CALIFORNIA MIGRATION A COMPARATIVE ANALYSIS

Transcription

1 CALIFORNIA MIGRATION A COMPARATIVE ANALYSIS MARCH 2016

2 Next 10 is an independent nonpartisan organization that educates, engages and empowers Californians to improve the state s future. Next 10 is focused on innovation and the intersection between the economy, the environment, and quality of life issues for all Californians. We provide critical data to help inform the state s efforts to grow the economy and reduce greenhouse gas emissions. Next 10 was founded in 2003 by businessman and philanthropist F. Noel Perry. PRODUCED BY: NEXT 10 F. Noel Perry Sarah Henry Marcia E. Perry Stephanie Leonard PREPARED BY: Beacon Economics Christopher Thornberg Jordan Levine Rafael De Anda Brian Vanderplas DESIGN BY: José Fernandez ONLINE AT Data in this report can be accessed on where users can chart and compare all 50 states on over 150 indicators.

3 Next10 Overview' Inrecentyears,Californiahasexperiencednegativedomesticmigration,meaning morepeoplearemovingfromcaliforniatootherstatesthanthenumberof residentsmovingtocaliforniafromotherpartsofthecountry.theincreaseinthe numberofresidentsmovingoutthegoldenstatetootherpartsoftheunitedstates isoftenblamedoncalifornia'shighpersonalincometaxes.however,datafromthe U.S.CensusBureaushowthisperceivedconnectionbetweenoutKmigrantsandthe state sincometaxisoverblownatbest,andnonkexistentatworst. Infact,statisticsonthecharacteristicsofCalifornia sinboundandoutbound migrantssuggestpatternsinmigrationoverthepastdecadearemorerelatedto housingcostsinthestatethantotaxstructure.that snottosaycalifornia stax structuredoesnotrequirereform indeed,streamliningthetaxcode,broadening thetaxbase,andloweringtaxrateswouldlikelybolsterthestate seconomyfurther. However,thatdoesnotimplicatethetaxregimeasthesole,oreventheprimary, sourceofoutkmigrationfromcalifornia. WhileitistruedomesticmigrationintoCaliforniahascontinuedtobenegativein recentyears,itisimportanttolookatwhoisleavingthestateandwheretheygoing. Thisreportanalyzesdataon: 1. WhereCaliforniaranksamongotherstatesintermsofnetdomestic migration 2. Theincome,educationalattainmentlevels,andoccupationsofCalifornia's inboundandoutboundmigrants 3. Thereasonsthatmigrantsareoptingtoleavethestate Additionally,itisimportanttoconsiderthecharacteristicsofthoseenteringthe statefromothercountries. ThisanalysisisbasedonthemostcurrentdataavailablefromtheU.S.Census Bureau samericancommunitysurvey(acs).theacsdetailsifanindividualmoved inthepastyear,wheretheymovedto,wheretheymovedfrom,theirincome,their educationalattainment,andtheiroccupation.thisdatawillgiveinsightintonot onlythenumberofpeoplewhoaremigratinginandoutofcalifornia,butkey demographicfeaturesaboutthesemigrants.additionally,thisdatasetallowsusto excludethemigrationofcollegestudentswhooftenonlymovetemporarily. Themainfindingsinthisanalysisinclude: Californiaexperiencedanegativenetdomesticmigrationof625,000from 2007to2014.Inotherwords,625,000morepeoplemovedoutofCalifornia tootherstatesthanmovedintocaliforniafromotherstates. ThevastmajorityofoutKmigrantswenttojustfivestates:Texas,Oregon, Nevada,Arizona,andWashington. CaliforniaMigration:AComparativeAnalysis 2 March2016

