When comparing the health of state economies, we usually look at employment and incomes. Another critical indicator worth closer attention is where Americans choose to move, and the places they are leaving.
American history has been shaped by migration, from England to the Eastern seaboard, and later from the Atlantic Coast toward the Midwest, and later to the Pacific.
Our analysis of Internal Revenue Service data from 2014, the most recent available, give us an important snapshot of where Americans are moving now, and, equally important, a breakdown by income levels and age.
The Big Winners: The Sunbelt And Texas
To measure the states that are most attractive to Americans on the move, we developed an “attraction” ratio that measures the number of domestic in-migrants per 100 out-migrants. A state that has a rating of 100 would be perfectly balanced between those leaving and coming.
Overall, the biggest winner — both in absolute numbers and in our ranking — is Texas. In 2014 the Lone Star State posted a remarkable 156 attraction ratio, gaining 229,000 more migrants than it lost, roughly twice as many as went to No. 3 Florida, which clocked an impressive 126.7 attraction ratio.
Most of the top gainers of domestic migrants are low-tax, low-regulation states, including No. 2 South Carolina, with an attraction ratio of 127.3, as well as No. 5 North Dakota, and No. 7 Nevada. These states generally have lower housing costs than the states losing the most migrants.
But it’s not simply a matter of taxes and regulations. There are three states in our top 10 with mixed reputations for red tape and taxes: Oregon (fourth), Colorado (sixth), and Washington (eighth). These are states that have thriving information and professional business services sectors, which offer higher wages. And though these states have high housing costs, they are well below California’s. For Californians, the employment opportunities available in Seattle, Denver and Portland, combined with the prospect of huge profits from selling the house, makes moving particularly attractive.
The Biggest Losers
High costs go a long way to explain which states are losing the most migrants. At the top, or rather, the bottom of the list is New York State, which had an abysmal 65.4 attraction ratio in 2014 and lost by far the most net migrants, an astounding 126,000 people. Close behind was Illinois, a high tax, high regulation, and low growth disaster area. In 2014 the Land of Lincoln had an abysmal 67.2 attraction ratio, losing a net 82,000 domestic migrants.
Most of the other top people-exporting states are in the Northeast and Midwest. But the West, traditionally the magnet for newcomers, now also has some major losers, including Alaska (80.1), New Mexico (84.6) and Wyoming (88.6). The outflow for some of these western states may get worse, unless prices for natural resources like coal, oil, gas and minerals do not recover in the near future.
And then there is the big enchilada, California. For generations, the Golden State developed a reputation as the ultimate destination of choice for millions of Americans. No longer. Since 2000 the state has lost 1.75 million net domestic migrants, according to Census Bureau estimates. And even amid an economic recovery, the pattern of outmigration continued in 2014, with a loss of 57,900 people and an attraction ratio of 88.5, placing the Golden State 13th from the bottom, well behind longtime people exporters Ohio, Indiana, Kentucky and Louisiana. California was a net loser of domestic migrants in all age categories.
Where’s The Money Going?
Some analysts have claimed that the people leaving California are mostly poor while the more affluent are still coming. The 2014 IRS data shows something quite different. To be sure the Golden State, with its deindustrializing economy and high costs, is losing many people making under $50,000 a year, but it is also losing people earning over $75,000, with the lowest attractiveness ratios among those making between $100,000 and $200,000 annually, slightly less than those with incomes of $10,000 to $25,000.
Overall, many of the most affluent states are the ones hemorrhaging high-income earners the most rapidly. As in overall migration, New York sets the standard, with the highest outmigration of high income earners (defined as annual income over $200,000) relative to in-migrants (attraction ratio: 53). New York is followed closely by Illinois, the District of Columbia and New Jersey, which are all losing the over-$200,000-a-year crowd at a faster pace than California.
The big winners in terms of affluent migration tend to be historically poorer states, mainly in the Sun Belt and the Intermountain West. Florida has an attraction ratio for people earning over $200,000 a year of 223, the highest in the nation, followed by South Carolina, Montana, Idaho and North Carolina. Four of the states with the highest attraction rate among the highest income earners were in the top five in net in–migration of seniors, many of whom are taking nice nest eggs with them. South Carolina scored the highest, followed by Delaware, Idaho, North Carolina and Florida.
Where Young Adults And Families Are Headed
Much of the discussion about millennial migration tends to focus on high-cost, dense urban regions such as those that dominate New York, Massachusetts and, of course, California. Yet the IRS data tells us a very different story about migrants aged 26 to 34. Here it’s Texas in the lead, and by a wide margin, followed by Oregon, Colorado, Washington, Nevada, North Dakota, South Carolina, Maine, Florida and New Hampshire. Once again New York and Illinois stand out as the biggest losers in this age category.
Perhaps more important for the immediate future may be the migration of people at the peak of their careers, those aged 35 to 54. These are also the age cohorts most likely to be raising children. The top four are the same in both cohorts. Among the 35 to 44 age group, it’s Texas, followed by Florida, South Carolina and North Dakota. Among the 45 to 54 cohort, Texas, followed by South Carolina, Florida and North Dakota.
Far more than the often anecdote-laden accounts seen in the media, the IRS data provides us with a glimpse of a demographic future dominated by those states that are either retirement havens or lower cost places that can compete with the traditional high-income economies such as Massachusetts, California, New York and New Jersey. As millennials age, along with their boomer parents, the data gives us a vision of a changing America which is likely to see a greater dispersal of population, income and demographic groups to many places that, like Texas, Florida or South Carolina, have been considered backwaters but now seem destined to emerge as shapers of our national future.
This piece first appeared at Forbes.
Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.
Wendell Cox is principal of Demographia, an international pubilc policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.