Last week, the US Census Bureau released its “Population estimates for the new 2021 vintagefor the United States and surrounding territories. I’m always particularly interested in the net inland immigration numbers, which reveal whether people are coming to or leaving a state. These numbers are interesting because, taken together, net migration patterns likely reveal changing preferences for different states.
Although people have different preferences for things like weather and geography, net immigration patterns are unlikely to be heavily influenced by these things when you compare year to year. Why? Well, things like weather and geography rarely change quickly. People know that California has beaches, the northeast has leaves, and Colorado has mountains. It won’t shock residents that Minnesota gets a lot of snow. It is therefore unlikely that in any given year a mass of people will move to Colorado because they suddenly decide that the mountains are calling louder this year than last.
So what factors could be causing people to move? Well, new job opportunities are probably a major factor. For example, the rise of Silicon Valley probably drew a lot of people to California to fill the hundreds of thousands of tech jobs created in the 1970s and 1980s (and beyond). Industry changes like the rise of telecommuting, for example, could also upend people’s residency plans.
Another clearly important factor that changes (and is at least somewhat related to business opportunities) is a state’s political environment. The political regime in place and the consequences of its policies are variables that change frequently and could easily explain the evolution of migration patterns.
Although there are more factors involved in internal migration than politics and politics, I think it is a better indicator of people’s political preferences than their voting habits. “Voting with the feet” or “going out” is a valuable indicator because it costs individuals much more than voting at the polls.
When voters go to the polls, their vote is unlikely to make much of a difference. For this reason, the “cost” of voting for one party over another is minimal. A single voter is unlikely to drive the adoption of a particular policy, and therefore voters are unlikely to receive benefits or penalties for a good or bad vote. As such, there will be little incentive for voters to spend significant time and effort researching the political candidates who are the best fit for them in politics. Economists call this rational ignorance. Simply put, their decision to remain ignorant of politics and politicians is rational, as the costs of awareness (time, effort, etc.) outweigh the benefits.
That said, this cost-benefit calculation often doesn’t hold for migration. When individuals move from one state to another, they are sure to experience different laws. When you choose to move from a state with high income taxes to low income taxes, your decision literally changes your tax rate. On the other hand, when you choose to vote for a politician who supports low income taxes, your vote in a statewide race has almost a 0% chance of changing your tax rate.
Voting with your feet guarantees you have your skin in the game. And, fortunately, the American federalism system ensures that moving to different states, while certainly an investment, is not out of the question. of range. Getting a new tax policy by moving to a new state is certainly easier than moving to a new country, for example.
The biggest losers
The first interesting observation we can make from the census data is that there are three clear “lead states” that are losing the most people. There are two different ways to think about a lower population. First, we might think of the lower number of people in a particular state. Alternatively, we could think of how much smaller the population of a particular state is in terms of percentage. For example, if there are 1,000 fewer people in Kansas this year compared to last year, that’s a much larger percentage decrease than if there were 1,000 fewer people in New York this year compared to compared to last year.
Fortunately for the ease of this analysis, the top 3 losers in absolute numbers are among the top 4 losers in terms of percentage. This top 3 includes New York, California and Illinois. These states each lost more than 100,000 people.
The table above shows two numbers for each state. The first, net migration, shows the number of people who come from another state, minus the people who leave for another state. The second number, population change, shows the total population change, including net migration (national and international), births and deaths.
California’s decline is a far cry from the norm. Indeed, the population of California was increasing from before 1900 until 2019. However, someone with a keen eye might point out that California’s rate of annual population increase has been declining for a long time. Since 2015, California has added far fewer people to the state each year. So is 2020 really off-trend?
As shown in the figure below, the answer is yes. Annual population of California from 2016 to 2020 cash never fell more than 100,000. But from 2020 to 2021? California’s population change (now negative) fell by 192,000. So not only is California continuing its downward trend in population growth, but the trend has accelerated.
Illinois has a similar story. The population has been declining for years and the decline has become more pronounced each year. But 2021 was still a significant departure from the norm. From 2019 to 2020, Illinois lost 79,000 people. The previous two years, that number was in the 50,000s. From 2020 to 2021, the state lost nearly 114,000 people.
Finally, New York’s loss of 319,020 eclipsed their loss of 126,000 and 81,000 in the previous two years.
So the population is plummeting, but what about the aforementioned net migration? Well, for all three states, the number of people moving to other states on the net exceeded the population loss of each state (as shown in the first table above). In other words, the main reason these three states are losing people is because people are moving away to other states, not coming from other states.
It is no exaggeration to say that Americans are fleeing these states.
What about states that are gaining in population?
Not surprisingly, some of the fastest growing states by percentage are western states near California.
But Florida and Texas top the list with the largest population increases and greatest levels of net migration. Between the two, Texas grew faster in percentage terms. However, the population increase of either state was not out of trend compared to past increases. The story seems less about where people go at and more on where they run from.
Population and politics
Are bad state policies in California, New York and Illinois responsible for people leaving? The acceleration of exit from these states over the past two years certainly suggests a relationship between the pandemic and exit, but it is possible that the remoteness of these states reflects a desire to escape high-density areas where the COVID can thrive better.
However, given the net migration to Florida where the population is denser than California and almost as dense as New York, this seems unlikely. Likewise, New Yorkers wishing to escape the density of NYC could easily escape to upstate New York, or New Jersey and Pennsylvania (which also have declining populations). Fully assessing this hypothesis would require more detailed information, but I find it unconvincing that fear of COVID drives people from high-density states to low-density states.
Telework could also be at the origin of much of this movement. New Yorkers and Californians lucky enough to nab high-paying jobs in those states could now move to somewhere with a lower cost of living.
On the other hand, in the case of Illinois, for example, it seems strange that residents feel the need to leave the state to bring down the cost of living. If they want to move to a rural area, why not just move to rural areas in their own state? If they move to another major metropolitan area, how much cheaper could it be compared to Chicago? What is also the percentage of employers who have guaranteed permanent teleworking as an option?
Finally, and I think very convincingly, it looks like a lot of the movement could be related to pandemic policies. Lockdowns, documentation mandates, school closures and other COVID regulations are probably too much for some to tolerate. Anecdotally, Elon Musk, the nation’s largest individual taxpayer, followed through on his threat to leaving California due to COVID-19 regulations, and many others also left the state for similar reasons.
Whatever the reason, the data is clear. Americans want to leave New York, California and Illinois. These three states are the biggest losers (population).