Over the past several years, I have written extensively about the population exodus from the coasts further inland, a sort of Manifest Destiny in reverse, as people sought more affordable housing, lower taxes, and perhaps places with less red tape and bureaucracy. However, one significant driver of this domestic diaspora that I have not discussed is how the Southwest has emerged as the country’s new factory hub.
Five states – Arizona, New Mexico, Texas, Oklahoma, and Nevada – added more than 100,000 manufacturing jobs from the start of 2017 to beginning of 2020, representing 30% of US. employment growth in the sector. As Silicon Valley’s influence becomes more widespread and fragmented, markets like Phoenix, Denver, Austin, Henderson/Las Vegas, and other cities should see increased tech-based jobs, and along with those high-paying jobs, greater demand for housing.
For example, Taiwan Semiconductor Manufacturing Corporation, the world’s largest contract chip manufacturer, whose products are in significant demand, selected Arizona as the site for a new $12 billion factory, which will employ some 1,600 workers. Intel is already active in that market and is expanding there. From Tesla to Lucid Motors to Steel Dynamics, numerous firms are expanding from traditional manufacturing hubs and coastal markets to places like Nevada, Arizona, and Texas. COVID and the supply chain disruptions it brought have only accentuated the trend.
Another concerning trend I have mentioned many times in recent years has been the decline in fertility rates because of its longer-term impact on the economy and housing. At end of April, the Census Bureau reported that decade ended 2020, U.S. population grew at slowest rate since the Great Depression and second-slowest rate in any decade since our country was founded. However, declining fertility rates are a global phenomenon and governments are doing their part to stimulate reproduction rates (insert joke here). I recently read that China is now “allowing” families to have three children and two weeks later, I saw another article that said that China is poised to “lift all childbirth controls.” China clearly recognizes that policies limiting family sizes might have significant demographic and economic impacts looking forward. However, without associated economic incentives, I cannot see how such a policy will have any meaningful impact. After all, having children costs a lot, and is not getting any less so. Closer to home, the American Rescue Plan passed earlier this year increased the child tax credit to $3,600 for each child under 6 and to $3,000 for each child up to age seventeen. The Biden Administration has also proposed the expansion of paid-leave programs and improved childcare access. Regardless, I do not see any of these policies having any meaningful impact.