About this time of year, my far-flung friends start sending me local newspaper articles about how everyone is leaving their state.
It is somewhat amusing watching newsrooms in Los Angeles, Chicago, New York, New Jersey, and Connecticut try to spin what might be motivating people to leave these places at historic rates. After all, these newsrooms had a role in creating the societies that people increasingly find undesirable. Naturally it is difficult for them to explain being rejected.
If you read California papers, the massive out-migration narrative is a lot like sitting through a Hillary Clinton campaign rally: The people leaving are obviously leaving because they are less superior in some way to the people who are staying or coming in. They are less wealthy. They are less educated. They are less “elite.”
This is, of course, statistically untrue. Any place that has an inflow of Millennials is going to appear more “educated” on paper, because you are talking about the generation in the US that has purchased the most college degrees (using an epic amount of federal taxpayer-funded debt that they now passionately want to have erased because they feel they can’t afford it). California is also home to fully one-third of the nation’s welfare recipients.
Staying in California is not a story about elite-ness, but leaving California certainly is.
A considerable amount of wealth is currently walking out the door in California, and it is hardly a new phenomenon. About 13,000 businesses have left California, primarily for the pro-business economic environment of Texas, over the last decade. According to the Stanford Center on Poverty and Inequality, California has lost hundreds of its highest net worth individuals following the passage of Prop 30 in 2012 (and you can bet even more after tax reform). You can flip this trend with New York, New Jersey, and Connecticut versus Florida and it’s basically the same thing. Or Chicago and basically anywhere in the South.
Just over half of California’s registered voters have considered leaving the state, according to a UC Berkeley Institute of Governmental Studies poll conducted for the Los Angeles Times. Republicans and conservative voters were nearly three times as likely as their Democratic or liberal counterparts to seriously have considered moving — 40% compared with 14%, the poll found. Conservatives mentioned taxes and California’s political culture as a reason for leaving more frequently than they cited the state’s soaring housing costs.
As we have seen with the public policy factors that have contributed to PG&E’s bankruptcy, this out-migration means that the people who remain in the state are only going to appear more politically extreme going forward. They are going to cement further the political trends that are driving businesses and high net worth individuals away. This isn’t really going to trigger the folks in Sacramento until it starts impacting Silicon Valley directly, however. Silicon Valley is pretty much propping the entire state up right now.
But what about the narrative that housing costs are driving out-migration? Maybe for some people, but housing costs in Texas, Colorado, and other destinations are already in bubble territory. You are looking at housing costs that are multiples of their pre-financial crisis highs in those locations. People are making an investment in leaving California, not just downsizing.
Instead, I would suggest you consider what you are getting for what you are paying. And I’m not just talking about square footage or quartz countertops. I am talking about good schools, functional infrastructure, safe and civil neighborhoods. The number one complaint I hear from friends living in these states is that they are paying the equivalent of a full-time job in taxes and they look around at their city and there’s absolutely nothing to show for it. The money is going into a pension black hole or self-dealing government contracts. Or the money is going to fund political priorities that they do not support. No matter what the qualm, the point is they feel their money is being flushed down the drain.
Many of these states have seen a full decade of out-migration, and remarkably it is not changing their perspectives on governance at all. It’s going to be interesting to see what our country is going to look like after the great re-alignment is finished.