Talent Migration Is Not as Damaging for Major Markets as Previously Thought

Don’t believe everything you hear anecdotally such as all the buzz that knowledge workers have fled high-cost major U.S. major markets in droves, emptying those cities of talent, especially for tech and finance. 

According to CBRE, there’s a much fuller, more detailed story to share. Three major trends are happening based on data for the year ending February of 2023: High-cost major markets have larger talent pools than most Sun Belt cities; out-migration from the high-cost major markets during the pandemic was relatively minor and has slowed, even reversing in metro New York; and high-cost major markets remain preferred destinations for young tech and finance talent.

The bottom line, according to the report, is that economic and lifestyle considerations were key factors in driving talent migration patterns, affected by how long a person has been in their chosen field. Younger professionals tend to head to higher cost major markets and fast-growing Sun Belt areas based on job prospects, networking possibilities and cultural experiences. Mid-to-late career professionals prioritize lifestyle, including affordable homes, and Sun Belt markets offer a lower cost of living and slower lifestyle pace.

As a percent of total workforce, outflows were also modest in big markets like San Francisco at -0.9%, Chicago -0.6%, Boston at -0.4%, Los Angeles at minus 0.2% and Washington, D.C., at minus -0.2%. New York City had a net outflow of around 47,0000 professionals, a 0.6% decrease. In contrast, migration increased in Sun Belt markets. Austin had a 4.1% increase, followed by Nashville at 2.6%, Tampa at 2.6%, Charlotte at 2.2% and Raleigh at 1.9%. But these numbers aren’t as huge as some have thought, and as the report said, “…at these rates, it would take over 80 years for Austin’s talent pool to reach the size of San Francisco’s.”

In addition, talent migration from the high-cost major markets is slowing for San Francisco, Chicago, Boston and Los Angeles. Washington, D.C., was the only major market with a slightly higher rate of out-migration over the past year ended the same period in February 2023.

For New York City the outflow has even been reversed for the year ending the same period. Dallas-Fort Worth, Charlotte, Tampa, Orlando and Houston are having higher-in-migration in the year ending for this period. Some other markets are having in-migration, too, but in lower numbers such as Austin, Nashville, Denver, Phoenix, Las Vegas, Miami and Atlanta.

Young tech talent with up to six years of experience continues to head to Seattle and San Francisco over the year ending February 2023. More recent grads, those with up to three years of experience, are also headed to Seattle, which had a 15.2% in-migration rate, followed by Austin at 9.7%, San Francisco at 9.1%, Indianapolis at 4.6% and Dallas-Fort Worth at 4.1%. Mid-to-late career tech talent, those with 11-plus years of experience is going to lower cost Sun Belt markets including Austin, Dallas-Fort Worth, Tampa, Raleigh-Durham and Jacksonville. San Francisco saw a minus .4% decrease of this talent pool. Only New York and Chicago had a larger loss of mid-to-late career tech talent during the same period.

Recent grads, those with up to three years of experience migrated at the highest rates to well-established Sun Belt financial centers like Charlotte, Tampa and Nashville and to higher-cost major markets like New York and Chicago over the same period of the year ending February 2023. New York was also among the top five markets for net in-migration of finance talent with four to six and seven to 10 years of experience. But like tech talent, in-bound destinations for mid-to-late career finance talent with 11-plus years of experience are smaller and where it’s happening is smaller, lower-cost markets like Tampa, Jacksonville, Las Vegas, Nashville and Orlando. The top three in-migration markets for finance talent at all experience levels were Charlotte, Tampa and Nashville. New York ranked 11th. 

Another significant conclusion from this data is that companies should focus on migration patterns of the skill sets and experience they need to get the jobs done rather than “just the aggregate population or total workforce.”