Wednesday, February 14, 2018

Blogger Candidate Forum: Unintended Consequences

http://www.citylab.com; February 4, 2018


Hello Everyone:

Time for another edition of Blogger Candidate Forum.  A couple of agenda items: First, thanks to another federal court ruling, Customs and Immigration Services will continue to accept renewal applications beyond the Trump administration imposed March 5th deadline.  For more information, please go to uscis.gov.   Second, it is almost Mid-Term Election primary season.  If you are registered to vote, good for you, do not forget to vote.  If you are not registered to vote, stop reading and go to USA.gov/register-to-vote.  Speaking of elections, our subject today is the Trump tax cuts and the Electoral Map.

Tax cuts are typically founded in economic terms but, as Richard Florida writes in his CityLab article "How Trump's Tax Cuts Could Change the Electoral Map," " but they have clear policy aims and implications."  A lot of ink has already been spilled over how the Trump tax cuts are aimed at undermining the blue states and cities.  Their common feature is that they already expensive places to live and, under the administration's plan, costs will dramatically rise.  He adds, "...since residents will no longer be able to deduct their high state and local tax bills and the interest on their mortgages for pricey homes."

A recent New York Times op-ed (nytimes.com; Feb. 1, 2018; date accessed Feb. 14, 2018), by Will Wilkinson of the Nishkanen Center, posits that "the long-term result of the cuts may be unwittingly undermine the GOP's advantage on the electoral map, by encouraging new migration of talented people who will gradually turn red or purple states like Florida, Texas, Arizona, Georgia, and North Carolina into blue states."  Mr. Wilkinson writes, 

The tax act's ceiling on deductions is likely to make many blue-state metro areas even more expensive--at least in the short run.... With the Republican changes to the tax code, the high-cost dynamic that has effectively redistributed some probable Democratic voters from left-leaning to right-leaning sates will be thrown into overdrive. (Ibid)

This is compounded by the impact of the corporate tax cut, which powers new job creation and new investment in the red states, where the dollar goes further.

If you go to economicgraph.linkedin.com (Jan. 5, 2018; date accessed Feb. 14, 2018) you can check out a helpful series of maps that provide empirical data on the subject.   The first map presents data on "Cities that Gained the Most Workers" in January of this year.

According to the report, "LinkedIn Workforce Report United States January 2018, major Sunbelt cities such as Houston, Dallas, and Phoenix are creating jobs and attracting workers at a faster pace than New York or San Francisco.  The biggest gains were in Sunbelt knowledge hubs like Austin, Charlotte, Tampa, Jacksonville, and West Palm Beach, as well as typical blue state cities like Seattle and Portland.

The next two maps illustrate where the red-state bound labor force comes from.

Beginning with Atlanta.  It experienced its biggest gains from New York and also attracting workers from Chicago, Philadelphia, and Miami, as well as smaller cities in Georgia and the Southeast.

The city of Dallas drew workers from New York, Los Angeles, and Chicago, also from Atlanta, Houson, Lubbock, Bryan-College Station, and surprisingly, Hyderabad, India.

The story gets a little more complicated when we turn our focus toward "out-migration from big, blue, superstar cities.  These workers are heading not only to other expensive blue-state knowledge hubs, but also less expensive red-state cities."

Taking a look at Blogger's hometown of Los Angeles. Mr. Florida reports, "L.A. has lost people to Dallas, Austin, Phoenix, Nashville, and Denver.  The number-one place it has lost people to is Las Vegas."  Right behind Las Vegas are the liberal bastions of Seattle and, oddly, the vastly more expensive San Francisco.  Just as fascinating, L.A. gained the largest share of workers from New York, Chicago, and Boston.  Must have been mild winters and laid back lifestyle.

Taking a look at New York, for a moment.  Workers leaving the city headed towards Dallas, Atlanta, Raleigh, Charlotte, Tampa,and West Palm Beach.  However, other expensive cities like  Los Angeles, San Francisco, and Seattle experienced the biggest gains in New Yorkers heading west.

Next, we have a chart from business.linkedin.com (Jan. 30, 2018; date accessed Feb. 14, 2018), "7 LinkedIn Data Points That Will Help You Recruit Software Engineers in the U.S.," that tracks the "Top Paths for those that Changed Regions," that provides additional information on the flow of workers between blue and red state cities today.  Richard Florida writes, "The chart shows the top paths for highly skilled software engineers who have the potential to make a big impact on urban economics.  These paths are essentially between the Bay Area [San Francisco and the surrounding area], L.A., New York, and Boston."  Essentially, when it comes to this highly prized labor force, "expensive blue-state cities 'trade' a lot of workers with each other."

Bottom line?

As we have seen, there is evidence of a talent migration from expensive coastal cities like New York and Los Angeles to Sunbelt metropolitans in the red and purple states.  The Trump tax plan may accelerate this trend over time.  Mr. Florida speculates, "Still, such a shift will do little to change America's deepening spatial inequality."

The bulk of this trade is, and will continue, to be between big cities.  It will either be a trade between two big liberal cities, or to a thriving red state metropolitan like Atlanta, Dallas, Miami, Austin, or North Carolina's Research Triangle.  Those areas have a lower cost of living for knowledge based workers and professionals than New York, San Francisco, L.A., Boston, and Washington D.C., but they are not exactly bargains.  Really.

However, Sunbelt cities like Houston and Austin are experiencing levels of inequality and economic, what Mr. Florida refers to as the "new urban crisis," that could give their more pricey coastal peers some serious competition.  Further, Miami, Atlanta, Houston, and Dallas are the hubs of the some of the world's biggest megaregions (citylab.com; March 12, 2014; date accessed Feb. 14, 2018), with economies that are among the 25 largest in the world, larger than Australia, Switzerland, or Hong Kong.

Ultimately, the consequence of the Trump tax cuts will be a migration of talent from the large, extremely expensive coastal metropolitans to large, not-quite-as-expensive blue metropolitans in red states.  The electoral map will look wee different, but will remain very uneven and unequal.  Richard Florida writes, "In fact, the backlash that has already registered in our national politics is likely to cause an even greater earthquake in the politics of these increasingly cosmopolitan Sunbelt states in the future."