Different states offer different amenities and ways of life, from tax rates to climate. In the United States, our freedom to move to a different state or municipality allows us to choose the location that best suits our needs. Particularly in the last decade, domestic migration patterns have been shifting. Where are people leaving from, and where are they going? What are the push and pull factors driving people away from and towards certain locations? How will this affect these areas and the country as a whole?

Introduction

View the Executive Summary for this brief.

Case Study

Data from the 2020 Census reveals that U.S. population growth has slowed significantly. The 7.4% increase in population between 2010 and 2019 is the second slowest growth rate on record; the slowest occurred during the Great Depression. This means people moving between states have a much larger influence on the population of states. And this has large repercussions.

For the first time in 170 years of its statehood, California lost a congressional seat, “a result of slowed migration to the nation’s most populous state, which was once a symbol of the country’s expansive frontier.” New York also lost a congressional seat, which  it would have kept “had the state counted 89 more residents in the 2020 census. With that number – the amount that could fill a single New York City subway car during off-peak hours – the state would have stopped its eight-decade streak of declining congressional representation.”

Meanwhile, Texas, Florida, and Colorado all gained seats, reflecting how Americans have “continued their march to the South and West,” and away from “one-time engines of growth” such as New York and California. These electoral shifts “reflect the decade’s broad population shifts: slow growth in the Northeast and Midwest, and gains in the South and some Western states.”

Why it Matters

Even small shifts in population can have influential effects, and political representation is only one example. In states where the population is booming, there are potential new burdens, “like increased traffic, rising home prices and strains on an infrastructure already grappling with climate change.” States losing population may see negative changes to their tax base, a workforce shortage, and a drain on intellectual capital.

The U.S. system of federalism is what allows individual states and localities to direct policies of local concern, and means each state has the freedom to set its own policies. Greater patterns of migration can shed light on what is drawing people to some places and pushing them away from others. This reflects the idea of “‘voting with your feet,’” the ability of people to exercise a degree of political freedom in deciding what policies they would like to live under. Determining which policies are working and which are not can help policymakers determine which key factors need attention.

Putting it in Context

History

Americans do not move as much as they used to. In the post-World War II era from the late 1940s to the 1960s, about 20% of Americans changed residence annually, thanks to economic growth and a demand for housing among the young population. Over the next few decades, a number of factors contributed to fewer and fewer people migrating each year, including the rise of dual-earner households, a slowly aging population, and labor markets all encouraged people to stay in place. In 2019, domestic migration rates dropped to a new low of 9.3%.

Local mobility (change of in-state residence within counties) accounted for about 8-9% of movement between 2005 and 2010, and has since dropped to 5.4%. As local mobility accounts for about 60% of all moves, it drove the overall downward trend. Cross-country movement stood at 5-6% in the 1990s, and has averaged about 3.5% since 2007.

Historically, young adults ages 18-34 have been the most mobile class of Americans, and drive overall migration trends. They still account for most migration, but issues “associated with higher housing costs and underemployment” have led many to postpone what are generally considered milestones, such as homeownership. This has pulled overall domestic migration rates down.

Motives

More than half of local movers cite housing as the reason for moving, either looking for new, better, or more affordable options. About a quarter of movers cite family reasons. The majority of longer-distance movers cite labor reasons, either starting or relocating to a new job. An overlooked factor (PDF download) tends to be that job-related moves could be housing-related if people are unable to move for work due to housing factors, but fewer people who are changing jobs are moving. Among individuals who have changed jobs, the percentage not moving states or counties has increased from 82% in 1980 to 90% in 2017.

COVID-19

The coronavirus pandemic has spurred more individuals to consider housing, family, and job-related reasons for moving. Particularly “as remote work became an option for many, people suddenly felt that they had more freedom to choose where they lived and they no longer had to be tethered to where their employers were located.”

While overall migration trends are still lower than they were a few decades ago, more than 7 million households moved to a different county in 2020, about half a million more than in 2019, reflecting the pandemic push.

Pew Research surveys conducted in June and November of 2020 found that reasons for pandemic-related movement shifted considerably in just a few months. In June, pandemic migrants were more likely to cite risks of getting the coronavirus as reasons for moving, while those surveyed in November were more likely to have relocated due to financial stress.

