Today's post is perhaps a good follow-up to yesterday's post about housing supply in Ontario. Below are a few charts taken from a recent article by Wendell Cox looking at net domestic migration across the US. The takeaway here is that the shift from larger cities to smaller cities seems to be accelerating, following a trend that started before COVID.
The data in these charts is organized according to population and by Core Based Statistical Areas (CBSAs). At the bottom are America's two megacities: New York and Los Angeles. Both have metro areas that exceed 10 million people. As you can, these two city regions have been losing the most people, both in terms of total humans and on a percentage basis. The goldilocks sweet spot seems to be cities in the 500k to 1 million range.
But the most telling figure is probably this one here:
This chart adds up all major metropolitan areas with a population greater than 1 million, and then shows net migration over the last decade. Here you can see when this trend started (around 2016) and how it has been accelerating. In this case, it does appear that COVID added some fuel to the fire. But the question remains: Why is this longer-term trend even happening?
Is it a short-term phenomenon? Is it because once a city reaches a certain size it simply becomes more annoying to live in it and people would prefer to live elsewhere? Or is it more about overall affordability? That is, if we could figure out how to deliver more affordable housing in our cities, could we stymie the bleeding toward smaller and more affordable ones?
I don't know the answers to the questions. But they have been widely debated and I still think they're interesting ones. If all things were equal (or closer to equal), how and where would most people choose to live? Put differently, how much of this is some sort of natural market outcome and how much of it is a direct result of our actions (or inactions)?
The world is increasingly spiky. Inequality is growing and it is increasingly geographic in nature. We know that people tend to make more money in urban areas compared to rural areas – even when they possess the exact same level of education. The returns to being smart and educated are simply greater in cities.
But they also depend on the size of the city. Mark Muro and Jacob Whiton of Brookings recently published data looking at labor market performance – by metro size – from 2009-2015 (right after the financial crisis). What they found is that larger metropolitan areas simply performed better than smaller ones.
In summary:
City size matters because it’s a major influence on city prosperity and adaptability as well as local worker fortunes. Bigger cities are more productive. They are more innovative. They draw better-educated workers by offering higher wages.
The situation is even more pronounced across the pond. According to the New York Times (quote from Richard Florida), a third of Britain’s gross domestic product comes from London alone.
What is far less clear is what should be done to address the decline of some of the smaller cities in America – cities that are stagnating and feeling left behind. But perhaps the first step is acknowledging what has happened and what remains feasible in today’s global economy.
Here is another quote from the above NY Times article:
Mr. Trump’s promise to relieve the pain by reviving the coal and steel industries, by keeping immigrants out of the country and by raising barriers against manufactured imports is only a rhetorical balm to satisfy an angry base seeking to reclaim a prosperous past that is no longer available.
That rhetorical balm.
Share Dialog
Share Dialog
