Spending

Cities in the South and Midwest are paying people to move in: Here's how it's going

Several U.S. cities are paying people to move there as remote work takes off due to the pandemic.

Twenty/20

When the coronavirus pandemic hit, Katrina Otuonye was living in Seattle. But six months after the city shut down, she relocated — and the destination she chose confused some of her friends. Otuonye moved to the Shoals, a region in northwestern Alabama she had never heard of until this year.

"Alabama? Really? Are you sure? I've been getting a little bit of that," says Otuonye, who works as a copywriter. "I think for some people there's a lot of misconceptions about the South and the people that live here."

What caught Otunye's attention: an incentive program offering $10,000 to remote workers who relocate to the Shoals metro area, which comprises the cities of Muscle-Shoals, Florence, Sheffield, and Tuscumbia. The Shoals is doubling down on its program amid the pandemic, opening it up to 25 participants, up from 10 in 2019.

To be eligible for the incentive, workers must earn $52,000 or more per year. The amount of cash someone receives depends on their income, and the money is paid out over the course of a year.

The Shoals is just one of several metropolitan areas in the U.S. paying remote workers to move. Cities including Topeka, Kansas; Tulsa, Oklahoma; and Savannah, Georgia see an opportunity to stimulate their economies, now that people are working remotely in record numbers and can more or less choose where they want to live.

VIDEO8:1508:15
These U.S. cities are paying people to move there

Video by Helen Zhao

How the pandemic is leading people to relocate

While estimates vary, a Stanford University study from June 2020 found that about 42% of U.S. workers are working from home full time. That's a norm expected to continue past the pandemic.

As a result, more people are leaving expensive coastal cities in favor of more affordable alternatives.

Otuonye says her Shoals apartment is double the size of her former Seattle apartment, for half the price. She envisions being able to afford her ideal life in Alabama.

"When I think about what I want my life to look like in a few years, like, do I want to have a house with like a little garden?" Otuonye says. "Do I want to get a chicken and grow some tomatoes? Those kinds of things. Yeah, that plays a big part in my decision."

In the Sheffield region of the Shoals, that $10,000 relocation incentive is about enough for a 20% down payment on a two- or three-bedroom house.

Since the program was created, 14 remote workers have relocated to the Shoals from places including San Francisco, San Diego, Seattle, Dallas, Washington, D.C., Nashville, and Atlanta, says Mackenzie Cottles, marketing coordinator for the Shoals Economic Development Authority. She says someone even inquired from Hawaii.

"We've seen a lot of applications," Cottles says, "and a lot of people that have said, 'You know, pre-pandemic, I wouldn't have even thought about this. But now I'm thinking this may be the route that I wanted to go.'"

When I think about what I want my life to look like in a few years, like, do I want to have a house with like a little garden?
Katrina Otuonye
Copywriter

Leaving the big city for 'Zoom towns'

The cities people are leaving in greatest numbers are New York City, San Francisco, and Los Angeles, according to Redfin data. Experts say people are leaving big cities because they are no longer incentivized to pay the premium required to live there.  

"Most of the attractions of the city are now off bounds," says Nicholas Bloom, a professor of economics at Stanford. "So why did people want to live in the city before? They wanted bars and restaurants and museums and shopping, you know, amazing stuff. But none of that is possible right now."

This has led to the rise of what some call "Zoom towns" — housing markets that are heating up as remote work takes off. Those include the likes of Sacramento, California; Camden, New Jersey; and Las Vegas, according to Redfin.

Now, other cities are looking to become "Zoom towns" with the help of monetary incentives. Paying people to move in gets media attention and makes it easier for people to imagine living somewhere they otherwise may not have considered.

Most of the attractions of the city are now off bounds.
Nicholas Bloom
Professor of economics at Stanford University

One Midwestern town that has drawn a number of Californians and New Yorkers is Tulsa, Oklahoma. In 2020, Tulsa is amplifying its existing remote work program. Tulsa Remote is offering spots to 250 more qualified remote workers, up from 70 last year. Those workers receive $10,000 in cash and a one-year membership at a co-working space.

