Bay Area's missing billions - Silicon Valley Business Journal

In no region of the country did migration in the years before and into the pandemic pack such a devastating economic punch as the Bay Area.

“The Bay Area is losing some folks that are fairly well-to-do, and they’re taking their cash and whatever human capital they had to help build their wealth to other cities,” Mark Vitner said in an interview shortly before retiring this month as Wells Fargo senior economist. The Bay Area’s loss has meant huge gains for cities such as Nashville, Miami, Dallas and Raleigh, North Carolina.

Outmigration accelerated during the pandemic as the embrace of remote work unleashed employees from their office cubicles, freeing many to move elsewhere in the country or around the world. At the same time, startups and their financial backers are seeing value in building businesses in lower-cost cities, providing some residents filling jobs with another incentive to leave the region.

“We’re going to become increasingly like Hawaii, a place where people who can afford it live there, or they come in and live there for a few months. Then they go back to wherever they live because they don’t want to pay these taxes,” Kotkin said, adding that he sees higher taxes on the horizon. California voters will decide in November whether to approve Prop. 30, which would raise the state’s top tax rate to 15.05% for those with incomes of at least $2 million.

“If we have a drop in tax revenues from a profound drop in business activity, that’s going to be felt by everyone,” said Matt Field, president of San Francisco real estate developer TMG Partners. He simply says it’s going to be a “hot topic” for Bay Area leadership to navigate some unpleasant options: cutting public services or adding to the tax burden of residents and businesses who remain.

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