What Today’s Talent Migration Really Means for Small to Mid-Sized Cities: Part II

Part II: The Cities Making a Case for Incentivizing Migration

In our first blog entry in this series, we placed a popular pandemic migration narrative under the microscope asking, Have people really been leaving the big city for small-town America? As much as we wanted to believe it, our analysis settled on a slightly different description of recent trends: while people are moving out of places like New York and San Francisco (as they always have), they are moving into places that are still among the largest in the country. More specifically, domestic migration in 2020 benefited sprawling cities in the Sun Belt, the kind that offer spacious single-family homes alongside urban culture and entertainment options. In short, this wave has been widely characterized by a change in scenery rather than a wholesale lifestyle change.

Given the complex problems facing the country’s largest urban areas, the fact that Americans are trading one big city for another seems like a sub-optimal outcome of pandemic migration patterns. On one hand, it’s great that migration is relieving some of the pressure on affordability, space, and infrastructure in overcrowded metros. On the other, doesn’t concentrating growth around a handful of “it” cities across the country literally shift housing, employment, and public works issues down the road? Right now, large cities like Austin, Tampa, and Charlotte may be enjoying the influx of talent and culture, but their citizens, new and old, are having to adjust to byproducts of sustained growth such as higher car traffic, increasing gentrification, tax hikes, etc. Soon, those byproducts will threaten the exact characteristics that made those cities attractive in the first place, and people will move on to the next “it” city. Rinse and repeat.

Such is the great irony of the “untethered,” “hyper-mobile” talent migration: though people can live and work anywhere with an Internet connection, they still choose to move to the same places. So even when a smaller city does become the place to be, the results are far from ideal. Just ask Bozeman, Montana — population fifty thousand. The home of Montana State University, a ski recreation destination, and recent hotbed of tech startups was inundated with transplants last year. Today, a housing crisis is in full effect, as new arrivals with big city jobs bid up the price for existing housing while locals with less spending power have moved farther away from the city center, taking up temporary residence within RVs, or become homeless altogether.

As with every other aspect of the economy, unfettered free will in the domestic migration market is bound to cause inefficiencies. However, if this current cycle of pandemic moves is any indication of what’s to come, it’s time to start introducing a sense of balance into a process that appears to be mostly driven by hype, or worse, panic.

Some cities and regions already have noteworthy solutions: Topeka, Tulsa, Savannah, and Northwest Arkansas (among others) have introduced relocation incentives to draw remote talent to their respective areas. All of these innovative programs share a basic concept — offer money and other perks to remote workers willing to set up shop in their towns’ coffee shops and co-working spaces. To dig deeper, let’s consider the New York Times headline-grabbing Life Works Here initiative by the Northwest Arkansas Council as a prime example.

With support from the Walton Family Foundation (yes, the Walton Family of Walmart fame), the Council put out a call for talent to move to the region in exchange for $10,000 in cash and either (a) a street or mountain bike to explore the area or (b) an annual membership to a local arts and culture institution. For the chosen few who get to make the move (the Council reportedly received close to thirty thousand applications), that’s a great deal! The cash incentive defrays moving costs and leaves a little left over for the first-month’s rent, and the bike or membership invites newcomers to integrate into their new community in a way that feels natural. This second objective — assimilation — is perhaps the more important of the two for the long-term success of these initiatives. Though program participants typically commit to living in an area for a year or two, the goal should be for them to stay indefinitely, helping to build the relationships and businesses that are the hallmark of thriving communities.

Admittedly, as splashy as these programs are, they are far from the norm compared to corporate relocation incentives. Which begs the question, why haven’t more governments and economic development organizations begun to incentivize talent relocation? Cities and states across the country give tax breaks to firms to come to their area, and these deals often range from one to several hundred millions of dollars. By comparison, redistributing talent fairly among communities that could use an injection of new ideas, energy, and income seems to be a much less expensive pursuit. Ideally, it wouldn’t take hundreds of new transplants to revive a small town, just a small cohort interested in seeing their abilities make the biggest difference.

In that vein of thought, a large-scale solution to the clusters that form through natural migration could rely on a program at the state or federal level that identifies communities in need of a talent boost and offers tax incentives to people who move there. Cities and towns would be classified according to their need and capacity (in terms of housing and amenities), and each would be given a set amount of remote talent relocation passes to offer prospective movers. Local governments and organizations would also be tasked with developing programs aimed at welcoming and integrating transplants, encouraging relationship-building, and providing avenues for entrepreneurship. In return, transplants would receive a base tax credit along with additional incentives like more substantial credits for buying a home or starting a business in their new community than they would get elsewhere.

For the new trend in talent migration to truly benefit small cities and towns, more radical approaches than “wait-and-see where everyone goes” are in order. We know that big cities have their appeal, but we also know that there are thirty thousand people who would like to move to Northwest Arkansas for $10,000 and a mountain bike. There is demand to live in places with charm, open space, and slow-paced lifestyle, but many people don’t have enough knowledge (or incentive!) to consider all their options and take the step of relocating. It seems like they simply need a little guidance and a nudge.