4 Next10 Californiawasanetimporterofresidentsfrom15statesandtheDistrictof Columbiafrom2007to2014. Californians25yearsofageandoverthatdonotpossessfourKyearcollege degreesaccountedforover469,800outkmigrants.however,californiawas actuallyanetimporterofnearly52,700residentswithabachelor'sdegreeor higher. Californiaremainsthetopstateattractinginternationalmigrants,manyof whicharelowkincomeearnersandthosethathaveobtainedabachelor s degree. Despiteseeinganoverallnegativenetdomesticmigration,Californiaiscontinuing toattractnewresidentstothestate.despitetherhetoricregardingcalifornia s oppressivetaxregimeoritsoverallhostilitytobusiness,individualscomingto CaliforniaareprimarilyconcentratedinhighKwageoccupations,whichenablethem tobetterabsorbthestate shighhousingcostsandcostofliving.incontrast,the majorityofcalifornia'soutboundmigrantstendtoearnlessthan$30,000annually. MigrationtrendsalsoshowthatthemiddleKclassisbeingpricedoutofthestate.Net migrationofthoseearningbetween$30,000and$49,999accountedfor43,100 residentsleavingcalifornia.meanwhile,lowkincomeearnersfromothercountries arereplacinglowkincomeearnersleavingcaliforniaforotherstates. HighhousingcostshavemadeCaliforniaanincreasinglydifficultplaceforlowerK incomeresidentswithlesseducationtomaintaintheirqualityoflife,whilemany middlekincomeresidentsarehavingtroublemovingfromrentingto homeownership.meanwhile,thosewithhighereducationandhighkwage occupationscontinuetofindthestateanattractiveplacetolive.ultimately,the choiceofwheretoliveisoneofconsumptionandreflectsavarietyofpreference factors.basedonthedata,itappearsthatdespiteahighcostofliving,individuals whocanaffordtoliveincaliforniawill,becauseofallthestatehastooffer. Where'are'Californians'Migrating'To?' From2007to2014,Californiasaw625,000moreU.S.residentsmigrateoutofthe statethanin.thevastmajorityofthesemigrantswenttoonlyahandfulofstates. ThestateseeingthelargestnetmigrationfromCaliforniawasTexas,whichsaw over212,600netdomesticmigrantsfromcaliforniabetween2007and2014.other statesthatwereprimarydestinationsofcaliforniakoutboundmigrantswere concentratedinthewesternunitedstates,withoregon,nevada,arizona,and Washingtonroundingoutthetopfive.Together,thetopfivestatesforCalifornia s netoutbounddomesticmigrantsaccountedforover550,800(or88). Californiawasnottheonlystatetoseenetoutbounddomesticmigrationfrom2007 to2014.indeed,23otherstatessawnegativenetdomesticmigrationoverthesame period.besidescalifornia,whichhadthesecondlargestoutboundmigration,the statesseeingthelargestamountofnetoutboundmigrationwereconcentratedin CaliforniaMigration:AComparativeAnalysis 3 March2016

5 Next10 thenortheast,withnewyorkseeingthelargestnumberofnetoutbounddomestic migrants(967,400).illinois,michigan,andalaskaalsosawdomesticmigrationturn negativeovertheperiod,howeverlosseswerenotassteepinabsolutetermsas lossesinnewyork. Importantly,Californiasawpositivenetdomesticmigrationfrom15statesandthe DistrictofColumbia,despiteanoverallnegative,from2007to2014.Thestates accountingforthelargestinflowstocaliforniaincludenewyork,illinois,michigan, NewJersey,andAlaska.Togetherthesestatesaccountedforanetinflowofover 119,600migrantstoCaliforniafrom2007to2014.Californiaattractedmany residentsfromsomestatesthatdonothaveanincometax,includingalaska (20,700)andFlorida(18,000).Aswillbediscussedbelow,thiscountersthe perceivedlinkbetweenmigrationandtaxrates,andsuggestsotherfactorsare drivingmigrationtrends. In2014,CaliforniasawoutKmigrationfall,withjustover52,000residentsleaving California,onnet.ThatputsCaliforniathirdinnetnegativedomesticmigration behindnewyorkandillinois.floridaattractedthemostdomesticmigrants,with netinkmigrationtotalingover136,300in2014.what smore,halfthestatesinthe nationsawnegativenetdomesticmigrationovertheperiod,indicatingthatthisis notacaliforniakspecifictrend. Who'are'California's'Migrants?' WhileCaliforniahasseenasignificantnumberofresidentsleavethestateinrecent years,itisimportanttolookatwhoisoptingtoleavethestate,andconverselywhat thedemographicmakekupisofthosestillmovingintothestate.acommonthemeis tolookatthemigrationoutofcaliforniaandblameitonapoorlyperforming economyorincometaxeswithoutlookingatwhothepeoplemigratingactuallyare, CaliforniaMigration:AComparativeAnalysis 4 March2016

