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In the wake of COVID, rising populations are shifting out of states like New York and California and moving to previously less-popular landscapes. The biggest beneficiaries of the post-pandemic economy have been states in the American South, including Texas and Florida, which has seen the fastest GDP growth of any state since the start of COVID, at more than a 20% increase.

What is driving these shifts in economic geography? Economist Joseph Politano points out that the most obvious factor is the increasing remote work possibilities. Some of the biggest states to lose residents have been dense, urbanized, unaffordable areas, and some of the biggest winners have been less dense, suburban, more affordable areas. People, when given the flexibility to tele-work, choose places that are more spacious suburban states than they did before the pandemic.

California and New York are going to have to reform a lot of their policies around housing, construction, and transportation if they want to compete in this new economy. And if they don’t, the exodus to states like Texas and Florida will only continue.

JOSEPH POLITANO: Since COVID, there's been a lot of migration happening within the United States, and some areas are booming, and some areas are losing out.

- 'The California exodus continues.'

- 'Cities are losing population.'

- 'As Americans are moving in mass to the south.'

- You may have moved within your city or to a different city, you probably noticed some of your neighbors moving out or maybe moving in, and those shifts have really reverberated throughout the entire U.S. economy in ways that are radically reshaping the geography of U.S. jobs and the geography of U.S. growth. So first, we're gonna talk about where, then we're gonna talk about when- Why, yes.

- [Producer] Why, yes.

- So first, we're gonna talk about where, then we're gonna talk about why. Some of the biggest beneficiaries of the post-pandemic economy have been states in the American South. And the two biggest examples of that are Texas and Florida. Florida actually has the fastest GDP growth of any state in the union since the start of COVID, more than a 20% increase. Texas is not far behind. They've had a GDP increase of more than 14% since the start of COVID. Both those states have seen jobs increase by 9% overall. On their own, those states are the size of mid-size European economies, and they're growing as fast as rapidly industrializing nations. For example, Texas' economy grew 5.6% through 2023. That's faster than even China, which only grew at 5.2% by comparison- that's a lot for states as big as Florida and Texas. States in the Rocky Mountains have also seen really rapid growth. That includes places like Idaho, Utah, Arizona, Colorado, which have seen extremely fast GDP growth and rapid job gains as remote work enables people to move to those states. On the Pacific Coast, California has had very fast GDP growth, faster than the nation as a whole. Even though the tech boom throughout the pandemic has really helped the state, it's lagged behind in terms of job growth. Washington State has also seen really rapid GDP growth, thanks in large part to the tech boom, but with a bit of stronger job growth than California. And Oregon lags a little bit behind both. The Northeast and Midwest, by contrast, have been falling behind a bit. Illinois and New York, in particular, have only barely recovered the jobs that they lost during COVID, and have had pretty weak GDP growth. There are some bright spots: Indiana's GDP has grown more than 8% since the start of the pandemic, while Maine's has grown by more than 11%. But the region, as a whole, is struggling a bit. I am trying to think, is there a big state that I, like, didn't mention? And not really. Ohio people will be mad at me, but that's fine. So what's driving these shifts in economic geography? The big obvious one is remote work. Some of the biggest losers have been dense, urbanized, unaffordable areas. And some of the biggest winners have been less dense, suburban, more affordable areas. People, when given the flexibility to tele-work, pick places that are more spacious suburban states than they did before the pandemic. That includes places like Utah and Arizona, but also places like Maine. Do keep in mind, affordability isn't set in a vacuum. Another big shift caused by the pandemic was migration to states that allow more housing construction than others. Housing construction is a big part of the reason why states like Florida and Texas are booming, and states like New York and California are struggling. Florida and Texas build tens of thousands more units a year than either New York or California. They're some of the fastest builders, even on a per-capita basis, in the nation. Another important part of this is the dissolution, or at least the weakening of a lot of economic clusters that dominated pre-pandemic America. For example, before the pandemic, about 19% of all tech jobs were located in California. And as soon as the pandemic hit, this share started dropping, and it started dropping really rapidly. And for some specific industries like software publishing, it's near some of the lowest levels on record. Other industries are also spreading out from their historical hubs, think finance from New York or movies from Los Angeles. But let's zoom in on tech in California, and in the Bay Area in particular. In early COVID when the tech industry was booming, it didn't matter so much that California was losing ground to other states. The Bay Area had some of the fastest GDP growth in the nation, and hiring was still really rapid. But when the tech industry slowed down as interest rates rose and the tech-cession began, it meant California went from a smaller slice of a growing pie to losing outright. And the loss of tech jobs has cost California and the Bay Area a lot. The state depends on IPOs and tech pay for a lot of income tax revenue, and localities are really dependent on office space and other commercial districts for local sales tax and property tax revenue. That's drying up as more tech workers are leaving the Bay Area. And the big destination has been Texas, followed by New York, Florida, and Washington State. All states that have tech hubs of their own, like Austin, like Seattle, like New York, but have had more affordable housing and build more than San Francisco itself. San Francisco has one of the lowest construction rates in the country, and is thus one of the most unaffordable cities on the planet. But despite losing ground to other states, California still has a really big advantage at the very top end of the tech industry. The best jobs, the best companies are still in Silicon Valley. California's problem isn't that it's economically unsuccessful, it's that it fails to include everyone in its economic success. The states become so unaffordable that people have to leave for more accessible, less expensive locations. States like California and New York are gonna have to reform a lot of their policies around housing, construction, and transportation if they want to compete in this new economy. And if they don't, the out-migration to states like Texas and Florida is only gonna continue.

- [Producer] Do you wanna talk about any other states?

- You can't say anything about states without somebody getting mad at you, and being like, "What about my home state?" So you gotta accept that that's gonna happen.