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America is the land of opportunists. Beginning with the nation’s earliest settlers, the population has always pressed for greener pastures. The Westward Expansion, The Gold Rush, The Great Migration, The Dust Bowl, The New Great Migration; we have had so many migration events that we have had to give them their own monikers. But this American trait of leaving home in search of fortune (or in fear of persecution) seems to be ending. A recent study conducted by the Census Bureau and Harvard University has found that nearly six in 10 young adults live within 10 miles of where they grew up and eight in 10 live within 100 miles.
These stats seem to contradict the migration trends that we just witnessed during the height of the pandemic. But they are not really the same thing. During the pandemic, we saw adults and their families relocate. This study is looking particularly at how willing younger adults are to leave the area where their family is based.
There are a few possible explanations for this change in attitude. One is economic. Due to rising costs of living and skyrocketing prices for university education, many Gen Zers are relying more on their parent’s finances. Another explanation is cultural. Youngsters today create their social bonds online and so might be more dependent on their families for in-person social interaction. Both of these reasons are reflected in the study by the fact that Black and Latino youths are even more likely to live close to their families since both groups tend to be poorer and more family oriented than their white counterparts.
The main reason for a relocation is wage growth. People tend to move to places where they can make more money, hence the growth of New York City in the beginning of the 20th century and of the Bay Area in the 21st. But wage growth was not as big of an influence on youth as you might think.” Consider a case where a commuting zone experiences a $1600 increase in average annual wages,” the report says. “We estimate that this increase in wage growth would, on average, lead to a 1 percent increase in the number of residents.”
The reduced willingness to relocate for better wages has a lot of implications. One is that people’s wealth will be more closely tied to their local economy. As the report explains, “We can think of an individual’s ‘radius of economic opportunity’ as the geographic area within which they might benefit from economic growth. If individuals are highly mobile and highly responsive to wage opportunities, that radius is quite large. If the geographic mobility is limited, that radius may be quite small.”
When it comes to real estate that means that companies in the immediate area are the main contributor of wage growth, so local industries should be considered when investing. The growth of working from home can certainly bring in money from outside companies, but it is important to remember that most workers (at least 60 percent) don’t have jobs that can be done from home. Plus, even of the workers that do work from home, the large majority are still required to come to the office regularly, limiting the distance they can live from their workplace.
There are certainly benefits to America’s youth staying close to home. Strong families can keep many out of trouble. Aging parents, especially those that don’t have the money for senior housing or in-home care, often need their children when their health deteriorates. But all in all, this shift in attitude about moving in search of economic opportunity is probably detrimental. As a parent I have felt the selfish desire to keep my children close when they are old enough to leave home. But, that thought is not enough to overcome the guilt I would feel if I knew I was holding them back from a lucrative and/or meaningful career. America was built by people who wanted more than they were able to find at home and I sincerely hope that that continues to be the case.
Overheard
Resourceful
The Census Bureau has created a really useful website that tracks migration patterns of young adults by city.
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The big news today is that the Fed has announced another .75 percent increase in the base interest rate, leaving many to wonder how much higher they are willing to go. (The Guardian)
A slowdown in lending, rather than a loss of appetite from buyers, is holding back a number of real estate transactions. (WSJ)
The Saudi crown prince just announced his audacious (and in my opinion ridiculous) plans for two giant buildings that would house over 9 million people. (Bloomberg)
