Paying People to Move to Your City Is a Bust

Daniel Block in the Atlantic has a piece examining the impact of subsidy programs designed to lure residents to cities, particularly in an age of remote work. A number of cities, and even the state of Vermont, have started offering subsidies of $10,000 or even more to new residents who move there from out of town. Some of these are tied to remote work, others not. Block details some of these programs:

More than 40 places in the United States are giving people money to relocate, according to the website MakeMyMove. The Shoals, Alabama, will pay you $10,000. Northwest Arkansas will also give you $10,000—plus a free bike. Topeka, Kansas, offers up to $15,000 and $1,000 worth of Jimmy John’s sandwiches. Morgantown, West Virginia, has received a wave of mediaattention by making what may be the most generous offer: a combination of cash grants, free outdoor-gear rentals, complimentary ski tickets, and other perks collectively valued at $20,000.

I have been critical of these programs. For one thing, they reek of desperation. If you are publicly stating that you have to pay people to move to your town, what does that say about it? It’s also analogous to economic development incentives to companies, with many of the well-documented downsides of those.

Block documents another reason to be skeptical of these programs: they don’t work.

Since September, when the [Berrien County, Michigan] program launched, more than 2,500 people from all over the country have reached out to express interest in the incentives, Cleveland told me. He connected me with one of them, Jill Urbanski, a longtime Chicago resident who heard about the offer on the radio in October. By the end of February, she had moved to St. Joseph, Michigan, and collected her $10,000. “It made perfect sense,” Urbanski told me. “Everything lined up for me. There’s just one problem. In the 10 months since the program launched, Urbanski is the only person who’s taken the Cornerstone Alliance up on its offer. 

It’s not just Berrien County. The results have been modest in most places:

But the way these programs are playing out is nothing like their initial promise. Instead of something that can fundamentally reorient where Americans live, almost all of these initiatives look like what’s happening in Berrien: They’re bringing in some new residents, but not enough to make any notable difference for the cities’ population problems. For all the hype around remote work, it is clearly doing little to nothing for lots of shrinking cities.

The one city that has done well with a remote worker attraction program is Tulsa. About 1,000 people have taken them up on the offer. As Block notes, however, Tulsa is pretty big city. So it has a lot going on. And 1,000 residents, while sizable, needs to be compared to the 400,000 in the city (and the nearly one million in the metro area).

Something not in the article is that Tulsa’s program is funded by a multi-billionaire. Tulsa has gotten huge press for what they are doing, and I can’t help but wonder how much was spent on PR for it.

But overall, these programs appear to be extremely limited in the impact they can have on talent attraction. Cities would be well-advised to avoid overly focusing on things like this.

What makes more sense is for states to set up some sort of standardized program to reduce move-in friction. For example, maybe states could allow newcomers to deduct moving expenses on their state tax return, or even provide some kind of a tax credit for moving expenses. This would offset the legitimate costs people incurred to move into a place.