We mostly (hopefully?) know about “White Flight V1” (as we’ll call it) whereby, in the 50s and 60s, whites left racially-diverse urban centers for racially-homogenous suburbs and exurbs. Conventional argument today is that White Flight never ended — which is borne out in research that people of different races don’t tend to live near each other.
I’d agree with that, but I think it’s going to continue along different lines: less racial (still racial tho) and more financial.
Let’s frame this up
Here’s a relative cost of living map from about mid-2017:
Look for the reddish colors. See where they’re clustered? Not surprising — coastal areas, specifically Northeast corridor and SF/LA/Seattle.
Problem is, this is where some of the “sexier” jobs — Amazon! Silicon Valley! Boston startup scene! The Big Apple! — are now. But from the same article where I got that map:
For example, the New York City metropolitan area had a 2015 RPP of 121.9, which means NYC and its suburbs are about 21.9% more expensive than the national average. Meanwhile, Beckley, West Virginia, had an RPP of 79.7, meaning that goods and services cost just about four-fifths as much as the national average.
TL:DR on this section — it’s expensive to live on the coasts, and less so to live in the middle (although that will eventually change too).
Quick interlude story
Got some friends in Boston. Mid-30s. 1-2 kids.
They buy a house. Had a budget of about $550K. You can’t really get that in Boston, so they end up around $750K with money from each set of parents.
This is the bouncing ball of this decision:
- That parent/grandparent level has less money now — what if they live into their 90s?
- If your budget was 550, you cannot afford a 750 mortgage; you are now scraping
- The argument for staying in Boston is “Our friends are here,” but…
- … with two small children, how often do you see your friends? Is it in the same way?
Imagine if this couple had — and I realize this is a stretch — up and moved to Tulsa. I bet that $750,000 house is about $175,000 max. Make new friends. With the extra money, fly to Boston 4x/year. Have more space.
Obviously only a small percentage of people would be capable of doing something like that, but see how it makes some economic sense?
White Flight II
Understand firm-size wage effect: this is why companies keep your salary down.
Also understand “the stakeholder problem:” this is another reason your salary won’t be that high.
To live a comfortable life in a NYC or Seattle, you need to be making $120,000, I’d argue. You can mess with the numbers and make it work, but that’s a decent baseline.
Fewer and fewer people are making that.
Plus: real estate is more expensive in those areas. HQs are real estate.
So what’s starting to happen?
Tech companies on the west coast are starting to relocate their HQs.
If people love their jobs — or just need their jobs to, well, live — they often relocate with them.
So now you’ve got Salt Lake City as “Silicon Slopes,” right? Or a bunch of tech companies in the Kansas City metro?
Elephant in the room here: coastal cities are close to, well, coasts. There’s a sea level rise concern.
“The B-Corridor”
If you consider I-95 (NE) and I-5, etc. (west coast) as primary economic corridors of the US, I’d argue I-35 is the “B-Corridor.” It’s got a bunch of cities with jobs and decent costs of living — Minneapolis, Wichita, KC, Fort Worth, San Antonio, Austin (less good cost of living).
But the B-Corridor is rising up.
Companies know they can spend less, and employees know they can get more for their white-collar money (at least short-term).
White Flight II in effect?
Thoughts?
Ted but another spot on writeup. Flight out of Taxifornia is going from the “red” areas towards the less blue as you said I-35 Corridor and beyond. I can’t figure out how any two young people (married couple) can make it in at least Southern Taxifornia having to live one place and travel directions for hours to work elsewhere. If they have family $$$ help in housing yes they can start but the pressures mount. Best in my mind if young move to Texas or Florida, Arizona or Nevada. Find a job (pays usually same as Taxifornia) where you can live within 30 miles and not have to sit in 6-8 lanes of Rush hour traffic for hours to get home. Then you can get home at a reasonable time spend time with family, be less stressed and enjoy some of the American Dream that our parents had. Spending hours in traffic is not healthy for a family life. That’s why I am glad my now 25 year old Daughter moved to Tyler, Texas last fall and married. She (a Special ED teacher) and her Husband (a banker) have good opportunity to find a home under 250K with land within 30 miles. Life is chill there, not fast paced and you can do things in the evening.
I’ve been to a bar in Tyler.