6 Next10 or,ultimately,whytheyareleavingthestate.thisisespeciallyimportantfroma publicpolicyperspectiveinthathavingtherightdiagnosisiscriticaltoovercoming challenges.indeed,iftaxratesarethedriversofoutkmigration,thepolicy recommendationthatlogicallyfollowsistolowerthetaxrate.however,if,asthe datasuggests,thereareothermoreimportantdrivers,thenthereductionoftax rateswilldolittletostemthetideofthoseleavingthestate. Lookingattheincomelevelsofdomesticmigrantsunderminestheassertionthat California sprogressivetaxsystemisdrivingresidentsfromthestate.infact,from 2007to2014Californiahasactuallyseenanetpositivedomesticmigrationof individualswhoearnover$50,000annually.thismeanstherearefactorsother thanincometaxesimpactingmigrationdecisions,sincethemajorityofout migrationcanbeattributedtoresidentswhoearnlessthan$30,000andarenot subjecttocalifornia shigherupperkincometaxbrackets.thisalsofollowsthe earlierfindingthatcaliforniagainsresidentsfromstateswithnoincometaxes. Indeed,itappearsthatCalifornia shighcostoflivingandhousingcosts,particularly formiddlekandlowerkincomeresidents,isplayingalargerroleinthedecisionto moveintooroutofthestate. EducationalattainmentlevelsofCalifornia smigrantsprovideperhapssomeofthe bestinsightintotheunderlyingnuancesofmigrationinthestate.toillustrate,from 2007to2014,Californiaresidents25yearsofageandoverwithabachelor sdegree orhigherhadthelowestpropensitytoleavethestate,withthisdemographic actuallyseeinganetinflowofnearly52,700domesticmigrantsovertheperiod.in contrast,californiaresidentswhodonotpossessabachelor sdegreehadthe highestpropensitytoleavethestate,withthisdemographicseeinganetoutflowof over469,800domesticmigrantsovertheperiod.thisshouldnotcomeasasurprise giventhateducationisaprimarydriverinincomedisparitiesandtheconcentration ofoutkmigrantsinthelowerkincomecategories. ThedataonoutKmigrationfromCaliforniabyoccupationtellsasimilarstoryas whenanalyzedaccordingtoeducationalattainmentandincomelevels.thevast CaliforniaMigration:AComparativeAnalysis 5 March2016

7 Next10 majorityofoutboundmigrantswereconcentratedinlowerkskilled,lowerkpaying fields namelysales,officeadministration,transportation,andfoodpreparation, whichtogetheraccountedforanetoutflowofover192,700domesticmigrantsover theperiod.incontrast,californiacontinuestoattractworkersinhighkskilled,highk wagefieldslikecomputer/mathematical,healthcarepractitioners,science,and Architecture/Engineeringoccupations,attracting54,200netinboundmigrants. Theseoccupationalpatternssupporttheargumentthathighhousingcostsrather thanincometaxesareimpedingpositivenetdomesticmigrationtothestate.since Californiaisarelativelyprogressivetaxstateintermsofincometaxes,increasesin theincometaxburdenarelesslikelytoaffectworkersinlowkandmiddlekwage occupationsthanthoseinhigherkwagejobs.yet,itwaslowerkwageandmiddlek wageworkerswholeftthestateingreaternumberswhiletherewasactuallyan influxofhigherkwageworkers. Why'are'Californians'Migrating?' Ultimately,thechoiceofwheretoliveisoneofconsumption,andreflectsavariety ofpreferencefactors.highhousingcostshavemadecaliforniaanincreasingly difficultplaceforlowerkincomeresidentswithlesseducationtomaintaintheir qualityoflife,whilethosewithhighereducationinhighkwageoccupationscontinue tofindthestateanattractiveplacetolive. Foryears,Californiahassufferedfromachronicundersupplyofhousingdespite risingpopulationandincreaseddemand.forexample,althoughhometomorethan 12ofthenation spopulation,californiahasconsistentlyaccountedforjust8of residentialpermittingforalmosttwentyyears.infact,between2007and2015, Californiaaccountedforjust9ofthenewresidentialpermitsinthenation.The statesimplyhasnotbuiltenoughnewhousingtokeeppacewithitsexpanding populationoverthelongterm. Indeed,thelackofpermittingdoesnotappeartobeademandissue.Accordingto thecaliforniaassociationofrealtors,inventorylevelsaveragedjustoverfour monthsofsupplyin2015incalifornia,whilethenationoverallsawinventorylevels averageoverfivemonthsofsupply.thismeansattheaveragerateofsalesin2015 thestockofavailablehomesincaliforniawoulddryupinjustfourmonths,while thestockofavailablehomesinthenationoverallwouldlastfivemonths. CaliforniaMigration:AComparativeAnalysis 6 March2016