The trend has continued into 2021, with Census data showing that 65.6% of American counties saw an increase in population as Americans moved from larger cities to smaller ones. A report by the Economic Innovation Group found the nation’s largest urban counties lost more than 860,000 residents in 2021, while the fastest growing counties were suburban and exurban

Nationwide Changes

Housing Markets & Resources

A variety of factors are putting pressure on the U.S. housing market, “including incomes that haven’t kept up with housing costs increases and a housing construction slowdown.” In January 2022, the number of active housing listings in the U.S. dropped to its lowest in five years; this limited supply coupled with rising demand has pushed prices higher. Adding to this are the challenges of lack of labor, land-use regulations, raw material costs, and lack of available lots. In these growing markets, the undersupply of housing “is leading to speculative booms.” Home prices in the top 10 markets in a WSJ/realtor.com index rose 27% on average in 2020, compared to the nationwide average rise of 14%. 

While residents coming from more expensive markets likely have the funds to buy homes in cash, they threaten to price out the people already living there. These individuals may be forced to move further out from major areas in search of less expensive housing. In turn, this may affect the labor market if they choose to leave their jobs, or affect infrastructure through longer commutes to work. Particularly as more people come than leave, there may be additional burdens on infrastructure as more individuals use public transportation and drive on roads, and additional burdens on services as more students enroll in schools. On the other hand, there is also an opportunity for more people to invest their time in new communities by supporting local  businesses and restaurants.

Contracting markets have too much inventory due to outmigration, which leads to “a slowdown in house price appreciation.” In large cities where people are leaving, the result is double-digit rent decreases and the subsequent decrease of billions of dollars of annual property tax revenue. Property taxes in 2018 accounted for 30% of local government general revenue, which means cuts in property tax revenue will result in subsequent cuts to local spending in areas from elementary and secondary education to public health and hospitals to roads and highways. There may also be fewer residents to cover costs of long standing commitments such as debt or state employee retirement benefits.

In contrast, growing populations generally indicate a strong labor force, which fuels economic activity to generate tax revenue and fund increased spending on infrastructure, education, and government services. PEW Research details the top states that gained and lost residents in 2021.

See what’s happening to inventory and property listing prices in your community, from WSJ.

Economics

Operating on the assumption that Americans and U.S. companies “‘vote with their feet’” when they move, patterns are reflecting migration based on economic factors such as ease of doing business and tax burdens. For example, in terms of fiscal stability (including state credit ratings, public pension liabilities, and state budget management), four of the top ten outbound states were among the five states with the worst fiscal stability rankings. The American Enterprise Institute gathered more data on this for 2019:

 

These migration patterns held into 2020. Texas and Florida, two states that saw the biggest net migration gains, have no income tax. According to the Illinois Policy Institute, many residents from Illinois – who pay the highest effective local and state tax rates in the country –  have made short moves to Indiana, which has a low flat tax and low property taxes, or Wisconsin, which has fully funded pensions and generous tax credits.

As this WSJ article explains, “Suburbs are emerging as the winners from these changes, marking the end of a decade long growth trend for big cities. Companies intent on lowering overhead and retaining talent are opening offices there, and developers are adding amenities to keep entertainment dollars local.”

The Tax Foundation’s 2021 State Business Tax Climate Index shows the four worst performing states on the index are also in the top ten states with the most outbound migration (New Jersey, New York, Connecticut, and California). Meanwhile, seven of the ten states with the most inbound migration are in the top half of states on the index.

These data points indicate the cost of living and cost of operating a business are major factors when individuals decide to relocate. Areas where it is more difficult to start or conduct business are likely to see a drain on intellectual capital as entrepreneurs take their businesses elsewhere. Areas where workers take home less earnings due to taxes are likely to see a shortage in the labor market as workers move to where their earnings can go farther in relation to cost of living. Meanwhile, areas with policies that encourage business development are likely to attract individuals looking for business opportunities, either to start their own or to join an active and flourishing business sector and labor market. Research by the George W. Bush Institute and SMU Economic Growth Initiative support these assumptions, finding that the top performing metro areas have above average living standards, upward mobility opportunity for residents, affordability, strong social capital, and growth-friendly business and land-use rules.

