Red States Winning the Post-pandemic Economic Recovery

Driven by mass migrations of both workers and employers, red states have been winning the post-pandemic economic recovery over blue states.  Not really a move because of political preferences, workers left for financial and lifestyle reasons such as cheaper housing, less Covid restrictions and lower taxes.  Biggest winners are Florida, Texas, and North Carolina while California, New York and Illinois have lost the greatest number of residents.  Josh Mitchell, reporter at the WSJ, joins us for how red states have had quicker recoveries.

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Episode Transcript

Speaker 1 (00:00):
It's Monday, Len I'm oscar A mirrors from the Daily
Dive podcast in Los Angeles, and this is reopening America,
driven by mass migrations of both workers and employers. Red
states have been winning the post pandemic economic recovery over
Blue states. Not really a move because of political preferences.
Workers left for financial and lifestyle reasons such as cheaper housing,

(00:22):
less COVID restrictions, and lower taxes. Biggest winners are Florida,
Texas in North Carolina, well California, New York, and Illinois
have lost the greatest number of residents. Josh Mitchell, reporter
at the Wall Street Journal, joined us for how red
states have had quicker recoveries. Thanks for joining us, Josh, Well,
when we're looking at the pandemic recovery, the post pandemic recovery,

(00:45):
a lot of that has changed is kind of the
geography of what's going on with the economy, and we're
looking at red states versus blue states right now. There's
a lot of different things beyond let's say the political
motivations and all that, but we're seeing that a lot
of red states have recovered faster economically than Democratic leaning
blue states. We're looking at people moving away from the

(01:06):
coasts going to the middle of the country and Florida. Florida,
it's one of the big winners throughout all of this. So, Josh,
what are we seeing in the numbers on this? First
of all, if you just look at jobs over the
past couple of years during the pandemic, red states have
gained a greater share of US jobs than blue states have.

(01:27):
And by the way, we define blue states based on
an index that the Cook Political Report uses, which is
based on how states voted in the past to presidential elections,
and so red states have gained more jobs. But not
only that. If you look at a range of things
that help determine what the economy is doing, whether it's

(01:48):
restaurant reservations, whether it's retail sales, whether it's g d P,
red states are recovering much more quickly than blue states have.
And so one of the big things that's driving this
is that a lot of people have simply moved from California,
New York, Illinois, through the middle of the country, Nashville, Texas,

(02:10):
various cities in Texas, and also Florida. And so what
we've seen is this sort of mass migration during the
pandemic of workers as well as employers who are moving
from those blue states to Red states. It's the people
that are moving, buying home, spurring with the local economy
has there. But yeah, those businesses as well, attracting more

(02:33):
workers and all that. So there's a lot of stuff
going on there. And you know kind of what you're saying, right, Florida, Texas,
North Carolina all leading getting more people. States that lost
a lot of people, California, New York, Illinois, And a
lot of this has to be is due to remote
work and the possibilities that happened throughout the pandemic. Right,
a lot of companies said, okay, work from home. A

(02:55):
lot of companies made some of that stuff permanent, really
loud their their employees to move the throughout the country
and be wherever they wanted. And we've heard about that, right,
the great resignation work life balance. Everybody really wanted to
get that perfect life going and they found that in
a lot of these red states. Lower taxes, less COVID restrictions,
that's what that's what they wanted. Yeah, you know, and

(03:17):
just to clarify, you know, some of these things are
pre existing trend. So like, for example, California, you know,
there there were already businesses that were starting to leave
California just because they became too expensive San Francisco. And
this this tends to happen in the broader economy. Things
get too expensive at some point they hit they hit
an reflection point, and then people moved to other places

(03:40):
that are a little bit cheaper, or they moved to
other states, or then they moved to other cities nearby.
And so some of what's happening is exacerbating pre existing trend.
But I think what's important that happened during the pandemic
is any time you moved to a city or an
urban area, you make a calculus as to how much
stuff you're willing to put up with. You know, we

(04:01):
we often complain, and by we I talk about myself,
who who's lived in Washington, d C. You know, for
the past twenty years, we complain about the cost of
living in places like d C. But you know a
lot of people like myself are willing to pay that
because d C has a lot of cool things to
offer that maybe other places don't. And so for years
there was this calculus that workers made which is okay. Look,

(04:24):
if I'm gonna pay this high rent in New York City,
at least I have access to Broadway shows. At least
I have access to a good food scene, you know.
At least I have access to a subway that can
take me to other areas of the city that are fun,
you know, that offer things to explore. But the pandemic
shut down a lot of these cities, and all of
a sudden, the calculus changed. All of a sudden. I

(04:45):
think a lot of people said, wait a minute, why
am I paying all this high rent if now I
no longer have access to the amenities that made the
high cost worth it. And so you you take that.
The calculus changed, and then you had people, a small
but significant part of the population who could suddenly work
from home. And they said, wait a minute, if I
could take my paycheck, if I'm earning one fifty two

(05:06):
hundred thousand in New York or California, I can take
that to Florida, where there's no income tax, where the
housing is cheaper, and I can live like a king.
Especially when you're looking at home prices, right, a lot
of people wanted to leave that bigger home. You can
work from home, have that office in the ten states
to gain the most people in the time pairds were
looking at the typical home cost twenty three less than

(05:27):
a typical home in the ten states that lost the
most residents to these moves. So, I mean, you know
that these home prices, the taxes that you were talking
about right now just huge drivers of these migrations. And
and the companies that followed to right, they're also looking
for those tax breaks that they can get in some
of these states. Yeah, I was talking to some companies
about this, and you know, and they basically said I

(05:48):
talked to a few that were in California and they said, look,
you know, early on, we gave our workers the option
to work from home so they could work from anywhere,
which meant we no longer needed to rent out this
office space for nine employees in Pasadena, California that was
costing us a lot. Let's just run out a much
smaller office in Austin, Texas. Our rent is gonna be
a lot cheaper. You know, all of the costs associated

(06:10):
with keeping offices open is going to be a lot cheaper.
And also we can, you know, better recruit employees around
the country. Who might no longer be willing to live
in California. Now we can give them the option, and
it's gonna help us flying workers in this type jobs market.
So there are there are employers who are also cutting
their own costs through the pandemic. For now, Red States

(06:30):
winning the post pandemic economy. Josh Mitchell, reporter at the
Wall Street Journal, thank you very much for joining us. Sure. Thanks.
Hi'm Oscar Ramiris, and this has been reopening America. Don't
forget the States big news stories. You can check down
on the Daily Dive podcast every mondy through Friday, So
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(06:51):
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