High housing costs pushing Americans out of the northeast

Despite what Rick Perry might argue, it’s housing policy that explains growth in southern states

Texas governor Rick Perry will likely run for the US presidency on the basis that he knows how to create prosperity. Photograph: Doug Mills/The New York Times

Texas governor Rick Perry will likely run for the US presidency on the basis that he knows how to create prosperity. Photograph: Doug Mills/The New York Times

Tue, Aug 26, 2014, 13:23

Governor Rick Perry of Texas is running for president again. What are his chances? Will he once again become a punchline? I have absolutely no idea. This isn’t a horserace column.

What I’d like to do, instead, is take advantage of Perry’s ambitions to talk about one of my favourite subjects: inter-regional differences in economic and population growth.

You see while Perry’s hardline stances and religiosity may be selling points for the Republican Party’s base, his national appeal, if any, will have to rest on claims that he knows how to create prosperity.

And it’s true that Texas has had faster job growth than the rest of the country. So have other Sunbelt states with conservative governments. The question, however, is why?

The answer from the right is, of course, that it’s all about avoiding regulations that interfere with business and keeping taxes on rich people low, thereby encouraging job-creators to do their thing.

But it turns out that there are big problems with this story, quite aside from the habit that economists pushing this line have of getting their facts wrong.

To see the problems, let’s tell a tale of three cities.

One of these cities is the place those of us who live in its orbit tend to call simply “the city”. And these days it’s a place that’s doing pretty well on a number of fronts. But despite the inflow of immigrants and hipsters, enough people are still moving out of greater New York – a metropolitan area that, according to the census, extends into Pennsylvania on one side and Connecticut on the other – that its overall population rose less than 5 per cent between 2000 and 2012.

Over the same period greater Atlanta’s population grew 27 per cent, and greater Houston’s grew almost 30 per cent.

America’s centre of gravity is shifting south and west. But why?

Is it, as people like Perry assert, because pro-business, pro-wealthy policies like those he favours mean opportunity for everyone? If that were the case we’d expect all those job opportunities to cause rising wages in the Sunbelt, wages that attract ambitious people away from moribund blue states.

It turns out, however, that wages in the places within the United States attracting the most migrants are typically lower than in the places those migrants come from, suggesting that the places Americans are leaving actually have higher productivity and more job opportunities than the places they’re going to.

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