Global Trend

Moving South

America is on the verge of a great migration that is affecting where people will live and how companies will profit. As futurist Dr. Jim Taylor points out in American Demographics, the U.S. has been the site of two previous major migrations.

The first migration, the relentless push from East to West, started in the 1690s and continued into the 1850s, when the entire nation was settled. The second migration, inspired by the Great Depression of 1929, lasted into the late 1970s; during that period, people from the South moved North in search of factory jobs, and farmers and office workers in the Midwest moved further west to find better land and better jobs.

Now, the third great American migration has started. According to U.S. Census statistics contained in the report, “Population Trends in Metropolitan Areas and Central Cities,” from 1990 to 1998, the population in the cities in the entire Northeast Region of the U.S. dropped by 2 percent, and by 0.3 percent in the Midwest Region. At the same time, the population in southern cities grew by 5.3 percent. Overall, the 10 fastest-growing cities were all located in the South or the West.

Specifically, Temecula, California grew by 63 percent. Las Vegas, Nevada grew by 56 percent. Scottsdale, Arizona and Rogers, Arkansas, each grew by 50 percent. And the following cities each grew between 38 and 48 percent: Nampa, Idaho; Conway, Arkansas; Laredo, Texas; Port St. Lucie, Florida; Mission, Texas; and San Marcos, Texas.

What is fascinating about these fast-growing cities is that they are not attracting highly educated people. There is very little overlap between the top 10 cities in growth and the 25 cities that have attracted people with college degrees from other cities. In fact, by contrast, Las Vegas, which is the fastest-growing city, is first in the country in gaining more high school dropouts than college graduates.

Why is this so? University of Michigan demographics expert William H. Frey told the Washington Post, “Really fast-growing places, like Las Vegas and Phoenix, have needs not associated with college education, like the construction industry and service workers for retirement communities.”

For example, Las Vegas increased its non-farm employment by 77 percent between 1993 and 2003. According to USA Today, the city is creating jobs in retail, service, construction, and manufacturing, as workers are needed to build houses for retirees, deal blackjack in casinos for gamblers, and clean hotel rooms for tourists.

Meanwhile, in Phoenix, the health-care industry is booming, thanks to the city’s popularity among retired people. The fourth-largest employer in Phoenix is doctors’ offices.

In a related trend, northern cities are suffering a “brain drain” of talented young people with college degrees, the Brookings Institution found. Not all of these educated people are moving South, but they are abandoning the Rust Belt and relocating to places like Austin, Atlanta, Boston, Denver, Minneapolis, San Diego, San Francisco, Seattle, and Raleigh-Durham, North Carolina.

The big losers of the brain drain are Baltimore, Buffalo, Cleveland, Detroit, Hartford, Milwaukee, Miami, Newark, Pittsburgh, St. Louis, and Stockton, California.

The Brookings Institution’s Paul Gottlieb explained in the report, “Labor Supply Pressures and the Brain Drain: Signs from Census 2000,” “While Atlanta, Austin, and Raleigh-Durham stand out as talent magnets in the fast-growing Sun Belt, that region as a whole is not yet the nation’s main depository of human capital.”

This is leading to a fascinating division of the country into four parts:

1. The consolidation of talent in a few northern “brain gain” cities like Seattle and Boston.

2. A hollowing out of talent at northern Rust Belt cities like Cleveland and Detroit.

3. Cities in the South and West that are growing rapidly with lower-educated workers, like Las Vegas.

4. The growth of southern cities that attract talented people with high-tech job opportunities and top research universities like Atlanta, Austin, and Raleigh-Durham.

According to Edward Glaeser, a professor of economics at Harvard University, two ingredients are essential for a city to prosper in today’s economy: intelligence and sunshine. The best scenario is for a city in the south to have a labor force in which a high percentage of people have college degrees.

At the same time, people who were born in the South and then moved North are retiring and moving back to their birthplace. Of the U.S. population of 294 million people, about 75 million people are over the age of 50, and 35 million are between 40 and 50. These people are contemplating where they will spend their retirement years, and an increasingly popular choice is to head south.

U.S. Census Bureau statistics reveal that between 1973 and 2003, the percentage of the population 65 and over that is living in the South increased from 29 percent to 34 percent. But that’s just the beginning.

According to Taylor, “As many as three-quarters of the people pondering retirement have established a good reason to head for America below the 35th parallel. And this may mean as many as 50 million emigres to the South over the next 20 years . . . Imagine drawing a line from Sun Luis Obispo, California to Cape Hatteras, North Carolina, and shifting three out of four people who are pre- and post-retirement south of that line. That process is now well underway.”

Among the reasons for the migration South are:

- A lower cost of living.
- A warmer climate.
- A simpler lifestyle.
Real estate brokers in California have been aware of this trend for more than a year. In 2003, for the first time in the 20 years that a San Francisco real estate agency tracked relocations, more home sellers in the study moved out of California than moved elsewhere within the state. One popular destination is Arizona, where many California businesses have moved. For example, DHL transferred some of its staff from San Ramon, California to a new data center in Scottsdale, Arizona.

