Shift in U.S. Job Creation: A Move from Coastal Cities to Sunbelt and Midwest

In a significant shift in the American job market, new employment opportunities are increasingly found not in the traditional economic hubs of the coasts but in the Sunbelt and Midwest regions. This change, outlined in a recent analysis by the Economic Innovation Group (EIG), highlights how skyrocketing housing costs in cities like San Francisco, New York, and Boston are driving jobs to areas with more affordable living costs.

According to the EIG report, cities such as Gainesville, Georgia, and Hilton Head Island, South Carolina, are now leading in job creation, overtaking the historically dominant coastal metropolises. This marks a stark departure from past trends where cities like Los Angeles and Seattle saw rapid job growth. Now, places in the Midwest and inland cities of the Northeast, such as Wenatchee, Washington, and Lansing, Michigan, are also experiencing stable increases in employment.

The shift is relatively recent, emerging strongly over the past year but roots back to the geographic and economic reshuffling triggered by the pandemic. As the cost of living in coastal cities continues to climb, the economic center of gravity in the U.S. is moving southward and toward the interior.

One of the key factors driving this trend is the lower average earnings in these rising job markets. These cities attract new jobs because they offer a lower cost of living, primarily due to more affordable housing. This has made them increasingly appealing both to workers and employers. “Employers are following where people want to live and where they can afford to live,” noted August Benzow, research lead at EIG and author of the report. Moreover, employers find financial benefits in these regions, such as cheaper office spaces and other incentives, which add to the attractiveness of relocating jobs.

The analysis also points to a slowdown in the technology sector as a catalyst for the redistribution of jobs. However, this shift is not limited to tech; it affects various industries, thereby increasing opportunities in professional services, retail, and other service sectors across these emerging cities. It is important to note that the data reflects the location of the employers and does not account for remote workers who may live elsewhere but work for companies based in these burgeoning regions.

Further supporting these findings is a Gusto analysis of over 300,000 small and medium-sized companies, which shows that from April 2022 to December 2023, hiring in smaller and medium-sized cities has risen, while major coastal cities have seen a decline. This trend underscores the ongoing economic and geographic reshuffle post-2020.

Additionally, negative perceptions about safety and public order in the richest coastal cities have also contributed to this shift. Benzow said that the perception of certain places as highly desirable has shifted since the pandemic, with some justification for the change while acknowledging that not all aspects of it are justified.

This migration of jobs from the coasts to the Sunbelt and Midwest is reshaping where Americans live and work, signaling a potential long-term change in the landscape of U.S. employment. As more people and businesses move to these regions, the effects on local economies, real estate, and community development are profound, promising a new era of regional economic hubs in the United States.

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