Food Truck Roadblock from Free to Choose’s Izzit.org, shows the business difficulties of offering a food truck in Chicago, Illinois, one of the cities/states with the highest outbound migration rates (12 min):

Case Studies: Outbound Migration

California

After experiencing significant growth between 1900 and 2000, California has seen its slowest growth rates ever since 2000. It grew by 6.5% between 2010 and 2020, compared to the national average of 6.7%. During this time period, 1.3 million more people left California for other states than came to California from other states. From 2019 to 2020, the population grew by only 0.05%, with a net population loss of 500,000. The bulk of people moving to California are international immigrants; meanwhile, from July 2020 to July 2021, San Francisco saw the largest rate of population decline among all U.S. cities (6.3%).

Between 2017 and 2018, Census Bureau data revealed California was the state with the most domestic outmovers. Those leaving are primarily middle-income residents: millennials and working class individuals say the paycheck-to-paycheck lifestyle and commuting is difficult, even with good jobs. Businesses and entrepreneurs are also among those heading out, considering new locations with lower taxes and other business costs. Finally, people of retirement age whose homes have appreciated are selling and moving to live in states with lower taxes.

According to Census Bureau data, of adults who left California in the 2010s, 49% cited work-related reasons, 23% cited housing-related reasons, and 20% cited familial reasons. A 2019 UC Berkeley poll of registered voters found more than half of survey respondents had considered leaving California; 71% mentioned high cost of housing and 58% mentioned high taxes. A survey by the Public Policy Institute of California in May 2021 found about a third of Californians “have seriously considered leaving the state because of housing costs.”

The cost of living in Los Angeles is 17.1% higher than the national average, and in San Francisco it’s 31% above the national average. Especially in comparison to other regions, California’s cost of living “remains an ongoing public policy challenge,” according to Hans Johnson, senior fellow at the Public Policy Institute of California, which means it “needs resolution if the state is to be a place of opportunity for all it’s residents.”

The WSJ dives into California’s rising home prices (5 min):

For more on rising home prices, see The Policy Circle’s Affordable Housing Brief.

Illinois

Illinois’ population has shrunk for six consecutive years. Over 1.6 million people left Illinois for other states from 2014 to 2018, up almost 16% from the number that left the state between 2009 and 2013. In fact, Chicago has the distinction of being the only city “to suffer a drop in both people moving in and an increase in people moving out,” whereas other cities losing population have out-migration offsetting in-migration for a net loss.

The majority of those leaving are prime working-age residents looking for better jobs or housing opportunities; Census Bureau data revealed that between 2010 and 2019, 50% of adults ages 25-54 said they moved out of Illinois for work reasons and 20% for housing reasons. Census Bureau data also showed that individuals with higher levels of education were twice as likely to leave the state, indicating that primarily young, education professionals in their prime working years are mostly looking for better employment opportunities, which has negative implications for the state’s tax base, labor market offerings, and intellectual capital. According to the Illinois Policy Institute, residents already pay higher effective local and state tax rates than anywhere else in the nation.

New York

New York’s cumulative net domestic migration loss to other states since 2010 sits at over 1.5 million. Census estimates say over 200,000 more residents moved out of New York state than into New York from other states between July 2019 and July 2020, the highest amount in 14 years. In 2020, the state lost a net 150,000 households, more than any other state and double the amount in 2019. Across all 50 of New York’s counties, only 3 have gained population over the past decade.

Movement out of New York City specifically is even more noticeable. Data from the U.S. Postal Service shows that almost 250,000 New Yorkers filed a change-of-address request to zip code outside of the city from March to October 2020, double the amount of requests during that period in 2019. Moves out of Manhattan and Brooklyn more than quadrupled between February and July 2020. Even though the city is experiencing a rebound in early 2022, overall the population has declined and continues the trend from the past decade that most NYC counties have been experiencing out-migration.

