Rochester’s remote chance

Even before COVID-19 struck, out-migration from some of the largest U.S. cities was an emerging trend. The pandemic accelerated the shift in how and where people work and live, one that a number of experts believe creates an opportunity for midsize and smaller metros to win over those who want less stress and lower costs.

Recent surveys suggest that as many as one-third of U.S. remote workers plan to move in the next year or two. Competition for them is heating up: Tulsa, whose metro population is nearly identical to Rochester’s, has launched a one-year program, Tulsa Remote, that offers $10,000, free desk space and other perks to individuals who have full-time remote employment or are self-employed outside of Oklahoma and are willing to move to Tulsa within the next 12 months.

But is there a risk of overstating the opportunity for metro areas like Tulsa and Rochester? Does the increased acceptance of working from home truly give smaller cities a chance to significantly close the competitive gap with “superstar” cities like San Francisco, New York City, Seattle and Boston?

Time will tell, but data showing migration patterns during the pandemic suggest that remote and hybrid work alone will not make a big difference.

In April, CBRE released an analysis of migration based on U.S. Postal Service data. By examining millions of change-of-address requests, the commercial real estate services firm formed a picture of moves from and to metro areas nationwide. It found no dramatic relocation of population.

“At the metro level, the pandemic accelerated several long-standing migration patterns,” the CBRE report states. “Net move-outs from high-cost coastal cities increased. Anecdotal evidence suggests that many who left these coastal cities may return once the pandemic is over.”

The report adds: “While migration was elevated in 2020, it constituted a relatively insignificant percentage of metro area populations.”

In an article published last month titled “Remote work won’t save the heartland,” a group of Brookings Institution researchers wrote the CBRE analysis showed that “while the outflow of people from dense, high-cost urban metro areas accelerated in 2020, the flows were rather modest in most cases (with the exceptions of the Bay Area, New York, and Seattle). What’s more, most of the moves were short to moderate distances, often to nearby counties—not the nation’s interior.”

Using numbers from the CBRE report, I found migration patterns in the Rochester metro area that told the same story. In 2020, roughly 94,000 people moved to a Rochester residence—and a nearly identical number relocated from a residence here. Both totals were slightly lower than in 2019, when roughly 102,000 left and slightly fewer arrived.

In both years, the vast majority of people moving to a residence in this region—more than 90 percent—came from elsewhere in New York. In fact, some 85 percent in each year relocated within the Rochester MSA. Only 1.8 percent came from the New York City area, followed by 1 percent or less each from Buffalo and Syracuse. (Those three metros had similar percentages as destinations for Rochester-area residents leaving the region.)

The number of relocations to Rochester from the New York City area did increase in 2020, to 1,664 from 1,098 the year before, and the number of people leaving the Rochester area for the Big Apple declined to 720 from 833 in 2019. This represents a net gain of 944 people during the pandemic, compared with a net gain of 265 in 2019—so, in line with CBRE’s observation of an accelerated existing trend, but a very small number in a metro area with a population of more than 1 million. 

A sampling of migration numbers with other coastal elite cities paints a similar picture.

■ Moves from Boston to Rochester in 2020 totaled 287, virtually unchanged from 284 in 2019, while moves to Boston declined slightly, to 281 from 322;

■ Relocations from the San Francisco Bay area to Rochester grew to 145 from 67 in 2019, while moves to the Bay area from Rochester declined to 63 from 82; and

■ Seattle-to-Rochester moves totaled 78, up from 64 in 2019, while the number of Rochesterians relocating to Seattle decreased slightly, from 162 in 2019 to 154 last year.

Along with New York City, these cities accounted for 2,174 moves to Rochester (an increase of 661 compared with 2019) and 1,399 relocations out of our area (a decrease of 181). Still, migration from New York City, the Bay Area, Boston and Seattle accounted for only 2 percent of total Rochester in-migration in 2020—and by far most of those moves came from New York City. 

In other words, Rochester’s gains during the pandemic from these “superstar” cities—the metro areas that have been magnets for skilled workers in technology and other high-growth sectors—has been fractional at best.

U.S. Postal Service data has some limitations when analyzing migration trends, as Jed Kolko noted in a recent New York Times piece he wrote with two co-authors. Kolko, a Rochester native and chief economist at Indeed, in January took part in a Rochester Beacon economic outlook event.

Kolko and his co-authors noted that not everyone files a change-of-address form when moving—in particular, recent college graduates making a first move and households arriving from abroad. Further, the data include both permanent and temporary moves. 

Nonetheless, they concluded that “as disruptive as the pandemic has been in nearly every aspect of life, it doesn’t appear to have altered the underlying forces shaping which places are thriving or struggling. … Data on job growth mirrors this pattern: Most of the places with the biggest job gains (or smallest losses) during the pandemic were booming before the pandemic, too.”

During the Beacon virtual event in January, Kolko made a similar observation. He predicted that remote and hybrid work would continue to be a part of the post-pandemic economy and that, along with continued growth in housing costs in the largest cities, this would benefit more affordable regions that have dynamic labor markets.

“A lot of the growth of smaller cities that we’ll see will be among places that are already growing quickly, places that have already demonstrated a pull towards people who have more flexibility,” Kolko said.

In the Times piece, Kolko and his co-authors also pointed to a separate analysis of address changes. The Federal Reserve Bank of Cleveland, which examined the address changes recorded in credit reports, found patterns similar to those identified by CBRE. But the Cleveland Fed offered another insight.

Its report states that “the declines of in-migration are almost always greater than the increases in out-migration. Out-migration did increase in many urban neighborhoods, but the magnitudes probably would not fit most definitions of an exodus. What is certain is that hundreds of thousands of people who would have moved into an urban neighborhood in a typical year were unwilling or unable to do so in 2020.”

Now, with comparatively high vaccination rates in metros like the San Francisco Bay Area and New York City, young professionals and workers in the tech sector are starting to migrate again to urban cores. And while many companies are embracing hybrid work arrangements, the shift in momentum toward a return to the office is clear.

“For all the discussion of new work patterns and possible relocations for millions of professional workers, fewer and fewer will be fully footloose in the coming years, as remote work settles into a new level that will be higher than the pre-pandemic norm but lower than now,” the Brookings researchers predicted.

Where do these trends leave Rochester, which prior to COVID-19 did not rank among the nation’s high-growth metros?

Brookings recommends a “blocking-and-tackling” approach, focusing on “the kind of conscious, long-term investments that have long been the drivers of local economic growth and high standards of living.” Among the top priorities should be development of a skilled, diverse digital workforce, and investments in education, accessible child care, and other family-friendly policies.

I think Rochester also needs to continue to leverage assets such as its skilled workforce and strength in higher education and research, which seed growth in fields ranging from biotech and life sciences, to food and beverage production, and optics, photonics and imaging. At the same time, our region must find a way to effectively address Rochester’s concentrated urban poverty and chronically underperforming city schools.

Rochester also needs to do a better job of marketing its cost and quality-of-life advantages.

As for remote work, don’t expect it to let loose a flood of young, technology-savvy workers to this region. But an opportunity for local employers remains. The pandemic has shown that working from home in many industries is not only possible but can be highly productive. Going forward, openness to flexible work arrangements can help businesses recruit and retain top employees, no matter where they are.

Paul Ericson is Rochester Beacon executive editor.