Just how mobile are rich people?  - Technical.ly

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Just how mobile are rich people? 

For years, research has shown high-income earners are a lot less likely to move away from a city than you expect. Is the pandemic finally changing that?
One in five high-income earners living in Miami in 2019 were living somewhere new.

That was almost double the rate of Baltimore, Philadelphia, Phoenix and even Washington D.C.

In any given city in any given year, the vast majority of professionals who earned over $200,000 are living in the same place as they did a year prior. But there is real range among cities. This U.S. Census data was crunched by Technical.ly as part of our new “Who makes $200K?” series, an effort to identify trends in high-income earners, especially those with tech backgrounds.

Why do high-earners move at all? Well, the same as the rest of us: work, love and lifestyle, with tax strategy often discussed, too. These data do not differentiate between different motivations for moving. Across a sample of a dozen big U.S. cities Technical.ly evaluated, Miami had one of the highest rates of high-income earners who were living abroad the year prior, which fits its reputation as a gateway to Latin America. Boosters say that the boom of tech investors moving to Miami has accelerated as well.

We care about the mobility of high-income earners for at least two big reasons. For one, the relative transience of a city’s high-earners can suggest how desirable a city is reviewed by the well-heeled. For two, a city without wealth has very few tools to help especially vulnerable residents, so it’s crucial to understand their preferences.

Let’s take the first.

Other places of higher mobility from our sample include a surprising mix of fast-changing cities: Austin, Detroit and Pittsburgh. Atlanta, Boston and Cleveland are somewhere in the middle, and the high-earners in Chicago and Houston were among the least mobile in our sample.

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You might be surprised to find Detroit grouped with Austin, Cleveland grouped with Boston or that Chicago and Houston were among the least mobile of our sample. But look closer and they’re likely grouped because of differences in the data. For example, if a high-income earner moved from San Francisco to Detroit, or from suburban Detroit into a newly renovated loft in Detroit’s Corktown neighborhood, this data treats them the same. Different cities, then, include different flows of high-income earners: Perhaps Atlanta attracted more high-earners from other cities, like tech investor Jon Gosier, and Cleveland’s numbers reflect more intraregional changes. Chicago’s lower-mobility high-income earners fit well with that city’s reputation for having the widest gap in racial economic mobility. High-earning residents have stayed put, and fewer have joined them.

On the second point, local tax officials are especially interested in just how mobile high-income earners are. A long-held partisan debate has hinged on a straightforward question: If we tax the rich more, will they just move away anyway? Writing in 2014 for Stanford University magazine on social mobility, a pair of academics focused on just this question with especially elite income earners — those making at least $1 million a year.

High earners have made a different kind of migration in recent generations. Like so much about life right now, though, the pandemic contributes to outsized uncertainty about whether these trends will continue.

“The flight risk is greatly exaggerated,” wrote Cristobal Young and Charles Varner back then. “Millionaires are more attached to their states, and less inclined to migrate for tax purposes, than is often presumed.”

They followed up that paper with additional research confirming their findings, though noting that when high-earners do leave they often cite taxes as a reason. They point to at least two big reasons: Elite incomes are more temporary than we imagine them to be and in the past, earning power hasn’t migrated well.

The first reason remains true. The elite income earners they tracked typically spent just half of their professional years with earnings in excess of a million dollars. Their incomes go up and down with bonuses, exceptional business profits and stock market performance. If a taxing regime only impacts you occasionally, many just prefer to remain in a place they want to base their operations. (The authors do acknowledge retiree-millionaires are the exception, and are highly mobile.)

High earners have made a different kind of migration in recent generations. They’ve been part of “income sorting” in the United States, in which richer folk were increasingly clustering in coastal cities as wages sagged for much of the rest of the country. Like so much about life right now, though, the pandemic contributes to outsized uncertainty about whether these trends will continue. In a survey last year, more than half of high-net-worth investors who lived in cities said they were leaving permanently for less-densely populated areas. Early reporting has suggested that may be true. But we are unreliable predictors of our own preferences.

High-earners have long been less mobile than predicted. Whether remote work will change that forever is a still unanswered question.

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