What is the best state to call home after deciding to quit California?
First, let’s remember that far more folks talk about leaving California than actually do. For example, a recent poll showed 26% of residents were pondering a move out-of-state. Yet in 2017-2019, Census Bureau stats show just 3% of the population departed.
But for those who are seriously considering a move — or those who like to compare state economies — I loaded my trusty spreadsheet with cost-of-living and employment data — not to mention a key political stat — creating a guide to good targets for antsy-to-exit Californians.
I’ll admit, for starters, that averages and other statistical measurements rarely speak to everyone’s personal situation. And states are not easy to classify by economic figures, too, especially those with a healthy mix of urban and rural communities.
Caveats noted, here are my best estimations of what a typical Californian could consider when pondering relocation — and where the math might lead them.
Cost of living
Zero surprise: California is a pricey place to live.
The cost-conscious relocation candidates range from folks in financial distress to those on a fixed income like retirees and a new group created in the pandemic era — a worker who can do the job remotely.
Consider what a state-to-state “price parity” living-expense index from the federal Bureau of Economic Analysis tells us about cheap relocation possibilities.
Housing: By this math, California is the nation’s most expensive to put a roof over one’s head. Most affordable? Mississippi, with housing 61% cheaper than the Golden State. Then comes Alabama, Arkansas and West Virginia at 60%, Kentucky at 56% and Oklahoma and South Dakota at 55%.
Services: The cheapest places to get people to fix stuff and care for you are Alabama, Mississippi and Tennessee where services run 16.6% below California pricing. Next was Kentucky at 16.3%, then Arkansas and Louisiana at 16%. California had the fourth-costliest services.
Goods: Relatively speaking, California shopping is nowhere as pricey on a national scale. Nevada was the best place to be a shopper with goods 10.5% cheaper than the Golden State, by this math. Next was Mississippi at 10%, Utah at 9.9%, West Virginia at 9.8%, Arkansas at 9.7% and Arizona, Kentucky, New Mexico and South Dakota at 9.6%. Still, California has the fourth-priciest goods.
Californians seeking a lifestyle bargain should note the bureau’s overall cost-of-living index. This metric says the most affordable state is Mississippi where it’s 27.5% cheaper to live.
Next was Arkansas at 27.2% less expensive; Alabama at 26.3%; West Virginia at 25.2%; Oklahoma at 25.1%; and Kentucky at 24.9%. California ranked next-to-last.
Not everyone pondering a relocation is simply being cost-conscious.
Employment and wage levels are big factors for others who understand that more affordable states often come with lower salaries.
To analyze opportunities, I looked at annualized average wages from 2020’s second quarter, creating a national pay scale. The highest annual wages were found in Massachusetts at $81,640, then New York at $79,040. California’s No. 3 ranking at $76,336 is a key reason many folks stay. Next was Washington at $74,048, Connecticut at $73,164 and New Jersey at $71,552.
Several factors alter the value of those paychecks.
Start with the ability to keep a job. Look at average unemployment rates from 2015-2019 and you see North Dakota was the state in which you were least likely to lose a job with an average 2.7% unemployment rate. Next was Hawaii and New Hampshire at 2.8%, Nebraska and Vermont at 3%, then Iowa and South Dakota at 3.1%.
We cannot overlook how taxes hit wages, too. Combining tax data from the IRS, the BEA and WalletHub, I created a yardstick for average effective tax rates for a household.
For those who hate paying taxes, Alaska is your state with just 16.2% of incomes collected by the state and the feds. Next was Wyoming at 17.5%; Mississippi and West Virginia at 18.1%, Montana at 18.2% and Alabama at 18.4%.
California, by this math, ranked 17th-worst with 25.3% of income spent on taxes.
The bottom line
What’s a paycheck worth?
I adjusted pay for unemployment rates and the tax bite. Massachusetts was still No.1 with my definition of “take-home pay” at an average $55,190. Next was California at $54,230, then New York at $52,560, Washington at $51,900, Connecticut at $50,900 and New Hampshire at $49,190.
I’ll also note the 69% salary gap between No. 1 and No. 50 Mississippi at $32,680
Of course, the big issue for those watching their dollars and the job market is how much a paycheck can buy. So I recalibrated take-home pay with the BEA cost-of-living yardstick.
The typical Californian thinking about relocation should consider Massachusetts first, with $42,190 in theoretical buying power. Next was Connecticut at $40,910, Washington state at $40,410, North Dakota at $39,530 — then, yes, California at $39,321 — and Virginia at $39,220.
California’s high grade helps explain why 97% of residents didn’t move in 2017-19. By the way, only three states — Michigan, Texas and Illinois — had smaller shares of their population depart.
And the move-or-stay decision gets harder after costs are added in. The gap between states’ buying power narrows to just 36% between No. 1 and No. 50 Hawaii at $32,680.
Now I’m frequently told that California’s progressive political agenda motivates certain people to leave the state. So I further tweaked my scorecard to see where conservative thinkers might want to go.
How? By further adjusting the buying power results with a measure of President Trump’s popularity in the 2020 presidential election. Note: He got just 34% of California’s votes.
Retooled for conservative eyes, the best state for opportunity, costs and politics, by my math, was North Dakota followed by Wyoming, West Virginia, Alabama, Oklahoma and Alaska.
California? It ranked 12th worst.
Every household’s requirements differ — from financial to philosophical. No ranking will perfectly capture the dream location.
And I’ll admit, my scorecard is better for folks seeking a solid job market. Retirees or remote workers can primarily focus on the cost of living metrics.
To gauge the reasonableness of my scorecard, I compared results with the Top 10 states to which Californians chose to move in 2017-19 …
No. 1 Texas: Ranked by my metric as the 12th-best state for buying power and No. 8 after politics are factored in. Not terribly far off, I’d say.
No. 2 Arizona: 16th-best buying power; No. 20 with politics included. Its cost-of-living — 17% cheaper than California, by BEA math — is a key attraction.
No. 3 Washington state: Third-best buying power — an exact ranking match — but No. 29 with politics included. It’s basically California, with rain and greenery.
No. 4 Nevada: 30th-best buying power; No. 36 with politics included. This neighboring no-income-tax state is 16% cheaper than California.
No. 5 Oregon: 20th-best buying power; No. 42 with politics included. This neighboring state is 12% cheaper than California.
No. 6 Florida: No. 44 buying power; No. 40 with politics included. No income tax and 13% cheaper living attract retirees.
No. 7 Colorado: Ninth-best buying power; No. 31 with politics included. The state is 12% cheaper than California.
No. 8 New York: 13th-best buying power; No. 38 with politics included. You need a California salary (or more) to make this move pencil out.
No. 9 Idaho: No. 49 buying power; No. 27 with politics included. Poor job market but it’s become a retiree haven due to 21% cheaper living than California.
No. 10 North Carolina: 23th-best buying power; No. 30 with politics included. Its draw? Likely being 21% cheaper than California.
Source: Orange County Register