A swiftly declining number of Americans are choosing to move to California.
While the great “California exodus” debate grabs headlines, another slice of migration patterns reveals a far more ominous population trend for the Golden State. Basically, it’s become “a great place to visit, but who’d want to move there?”
This is not good news in a world of numerous shortages that now includes people, who have been elevated to a critical commodity. Who will fill our jobs? Use our facilities or businesses? Or, more crucially, pay taxes?
Consider what my trusty spreadsheet learned while studying fresh taxpayer stats from the IRS. This data tracks where Americans lived in 2021 when they filed their 2020 tax returns – and if they moved in that year.
Now, this math isn’t perfect – it doesn’t track non-filers, for example – but it’s a decent indicator of migration trends for a lucrative demographic cohort: taxpayers.
With caveats noted, California in 2021 had 385,188 new taxpayers – that’s the number of dependents on IRS filings – who moved to the state. And, yes, only two states – Texas and Florida – had more arrivals.
So you might think, “Jon, what’s the problem?”
Well, those inbound relocations are a relatively small share of California residents, equalling roughly 1.3% of the state’s nearly 31 million taxpayers. No state had a smaller share.
Look, no matter the reason – costs, congestion, civics or civility – California’s sun-surf-sand lifestyle isn’t selling. Its population inflow was roughly half the national norm with 2.7% of U.S. taxpayers making an interstate move in 2021.
Worse, this disinterest in California is growing. Go back to 2016, well before anybody without a doctorate in pandemics knew what a coronavirus was.
IRS stats that year show 432,443 taxpayers arrived in California. Again, the third-largest influx behind Texas and Florida.
But consider how life changed over these five years. A lockdown mentality inspired an upswing in national migration patterns. Nationwide, interstate relocations grew 11% between 2016 and 2021. Texas had 17% growth. Florida was up 23%.
But California was the place to avoid. Moves to the Golden State fell by 11% in this period. Yes, FELL.
Only two states — North Dakota and Louisiana — had bigger drops.
Who’s coming?
The 2021 influx was heavy with single people.
That’s logical as young adults are frequent movers, and high-cost California isn’t a friendly place for folks with families.
The average new Californian’s tax filings had 1.6 dependents – including the filer. Only five states had smaller inbound households. And the national average for interstate moves was 1.76 dependents.
Perhaps fewer couples moving to California explains the worrisome trend in incoming earning power.
California arrivals averaged $87,100 in adjusted gross incomes for 2020 – 2% below the average U.S. interstate move with $89,100 income.
Yet five years earlier, the California newcomer’s $75,200 income was 11% above the typical $67,900 income of a U.S. relocation.
Perhaps California’s lure is seen as a quest for opportunity and fatter paychecks. Folks who didn’t leave the state averaged $103,000 in adjusted gross income for 2020 vs. $86,700 nationally.
From where?
Let’s ponder the half-dozen states with the biggest drop in taxpayers lost to California since 2016.
It’s an unusual mix from heavily populated states.
Start with the 36,092 Texas transplants who moved to California in 2021, the largest source of new Californians. But that flow has been cut by 9,504 in this five-year span.
And then there’s Florida, which ranked sixth. The state lost 19,863 taxpayers to California, an outflow that was down 2,276 in five years.
Now before you say “politics” or “cheap housing” or “low taxes,” note the four states between Texas and Florida: Costly “blue” states.
Illinois lost 15,897 taxpayers to California in 2021, down 4,429 in five years. Virginia’s 13,917 relocations were off 3,048. New York’s 27,731 was down 2,373. And New Jersey lost 9,402 – a 2,364 dip.
Now, if your job was selling California as a good place to live, you might eyeball the few states with noteworthy growth in inbound relocations. That search tells us a key theme was proximity.
Washington had 27,915 moves in 2021 to California, up 2,519 in five years. Oregon’s 15,797 movers were up 1,897. And Nevada had 24,354 movers, up 802.
What’s next?
The buzz of most migration discussions focuses on people quitting California.
IRS stats show 716,948 Californians departed for other states in 2021, the most exits in the nation. And that’s up 38% in five years, the third-largest jump in the nation.
Despite the unnerving growth, however, the 2021 outflow equals just 2.3% of state taxpayers. And if only nine states do a better job at keeping people, by this measurement, how much improvement can be made?
Now Texas is better at retention, losing just 1.9% of its taxpayers to other states. But Florida is only average, with a 2.7% departure rate. Michigan is best, by the way, at 1.7%.
So, ongoing concerns about the slim slice of departing Californians seem misplaced. Almost as befuddling is that I’m not even sure who tries to bring folks to California.
Maybe nobody cares. Ask your neighbor and they’ll probably say the state is already too crowded. The business community prefers politics over marketing. And too many politicians eye saving the world – or a tiny hill – rather than helping fix in-state needs.
For a state known for innovation, Californians seem awfully comfortable with the status quo.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
