Many of my long-time readers know I have an odd fascination with trying to explain why there’s really no California exodus.
My thesis is based on math that shows ex-Californians are proportionally a small share of the state’s population. I’m well aware that my “no exodus” argument runs against conventional wisdom that’s based on statistics tracking California’s nationally leading number of residents exiting. But those figures overlook California being the most-populated state in the US.
So, I was thrilled to see a recent report from the Federal Reserve Bank of Dallas ranking states by the “stickiness” of their population. Stickiness refers to percentage of residents of a state who were born there.
Dallas Fed economists found California was the fourth “stickiest” state with 73% of its residents being native-born. Who knew? Wink!
No. 1 was Texas at 82.2%, then came North Carolina (75.5%), and Georgia (74.2%). Following California was Utah (72.9%) and Florida (72.7%). Let me call them the “sticky six.” (Note: For those seeing a political spin in that group, stop – the four least-sticky places were also “red” states: Wyoming at 45.3%, North Dakota at 48.6%, Alaska at 48.7%, and South Dakota at 54.2%.)
And the Dallas Fed double-checked population loyalty by also eyeing migration data similar to my own reporting – looking at the share of residents leaving for other states in 2021.
California tied at 11th lowest with sticky six members Georgia and Florida with exits equalling 2.1% of their population. Texas was No. 1 at 1.5%. The exit share in North Carolina and Utah ranked 18th at 2.3%.
Say, what?
I asked Pia Orrenius, the Dallas Fed’s senior economist, to explain what the report saw as California’s “notable exception” status.
“There are things that are exogenous, like size and weather; California does very well on those counts,” Orrenius says.
The physical size of a state matters due to the added costs associated with long-distance relocations. Texas is the nation’s second-largest state based on square miles. California’s No. 3. Then there’s Utah (13), Florida (22), Georgia (24), and North Carolina (28).
“Then there is economic opportunity, including job growth and the number of cities – correlated with diversity of jobs and high wages … California does well there too,” Orrenius says.
For example, my trusty spreadsheet shows California ranked ninth-best among all states for pre-pandemic job growth (2010-19) at 22%. Other sticky six states: Utah was No. 1 at 32%, Florida, No. 5 at 25%, Texas was No. 6 at 23%, Georgia was No. 12 at 20% and North Carolina was No. 14 at 18%.
Yet Orrenius noted with surprise that in California, “people stay there despite the high housing costs and a relatively high tax burden.”
Well, none of the stickiest half-dozen are bargain states. Consider a crude homebuying affordability index crafted by my spreadsheet, comparing a 2021 estimated mortgage payment with the statewide median income.
Of course, California was worst among the states with 36% of pay going to the home loan. Utah and Florida were ninth-highest at 26% and North Carolina and Georgia were 14th-highest at 23%. Texas was the “steal” – 22nd highest at 20%.
And yes, California’s tax burden is high. It ranked 35th worst when I mashed up three tax burden scorecards. That’s not much worse than Utah’s No. 32.
But others in the sticky six are below average for tax bites: North Carolina (20), Georgia (16) Texas (15) – and Florida, the fifth-lowest burden.
Does it add up?
Maybe life choices are not all about dollars and cents.
One reason folks stay in California is the breadth of things to do here. Ponder my “fun” grades used to rank states in my series of “Leaving California” scorecards.
If you want an entertaining lifestyle, California is fourth-best. Among the sticky six, Florida was No. 1. North Carolina and Utah tied for 15th. Middle-of-the-pack fun was found in Texas (No. 29) and Georgia (No. 30).
Yes, California has its challenges. And, yes, its costs don’t add up for many people.
Still, compared with other states, a large slice of residents seem to be pleased enough to stay. That’s not just the trusty spreadsheet talking. The Dallas Fed’s “sticky” math agrees.
PS: California’s immense population challenge is attracting new residents. My analysis of migration data shows the state is the worst in the nation for its share of population that just arrived from other states.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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Source: Orange County Register
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