Is Big Tech Moving Out?
Oracle, Hewlett Packard, and now Elon himself have all announced plans to relocate their headquarters to Texas. What's more, New York–based Goldman Sachs, Citadel, Elliott Management, and Blackstone are all moving operations from the Big Apple to the Sunshine State. All in all, many high profile companies are looking to avoid the high housing costs, taxes, and strict regulations of large cities.
But how significant are these transitions to smaller cities? Are people actually fleeing in droves or are these companies simply catching headlines for advantageous headquarter swaps?
To answer this question, we introduce the concept of a balance of trade between states. This concept is used frequently in international economics, and to measure trade surpluses and deficits between countries. We hear quite a lot about the US trade deficit with China, but we do not hear as much about the California trade deficit with Texas.
By looking at imports minus the exports of people between states, relative to the total exchange, we measure the total trade balance for each state:
Most states have a negative trade balance of employees, as many large states, like New York, Washington, California, and Texas have continued to attract talent from the rest of the country.
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Of the surplus states, we can further see where they’re gaining talent from or losing talent to:
- Despite the recent attention paid to Texas and Florida, Washington state has been the most effective at attracting talent. The tech center of Seattle continues to grow unbounded.
- The largest and most urbanized states continue to gain their share from smaller and less dense states. It will be interesting to see if this trend continues in a post-COVID world.
- Even though New York has a strongly positive balance of trade, it loses an enormous amount of talent to California every year. Likewise, California loses large amounts of its talent to Washington and Texas.
If you have any ideas of other metrics to track or would like to hear more, please feel free to reach out.