The desire to leave New York has been noticeably high among high-income NYC residents and among those ages 18-44. According to a Manhattan Institute survey from mid-2020, 44% of high-income NYC residents said they considered relocating over the summer of 2020, and 37% said it was at least somewhat likely they would not be living in the city within 2 years. Cost of living was the most common reason (69%), followed by crime (47%), and a desire for a non-urban lifestyle (46%). Additionally, 30% said the possibility of remote work makes it more likely that they will move.

New York state has a 9% tax on wages for high earners (who make over $100,000), and New York City places an additional 4%. Thus, the more people make, the greater incentive they have to leave for states with lower tax rates. This is particularly true among Baby Boomers, who accelerated their plans to retirement, based on the number of New Yorkers who moved to Florida, which has lower tax rates. Young professionals also found that remote work mitigated the advantages of urban life, and many entrepreneurs decided to take their businesses with them.

The reduced demand for city apartments is already visible, with median monthly rents falling about 8% in the third quarter of 2020. While this takes some pressure off housing prices in one of the nation’s most expensive cities, there are also negative repercussions. There is an entrepreneurial and intellectual capital drain as more individuals leave and take their businesses with them, thanks to remote work opportunities. New York City’s property tax revenues are expected to decline by $2.5 billion, and as more individuals leave, the city and state are left with a much smaller tax base. In total, residents who earn over $100,000 make up 80% of NYC’s income tax revenue, and personal income tax accounts for 22% of overall tax revenues. For more on different kinds of taxes and how they affect local budgets and individual wallets, see The Policy Circle’s Taxes Brief.

 

Case Studies: Inbound Migration

From 2017 to 2019, the population in the South and West of the U.S. grew at around seven times the growth rate in the Northeast and Midwest regions. Particularly in the South, the population growth was driven by domestic migration. In 2018, 1.2 million people moved to the South from another region, compared to 714,000 who moved from the South to another region. From July 2020 to July 2021, the fastest growing cities with populations of at least 50,000 were in the Sunbelt metro areas: the areas just outside Austin, Phoenix, San Antonio, and Fort Myers had growth rates between 6 and 10%.

Texas

Compared to the rest of the country, Texas is home to “an outsized amount of new home owners,” and drew more transplants from migration than any other state in 2020. The trend continued in 2021; half of the top 10 U.S. counties that saw the largest net population gains in 2021 were in Texas. Research by Bill Fulton, director of the Kinder Institute for Urban Research at Rice University, found that the majority of migrants are coming from California. In 2018 and 2019, he found more than twice as many Californians moved to Texas as there were Texans moving to California. Cost of living and high home prices are the primary drivers.

Besides housing, the labor market is also a pull factor. Dallas placed first for cities in tech investment growth in 2020, attracting entrepreneurial talent. Individuals are not the only ones heading to Texas; Oracle and Hewlett Packard have made the move, Tesla is opening a new assembly plant, and the Charles Schwab Corp. is among several “Northern California employers” that “have recently shifted thousands of jobs to Texas.” As one California business owner described, there is always “a permit, license, fee, or line to get things done,” but Texas is more “‘business-friendly’”. Municipalities may offer tax abatements to new businesses, and on the whole the state has no income tax, making it attractive for individuals and businesses alike.

Many Texas residents may benefit from venture capital operations and increasing labor market opportunities. At the same time, as more individuals come they risk pricing out residents. As Bill Fulton explains, “‘The consequences it does have is the people who already live in Texas who maybe do not have a lot of home equity and are not used to those California home prices, they may have a more difficult time buying a house, at least the house they want to buy in the place they want to buy.’”

Arizona

In 2019, interstate moves accounted for more than two-thirds of all household growth in Arizona. The Phoenix metro area has one of the highest share of out-of-state newcomers who are homeowners (41%). The majority of domestic migrants are coming from California and are attracted to the lower cost of living and home prices. In 2018, the cost of living in Tucson was about 6% below the national average, and Phoenix was 2% below.

Investors have been taking advantage of Arizona’s popularity. According to the Wall Street Journal, “Big investors now own more than 22,000 rental houses in metro Phoenix, and deploy house-hunting algorithms sophisticated enough to spot a sunny kitchen in a good school district faster than a for-sale sign can be pounded into the yard.” Companies such as Opendoor are capitalizing on the population influx and are bringing “Wall Street-style efficiencies and Silicon Valley software to the housing business,” making it even easier for newcomers.

