The pandemic drove Americans out of cities and into the exurbs. A recession could push some of them right back.

• During the pandemic, many Americans left cities for exurbs, or more rural areas.
• But higher wages and alternatives to gas-guzzling cars are making cities look increasingly attractive.

Cities became less attractive for many Americans during the beginning of the pandemic, causing some to pack their bags for exurbs — areas beyond suburbs — and even more rural locales.

The state of the economy, however — particularly slow wage growth and high gas prices — could nudge people back towards the skyscrapers.

Between July 2020 and July 2021, eight of the 10 largest US cities experienced population declines. New York City, Chicago, and Los Angeles lost 305,000, 45,000, and 40,000 residents respectively, while San Francisco experienced the greatest decline on a percentage basis — falling 6.3%.

While many of these people flocked to suburbs, the largest population shift was from cities to rural neighborhoods and exurbs, according to a 2021 Jeffries note. The ability to telecommute made these areas — characterized by lower living expenses and a greater distance from cities — an appealing alternative for many.

But the calculus could be changing yet again. While inflation-adjusted earnings are declining across the country at their fastest rate in 40 years, it's even worse for rural residents. Some are exploring whether moving closer to the city could help their waning bank accounts, Iowa State University sociology professor Dave Peters explained to NPR.

"A lot of people are beginning to think, 'If I have to continue to drive for everything and these fuel costs remain high and my wages aren't going up as fast as they are in cities,' some people are contemplating moving closer to a city," Peters told NPR.

Peters is the author of a July report that highlights the ways inflation has been weighing on rural households. Rural discretionary incomes — what's left of your paycheck after basic expenses — have fallen 50% since 2020, compared to a more modest 13% decline for urban Americans.

Per the report, the disparity has been exacerbated by the faster wage gains of city dwellers and the higher transportation costs of rural residents — many of whom require a car to get around. Rural Americans, for instance, are paying nearly $2,500 more for gasoline than they did two years ago, and in June, the average monthly car payment reached a record-high.

If this disparity continues, cities and suburbs could look more and more attractive, particularly if a recession is on the horizon.

The urban-rural tradeoff

During the depths of the pandemic, when as high as 43% of workers were remote, many Americans enjoyed the lower living costs of exurban and rural areas while maintaining their higher city salaries. Families led this movement — the number of children under five declined in large urban areas by 358,000, or 5.4%, between 2019 and 2021, per an Economic Innovation Group Study.

But as employers have begun nudging workers back to the office and, in some cases, deciding to pay remote workers less, the benefits of this lifestyle often aren't what they once were. Whether it's two or five days a week, a return to the urban office means higher transportation costs. For those who drive to work, elevated gas prices are sending these costs higher.

Some exurban and remote workers may eventually lose their city salaries as well. Companies like Google, Facebook, and Twitter are among the companies exploring location-based pay — paying workers less if they live in lower-cost areas. While demand for labor remains high, employers may be hesitant to roll out these policies, but this could change if the economic tides turn.

Some rural and exurban workers, however, aren't former city dwellers. While they've enjoyed the lower cost of living in their area, they've also — as Dave Peters' report describes — seen lower incomes and wage gains than urban Americans over the last two years. During the pandemic, rural Americans were less likely to work remotely, suggesting that many are among the 55% of Americans working on-site full-time as of this past June. With inflation eating away at their incomes, the idea of commuting to a higher-paying city job could be enticing. But two things are standing in their way.

"They would love to work and get city wages, but they can't commute. It's too expensive with the gas prices." Peters told NPR. Why not move closer to the city to shorten the commute? "It's not so easy to pick up and move to an urban area because housing costs are expensive," Peters added.

Despite the potential financial benefits of urban life, the tradeoff for some might simply not be worthwhile.

While it's unclear whether urban housing costs will decline significantly anytime soon, gas prices have begun to ease over the last month and could continue to do so. If this sustains, the calculus could shift again for rural and exurban Americans. Their high transportation expenses might not seem quite so terrible, particularly when compared to urban housing costs.

That said, if the aforementioned rural-urban disparity in disposable income persists, Peters believes this could "accelerate rural depopulation in parts of the Midwest and Great Plains" in the years to come.