8 Next10 Share of U.S. Residential Permits () California's Share of U.S. Residential Permits 1995 to Source: U.S. Census Bureau What smore,vacancyratesincaliforniaarewellbelowthenationoverall,where thehomeownervacancyratewas1.9in2014,comparedtojust1.1incalifornia. Thestoryissimilarforrenters,withtherentalvacancyrateat7.6intheUnited Statesoverallcomparedtojust4.5inCalifornia.ThissuggestshomesinCalifornia aremoreinkdemandrelativetothenationoverall. HomesinCaliforniaalsotendtobemoreexpensivethaninotherstates.For example,homesinaustin(themostexpensivemetroareaintexas)soldfora medianpriceofjustover$261,000in2015,comparedtonearly$395,000in Californiaasawhole,accordingtotheNationalAssociationofRealtors.Pricesare evenhighernearthecoastwithhomesinthebayareasellingforamedianpriceof over$700,000in2015.thisputsthedreamofhomeownershipoutofreachfor manyresidents,especiallyforthosewhoarenotinhighkwageoccupations. TherentalmarketinCaliforniaisalsoexpensivecomparedtoothermetropolitan areas.accordingtoreis,thecosttorentanapartmentintheunitedstatesaveraged $1,227in2015,whilethecosttorentinCalifornia smajorjobcenters,likesan Francisco($2,557),SanJose($2,109),LosAngeles($1,602),andSanDiego($1,545), waswellabovethisrate.withthesefigures,anindividualoptingtoliveinanarea withrentsnearthenationalaveragecouldsaveover$10,000annuallycomparedto thesanfranciscoandsanjoseareas. ItisimportanttonotethatthesepricedifferencesarenotjustaresultofCalifornia beingamoredesirableplacetoliverelativetootherareas.ourresearchsuggests thatalitanyoffees,ceqa,nimbyism,andthefactthatproposition13forces municipalitiestolooktopermitanddevelopmentrelatedfeesforrevenue,all contributetocalifornia saffordabilityissue.so,tosolvetheoutkmigrationissue,the focusshouldbeputontheseroadblocks,ratherthanthestate spersonalincometax rate. CaliforniaMigration:AComparativeAnalysis 7 March2016

9 Next10 Basedonthedata,itappearsthatdespiteahighcostofliving,individualswhocan affordtoliveincaliforniawill.however,itisimportanttolookcloselyathow affordabilityhasimpactedmigration,andwhyithasbeenapersistentissuein Californiaovertheyears. International'Migrants' Countertothetrendsobservedindomesticmigration,Californiacontinuestobethe mostpopulardestinationforinternationalmigrants.between2010and2015, 835,000netinternationalmigrantsmovedintoCalifornia morethananyother stateduringthatperiod.newyork(630,800),florida(610,500),andtexas (463,400)havealsobeenpopularstatesforinternationalmigrants. Furthermore,unlikepatternsindomesticmigration,themajorityofinternational migrantsmovingintocaliforniaearnedverylowincomes.morethan80of migrantsenteringcaliforniabetween2007and2014earnedlessthan$30,000per year,whichisnotmuchdifferentfrominternationalmigrantsenteringinnewyork (78),Florida(85),orTexas(78). Despiteearninglowwages,manyinternationalmigrantsenterthenationwithan advancededucation.approximately33ofcalifornia sinternationalmigrants25 yearsofageandabovehadobtainedabachelor sdegree,similartotherateinnew Yorkandgreaterthanthe27rateinbothFloridaandTexas.Themajorityof internationalmigrantsenteringcaliforniawithabachelor sdegreecomefromasia. Conclusion' AlthoughCaliforniaexperiencedanegativenetdomesticmigrationof625,000from 2007to2014,itappearsthatdespitehighhousingcostsandahighcostofliving, individualswhocanaffordtoliveincaliforniawillandinternationalmigrants destinedfortheunitesstateswillcontinuetostarttheirsearchforabetterquality oflifeincalifornia.thisisincontrasttothecommontalkingpointthatindividuals aredecidingtomovefromthestatebecauseofhighpersonalincometaxes.infact, Californiahasseenanetinflowofresidentswhoearnover$50,000annually,have bachelor sdegreesand/oradvanceddegrees,andworkinhighkskilledoccupations. CaliforniaMigration:AComparativeAnalysis 8 March2016

10 Next10 Californiastillhasplentyofroomforimprovement.Thestate spermittingrulesand itsbuildingregulatoryenvironmentcouldbeeasedandstreamlinedtoaddress California srealenemy:thehighcostofhousing.highhousingcostshavemade CaliforniaanincreasinglydifficultplaceforlowerKincomeresidentswithless educationtomaintaintheirqualityoflife,whilethosewithhighereducationand whoworkinhighkwageoccupationscontinuetofindthestateanattractiveplaceto live. ' ' ' ' ' ' CaliforniaMigration:AComparativeAnalysis 9 March2016

11 Next10 Appendix' CaliforniaMigration:AComparativeAnalysis 10 March2016

12 Next10 CaliforniaMigration:AComparativeAnalysis 11 March2016