The $88 Million Shift: Why Quality of Life Is Now the Prime Economic Driver
$88 million. That’s the net gain in U.S. jobs since 1969 attributable to businesses deeply rooted in their local communities – a figure that dwarfs the mere 229,000 net new jobs created across all other sectors in 2023. This isn’t a story about industry disruption or technological innovation; it’s a story about where people want to live, and how that preference is fundamentally reshaping the American economic landscape. Michael J. Hicks, professor of economics at Ball State University, argues that quality of life isn’t just a desirable amenity, it’s the single biggest predictor of economic success, and increasingly, businesses are prioritizing it even more than households.
This article draws on reporting from indianacitizen.org.
The conventional wisdom has long held that affordability is the key to attracting residents and businesses. Cities proudly tout “most affordable” rankings, assuming low costs will drive growth. But this is a miscalculation. Families may initially gravitate towards lower housing costs, but workers in areas lacking quality-of-life amenities – good schools, walkable neighborhoods, recreational opportunities – demand a wage premium to compensate. This creates a hidden tax on businesses, effectively negating the cost savings of a cheaper location. Hicks illustrates this with a personal anecdote from Muncie, Indiana, where he learned local hospitals had to offer higher salaries to physicians compared to nearby Carmel, despite significantly lower housing costs, precisely because of Carmel’s superior amenities.
Follow the money: the data reveals a clear divergence. Since the late 1960s, 90% of all job creation in the U.S. has occurred within locally-rooted businesses. These are the restaurants, retail stores, and service providers that thrive when a community is desirable. In contrast, sectors capable of locating anywhere – manufacturing, logistics, and increasingly, even tech – experienced net job losses in 2023, despite overall economic growth. This isn’t simply due to automation, though that plays a role. It’s because these “footloose” businesses are increasingly concentrating in areas that can attract and retain a skilled workforce. The 774,000 jobs added in just two locally-rooted sectors in 2023 highlight this trend, demonstrating the power of place-based economic development.
This dynamic is particularly acute in the Great Lakes states, where sluggish economic growth is directly linked to a lack of investment in quality of life. Places with higher quality of life consistently attract residents at a higher rate, and crucially, businesses respond to this population growth even more strongly than families do. The rise of remote work, with roughly one in four college graduates working remotely at least part-time, further amplifies this effect, giving workers greater freedom to choose where they live. However, even remote workers aren’t entirely location-independent; they still need infrastructure, community, and a desirable environment.
The implications for businesses that can locate anywhere are profound. Amenity-rich communities offer two key advantages: a growing population base and lower labor costs. While workers in desirable locations may command higher salaries in absolute terms, they require a smaller wage premium than those in less appealing areas. This effectively lowers the overall cost of doing business. Exceptions exist – value-added agriculture, for example, often seeks locations with a readily available, low-skilled workforce – but even this sector faces increasing pressures. The most effective economic development tool, according to Hicks, isn’t a tax break or a highway, but a concerted effort to make a place worth living in.
What this means for your wallet: if you’re considering a move, don’t just look at housing prices. Factor in school quality, access to recreation, and the overall vibrancy of the community. If you’re an investor, pay attention to where people are moving, not just where businesses are currently located. The next wave of economic growth will flow to the places that prioritize quality of life, and the question now is: will your community be next, or will it continue to fall behind as talent and capital gravitate towards more desirable locations?
