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Michael Swartz / Dec. 18, 2020

What’s With the Flight From Our Cities?

Urban unrest and COVID caused many Americans to weigh the benefits of the big city against the small town.

It was once sung that if you could make it there, you could make it anywhere. And most of the millions who actually lived in New York City were making it just fine — until the pandemic hit.

Since then, however, things have become drastically different.

A recent study by a “location analytics company” called Unacast estimated that the New York metro area had an outflow of 3.57 million people, which seems extremely high. However, they also estimated an inflow of 3.5 million people, leaving a net loss of 70,000 based on opt-in smartphone data.

Perhaps more important to this narrative, though, was the study’s estimate of $34 billion of net income loss for the city. Simply put: Those who were moving out were more well-off financially than those who were coming in. (Other anecdotal data on year-over-year rents this past fall supports that theory, too.) And while they weren’t going too far — nearly half simply relocated to other areas of New York and New Jersey — the fact that they’d left the city behind meant they were no longer contributing to its tax base.

While this study by Unacast was a clever way to bring attention to itself, it also brought up a salient point echoed in other circles: The bright lights of our big cities seem to have dimmed lately.

Perhaps the primary reason for this exodus was the COVID-induced worker repositioning that companies were forced to make in order to keep their employees healthy. Once workers became more accustomed to doing their jobs from home, many realized that there was no reason to remain in an urban area being hollowed out by pandemic-induced closings of bars, restaurants, sports venues, and other popular gathering spots. As long as they had a reasonable Internet connection, there was nothing wrong with relocating to a second-tier large city like Syracuse or Scranton. And while rents are plummeting in midtown Manhattan — much to the chagrin of developers and government alike — they’re going in the opposite direction in the second-tier cities that have needed this sort of break for awhile.

However, libertarian author Kristin Tate takes the economic reasoning farther. “It is easy to blame the deluge on the coronavirus, but in reality a unique combination of factors heralded the end of the growth in places like New York while introducing population booms in medium-sized cities and suburbs across specific regions of the country,” she writes, adding to the blame, “a plethora of new taxes and regulatory schemes that soak middle- and high-income earners.” Thus, she concludes, “The decline of liberal cities in blue states during a crisis is perhaps the clearest judgment on a raft of poor tax and regulatory policies.”

Regarding these “schemes” Tate refers to, for many years the fiscal appetites of large cities had been fed by wealthy residents who weren’t really hurt by the tax bite because they were able to fully deduct the toll from their federal tax bill. However, the limitation of the SALT (state and local tax) deduction included in the GOP tax cuts in 2017 made higher local taxes less appealing to those who lived in big urban areas in blue states. (Tate later points out that these refugees are moving to formerly red states but, unfortunately, are seemingly voting for the very same tax policies from which they moved away.)

Furthermore, while retirees from the large metro areas have for years been using the high home values and equity they had built up back home to sell out and move to cheaper housing in places like Florida, the Carolinas, or coastal Delaware, the pandemic has helped to broaden that market to telecommuters. In some cases, those who couldn’t afford to buy a house in the New York metro may have received their big break thanks to telecommuting — they can now afford a nice new house just a few hours away, which would have cost them twice as much in the metro area.

Yet while leaving the city has become sensible for fiscal reasons, there’s also an added feeling of security for families who’ve left riot-torn urban areas for smaller towns. There’s much less worry about “autonomous zones” and protests for defunding the police, and the neighborliness and the close-knit community bring a peace of mind that money can’t buy.

The Wuhan flu will one day pass, but we’re unlikely to return to the old normal — for bad and good. If it means Americans return to small-town values where family and community count for more than making lots of money and acquiring lots of stuff, we can count that as a gain.

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