Besides a housing hub, Arizona is one of the southwest states also emerging as a factory and manufacturing hub. For example, Intel Corp. is investing $20 billion to expand manufacturing in Arizona, pulled by tax credit for infrastructure investments that create jobs, which allows manufacturers to deduct energy spending from their sales tax bills. The WSJ explains in this podcast episode from June 1, 2020 (5:55-12:45).

Florida

Florida has been attracting new residents for some time now; in 2017, the state had the most domestic inmovers from other states (followed by Texas). In 2019, roughly half of the 96,000 new households in Florida came from interstate moves. The Tampa metro (along with the Phoenix metro, mentioned above), has one of the highest shares of out-of-state newcomers who are homeowners, at 41%.

COVID-19 has prompted many out-of-staters to buy homes in Florida, particularly New Yorkers, but overall population growth in Florida in 2020 slowed to its lowest rate since 2014. Warm weather and low taxes have historically attracted new residents, while rising home prices are beginning to push people out; the Miami metro area, for example, has one of the highest percentages (40%) of cost-burdened renter households in the country.

 

Conclusion

Plenty of Americans are still moving to states like New York and California, but more people move out than in every year. As we’ve seen with the results of the 2020 Census, small changes over time can make large differences in the demographics of the nation. Bill Fulton of the Kinder Institute says, “‘We are 10-20 years away from the South and West being truly dominant in American culture and American society.’”

What America is seeing at present is a central pillar of the American system of government: federalism. Different states, and even different municipalities, have different policies. If Americans dislike the policies in their current district or state of residence, they have the ability to vote with their feet by relocating.

Thought Leaders/Additional Resources

Flowing Data: Where Americans Live

See Migration History for individual states, 1850-2017, from the University of Washington

See migration patterns for individual counties, from the Census Bureau

American Enterprise Institute: Top Inbound and Outbound States

NerdWallet: U.S. Migration & Housing Affordability Analysis

Tax Foundation: State Migration Trends & 2021 State Business Tax Climate Index

Ways to Get Involved/What You Can Do

Measure: Find out what your state and district are doing about inbound or outbound migration.

  • Do you know the rate of inbound or outbound migration in your community or state? Or the state of the real estate market?
  • What are your state’s policies, such as those regarding taxation?  How are individuals taxed on their income?  What is the sales tax in your state? How are businesses taxed in your state?  How do your energy costs compare?
  • Is there a task force or project in your community to welcome new residents, or does one need to be formed?

Identify: Who are the influencers in your state, county, or community? Learn about their priorities and consider how to contact them, including elected officials, attorneys general, law enforcement, boards of education, city councils, journalists, media outlets, community organizations, and local businesses.

  • Are there community organizations that attend to the community’s new residents?
  • What steps have  your state’s or community’s elected and appointed officials taken?

Reach out: You are a catalyst. Finding a common cause is a great opportunity to develop relationships with people who may be outside of your immediate network. All it takes is a small team of two or three people to set a path for real improvement. The Policy Circle is your platform to convene with experts you want to hear from.

  • Find allies in your community or in nearby towns and elsewhere in the state.
  • Foster collaborative relationships with community organizations, school boards, or local businesses

Plan: Set some milestones based on your state’s legislative calendar.

  • Don’t hesitate to contact The Policy Circle team, communications@thepolicycircle.org, for connections to the broader network, advice, insights on how to build rapport with policy makers and establish yourself as a civic leader.

Execute: Give it your best shot. You can:

  • Talk to your neighbors or other community members.
    • Have they considered moving? Have you considered moving? If so, why?
    • Are there any newcomers in your community?  Where did they move from, and why did they move?
  • See what’s happening to housing inventory and property listing prices in your community.
  • See how many households moved in or out of your county.
  • Engage with your local elected officials; what is being done to welcome newcomers to the community?
  • Engage with your local chamber of commerce. What is the state of the business sector, and what is attracting or discouraging business formation?
  • See whether your state lost or gained seats after the 2020 Census, and history of apportionment, to understand population patterns in your state.

Working with others, you may create something great for your community. Here are some tools to learn how to contact your representatives and write an op-ed.