The San Francisco Chronicle profiled a family that sold its house in the Bay Area for $700,000 ? and bought a larger, better home in Arizona for $460,000. Another family sold a 900-square-foot house on a 50-by-100-foot lot in California for $450,000 ? then spent $70,000 less for a 4,000-square-foot dwelling on three acres in Tucson.

Using a cost of living calculator on the Realtor.com web site, a homeowner with a salary of $200,000 in San Francisco would need to earn only about half as much ? $102,000 ? to maintain the same standard of living in Scottsdale. In Tucson, it would cost only $92,000, and Phoenix a mere $90,000.

The Brookings Institution studied census data and concluded that nine of the top 10 destinations for “domestic migration” ? that is, U.S. residents moving to other U.S. locations ? were in the South, with Phoenix, Atlanta, and Las Vegas leading the list. According to the Los Angeles Times, the two cities that lost the most residents were New York and Los Angeles, even though they gained the most from immigration.

Among the smaller cities that can expect rapid growth as the result of the migration are:

Savannah, Georgia

Scottsdale, Arizona

Tucson, Arizona

Asheville, North Carolina

San Diego, California

Santa Fe, New Mexico

Corpus Christi, Texas

Looking ahead, we are confident in forecasting the following four developments:

First, as 30 million Americans move to the South, northeast cities will feel the impact. In metropolises like Detroit, Milwaukee, Cleveland, and Philadelphia, the real estate market will lose value as supply exceeds demand for housing; the economy will continue to slide as talented people flee to “brain gain” cities; and the tax base will shrink, causing a shortfall for cities that are already facing budget shortages.

Second, the wave of people moving to the South will also put a strain on the resources there, while also creating lucrative opportunities. The transplants to the South will demand health-care services; cultural activities; golf courses; fine restaurants; and large, affordable homes. This means that the most profitable businesses will be those that provide services for retired people who are still healthy and active, and accustomed to the amenities of northern cities.

Third, fueled by the mass migration and public investments, many industries will flourish in the southern states. The automobile industry has already moved many of its plants from the North to the South. Many of the nation’s high-tech, bio-pharma, and oil companies are based in the South. And, Taylor reminds us, it is “home to advanced development of fabric, plastics, chemicals, [and] advanced materials.”

Fourth, expect to see an increase in the number of people living in gated communities. The U.S. Census Bureau’s 2001 American Housing Survey found that roughly 7 million American households, or 6 percent of the U.S. population, already live in gated communities. They are increasingly common in the South and West, particularly in Arizona, Southern California, Texas, and Florida. University of Toronto economics professor David Foot connects the rise in gated communities with the aging of the Baby Boomers. “What happens generically as you get older is that you’re more concerned about crime. You’ve got more to lose because you’ve accumulated more in your lifetime,” he told the Toronto Star. “Once you get up into your 60s, you want to live among people you can trust who are usually people just like yourself, and that’s a homogenous gated community.”

References List :
1. American Demographics, September 2004, "Manifest Destiny 3.0," by Dr. Jim Taylor. ⓒ Copyright 2004 by Primedia Business Magazines & Media. All rights reserved.2. To access the report "Population Trends in Metropolitan Areas and Central Cities," visit the U.S. Census’ website at: www.census.gov/prod/2000pubs/p25-1133.pdf3. The Washington Post, November 9, 2003, Brain-Gain Cities Attract Educated Young," by Blaine Harden. ⓒ Copyright 2003 by The Washington Post. All rights reserved.4. USA Today, July 28, 2003, "Sunshine, Tax Structures Spark Jobs, Prompt Growth Spurts," by Barbara Hagenbaugh. ⓒ Copyright 2003 by USA today, a division of Gannett Co., Inc. All rights reserved.5. To access the report "Labor Supply Pressures and the ‘Brain Drain,’" visit the Brookings Institution’s website at: www.brookings.edu/dybdocroot/es/urban/publications/20040116_Gottlieb.pdf6. The Fort-Worth Star ? Telegram, April 19, 2004, "City’s Knowledge Economy Growing," by O.K. Carter. ⓒ Copyright 2004 by The Fort-Worth Star ? Telegram. All rights reserved.7. The San Francisco Chronicle, April 20, 2003, "Some Like It Hot," by Susan Fornoff. ⓒ Copyright 2003 by Hearst Communications, Inc. All rights reserved.8. The Los Angeles Times, October 3, 2003, "Escape from L.A.: It’s a Rainbow," by Scott Martelle. ⓒ Copyright 2003 by The Los Angeles Times. All rights reserved.9. The Toronto Star, January 18, 2003, "Safe and Sound as the Iron Gates Swing Shut," by Prithi Yelaja. ⓒ Copyright 2003 by The Toronto Star. All rights reserved.