidemic, even the city of Los Angeles suffered a steady reduction in its population. Experts believe that if the migration continues, it might lead to a substantial shift in housing markets, demographics, and corporate landscapes.
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Gavin Newsom, the governor of California, is engaged in an increasingly heated battle with other red-state governors, such as Rick Perry of Florida and Rick Perry of Texas. Increased tax income, more federal funding, and snatching up congressional seats are all part of the strategy to win back control of Congress. As a consequence of the 2020 Census, California lost one congressional seat, Texas gained two and Florida gained a third.
There is nothing new about California’s battle to prohibit its citizens from driving. According to Daryl Fairweather, chief economist at real estate company Redfin, the acceleration is the result of a host of changes to the employment sector due to the epidemic.
In Silicon Valley and other tech centers, young workers are fleeing because of the remote job prospects and soaring housing expenses, she added. Soaring rents in Santa Clara County have not been slowed down by the pandemic, which is expected to rise by another 6.3% in 2021, according to the California Housing Partnership.
It was for the longest time that Silicon Valley was the best location for IT employees to make their money,” Fairweather said, noting how high housing prices were offset by unique employment options. She warned, though, that if employees start to quit, things might get out of hand. “The benefits of networking and interaction go down when your coworkers start working remotely, and that’s what we’re starting to see.”
In the wake of Oracle and Tesla’s high-profile departures, the most persistent market consequences will come from larger-scale shifts in the way and where people operate. Remote work is here to stay, as Twitter’s announcement in March that its 5,000+ San Francisco-based staff would be able to work full-time from home “forever” revealed.
Workers in high-tech fields in places like Silicon Valley are particularly vulnerable to the trend. These workers are fueling a “donut effect” exodus that has hollowed out several big cities, including San Francisco and San Jose, according to a Stanford paper produced by economics professor Nick Bloom and Arjun Ramani. There are currently more than half of all employees in the suburbs around cities, smaller metro areas, and the surrounding rural areas.
Hiring in the tech industry is difficult because of the difficulty in persuading candidates to work for your company. A tight labor market exists in the technology sector, as Ramani said. “For many companies that need it right now, being able to work remotely full-time might be a competitive advantage.”
According to Kahn, the state’s public leaders may be forced to act if the migration continues at its current pace.
These cities had a strong foundation in the past because of their work opportunities,” Khan said, citing physical corporate infrastructure and employee commutes. “However, communities must step up their game when workers are untethered from corporate headquarters in this way.”
These cities must address a wide range of issues affecting the quality of life for residents, including crime, pollution, and homelessness, according to Kahn, if they want to maintain their position at the top of the heap.
Large-scale departures from the Bay Area could be a reset for a region that some belief is in the midst of a self-identification crisis. While the Bay Area used to be a haven for young professionals, the median age in Santa Clara and San Mateo counties is both 37 and 40 years older than it is in Austin, Texas, where it is 34 years older. Despite the changing demographics, housing and rent costs in the Bay Area are once again at record highs, alienating service workers and fueling the migration of medium and high-income workers.
According to Matt Schwartz, the president, and chief executive of the California Housing Partnership, an advocacy group dedicated to expanding affordable housing options in California, even amid such a transformation, the road to establishing lasting affordability in the Bay Area is long and winding. California’s population is mainly made up of high-earning IT workers, thus they will be the only ones who can fill their vacancies, he said.
“It’s simple to think that prices will drop enough at the bottom end simply because we have fewer individuals competing in the rental market as a whole,” Schwartz said. This isn’t the case for those on a fixed income.