Sometimes moving to a lower-cost of living area with cheaper real estate isn’t worth it. I’m from NYC and I moved to Lubbock, TX. The cost of living here is at least half of NYC and you can buy a house for $60,000, but it’s just not desirable for someone like me. There are no good paying jobs in this area and most jobs are in food service. So yes, while my expenses are less, there’s absolutely no chance of career progression or jobs paying more than $15/hr here. (ex. Nurses here are paid $20/hr.)
I would much rather move to a bigger city like Boston, where job opportunities and higher salaries are abundant, and be a lifetime renter in Boston while owning investment rental property in Lubbock. This kind of plan is good for people who don’t plan on living in their own house.
The girl I’m dating is from Lubbock and I see both sides of the issue too.
Annie: Wow NYC to Lubbock, talk about Culture shock, that’s one for sure. Desirable is something that comes into play everywhere and sometimes its more cultural than anything along with one’s personality. I happen to be a BBBWG (Big Bald Beautiful White Guy) who grew up in Michigan but has lived in New York (Hudson Valley) and now for the last 17 years in the heart of a 75% Asian community in the San Gabriel Valley of Southern California. I have a Chinese wife from Taiwan and we have two now adult Children (a Daughter who is 25 and son 23) who were both adopted from China at 1 year of age. The “asian” pressure of the San Gabriel Valley is something to behold and not something our Daughter Shao Lin enjoyed. She attended Cal State Channel Islands in Camarillo in Ventura County graduating in 2016 (it was a much chiller environment) and now lives in East Texas (Tyler) where she married another China adoptee (who is also 25) last November. Tyler is a little like Lubbock housing cheap, quieter than say NYC or Southern California and certainly chill. It suits Shao Lin perfectly, quiet, non pressured, friendly people and she is a Special Education Middle School teacher making as much as she would in Socal but it goes much further. One draw back, they have to make a 2 hour run to Plano each month for real Chinese food but its worth it for them. Annie, Texas is something (regardless of location) something you have to either want or get used to if you did not grow up there and both East or West Coast experiences sometimes don’t prepare you for the experience. I have business interests all over Texas and have been to Lubbock, Amarillo, Midland Odessa, Abilene, Corpus Christi, Laredo etc all which I have enjoyed. If I had grown up in NYC I would suspect I might feel differently. May you find the mix that fits and be happy in that space and environment.
I’m in between Ted and Annie on this one. I think there’s a lot of value in choosing to live somewhere that’s not a major overcrowded metro, but that move shouldn’t necessarily be predicated on the non-major-metro having a lower cost of living.
As Roger notes above, it is also important to consider area culture and whether that meshes with your personality. I’ve lived in 4-5 US cities now, places ranging in size from ~72,000 (my current town) to, well, NYC. A few years back my fiancee and I decided to move to Minneapolis-Saint Paul from NYC as I’d heard it was a great place for young people to build a career (a lot of money in the area and many nonprofits), offered relatively inexpensive housing costs (at least compared to many East Coast metros) and offered a lot of cultural amenities we would surely miss leaving New York. Granted, it’s still a fairly major metro, but not to the extent that NYC is, and how many people in NYC do you know who are dying to move to the Twin Cities?
As I’ve written from time to time here in Ted’s comments section, I did not enjoy my time in the Twin Cities. Culturally, it was night and day from my experience growing up in the NYC suburbs; yeah, maybe my expectations were a little outsized, but there is a different sensibility in that area that does not mesh well with people who have grown up on the coasts. It can be hard to suss that out given the mass amount of gushing thinkpieces on the Web about the Twin Cities and their “progressive” culture; I’m not here to say they aren’t progressive, but that word is defined very differently there than it might be in Providence, RI or Philadelphia. Don’t get me wrong, the Twin Cities a great place to live—for a certain kind of person. I’d advise people to look past the boosters and the big corporate $$ and consider whether they’d truly be happy there.
I now live in Missoula, MT, and while it’s somewhat like the town Annie describes above (not a lot of jobs to choose from, relatively low wages), culturally I do like it here quite a lot, and even if my earning prospects aren’t as high as they would be in other areas, I feel that it’ll be a lot easier for me to find a community here to belong to. I never really had that in the Twin Cities despite my best efforts, and while my life there was materially comfortable, I never felt like I really belonged.
So, in summation–yeah, people should absolutely look at alternative living situations instead of chasing the big-city dream, but at the end of the day I believe it’s important to be true to oneself and choose to live somewhere that makes sense for you and your interests.
Cheers y’all