Savannah, Georgia, launched an incentive program in June, offering up to $2,000 to qualified technology workers who relocate there.

Showing what the South and the Midwest 'have to offer'

Cost of living is a big draw, but many prospective transplants have concerns about culture. In response, metro areas like the Shoals and Topeka, Kansas, are trying to challenge perceptions of what it's like to live in the South and Midwest.

Topeka launched its program in August to reintroduce itself to America. The city is offering up to $10,000 to qualified remote workers who relocate and purchase a home in Topeka, or $5,000 to those who rent.

"A lot of people don't understand what Kansas has to offer people and what Topeka has to offer people. And so we want to be able to introduce the community to the nation," says Bob Ross, senior vice president of marketing for the Greater Topeka Partnership.

A lot of people don't understand what Kansas has to offer people and what Topeka has to offer people.
Bob Ross
Senior vice president of marketing for the Greater Topeka Partnership

Someone who inquired from California was anxious about moving to a red state, following a racist experience she had in Idaho, Ross says: "It broke my heart." Transplants can generally expect a warmer welcome, though, he says: "It's why we are being very intentional about projecting inclusion in this campaign, because Topeka made an intentional decision this year to be a boldly anti-racist city. If you harbor any racism, sexism, or homophobia, please move elsewhere."

Ross wants millennials and Gen Z to know that "there's more to the Midwest than meets the eye."

"Yes, I want people to move to Topeka who passionately pursue social justice," he says. "I want them to know that anyone will be welcome here. This place isn't perfect, but it's trying to be its best."  

Cities can compete for workers instead of businesses

Traditionally, cities have competed to attract businesses. Case in point: the recent bidding war for Amazon's second headquarters. Ross foresees more cities competing to attract remote workers rather than companies.

"I do think you're going to see a real, almost like economic development race around the country as people begin to recognize that talent is almost more powerful than companies," Ross said. "We don't need an Amazon headquarters now. We just need 100 of their workers to potentially choose us."

Choose Topeka is reviewing applications and interviewing participants. According to Remote Shoals, the program's first 10 participants, some of whom came with families, brought $1 million in income into the community.

We don't need an Amazon headquarters now. We just need 100 of their workers to potentially choose us.
Bob Ross
Senior vice president of marketing for the Greater Topeka Partnership

Experts say this trend could help even the economic playing field in America.

"There's so much income and so much growth that's gone to the center of cities, and rural America has honestly been left behind," says Bloom. "And the movement of the well-educated, well-paid college graduates back into rural and suburban areas is going to really help kind of flatten that landscape."

While narrowing the gap between geographic regions, the rise of remote work could exacerbate inequality between people. Those able to work remotely during the pandemic tend to be higher-earning with greater job security.

"They've been affected less on average by the pandemic," Bloom says. "And then on top of that post-pandemic, you're giving them a very valuable perk."

A perk that entails living where you please — and possibly even an extra $10,000.

More from Grow:

acorns+cnbcacorns cnbc

Join Acorns

GET STARTED

About Us

Learn More

Follow Us

All investments involve risk, including loss of principal. The contents presented herein are provided for general investment education and informational purposes only and do not constitute an offer to sell or a solicitation to buy any specific securities or engage in any particular investment strategy. Acorns is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.

Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. It is not possible to invest directly in an index.

Advisory services offered by Acorns Advisers, LLC (“Acorns Advisers”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Brokerage and custody services are provided to clients of Acorns Advisers by Acorns Securities, LLC (“Acorns Securities”), a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Acorns Pay, LLC (“Acorns Pay”) manages Acorns’s demand deposit and other banking products in partnership with Lincoln Savings Bank, a bank chartered under the laws of Iowa and member FDIC. Acorns Advisers, Acorns Securities, and Acorns Pay are subsidiaries of Acorns Grow Incorporated (collectively “Acorns”). “Acorns,” the Acorns logo and “Invest the Change” are registered trademarks of Acorns Grow Incorporated. Copyright © 2019 Acorns and/or its affiliates.

NBCUniversal and Comcast Ventures are investors in Acorns Grow Incorporated.