Imagine a business with best-in-class customer retention, but the worst performance for attracting new clients.
What do you think this enterprise should do to reverse its shrinking growth?
That, dear readers, is California’s interstate migration challenge.
Now, many folks are tired of hearing this from me, but California has a serious attraction problem — not a major population exodus.
Let me repeat: In the 10 years ended 2019 — the latest Census Bureau migration data available — the state lost 6.2 million residents to other states. But when you measure that outflow against the nation’s largest state population, it equals an annual exit rate of 1.6%.
That’s the nation’s lowest rate of residents leaving a state, just a few decimal points ahead of Texas. How much better can California do?
At the same time, 4.9 million people moved to California. That adds up to a 1.3%-a-year chance you’re new neighbors are from another state — the nation’s worst attraction rate. Texas’ attraction rate was at 2%, the 11th worst! So, there’s room for improvement, no?
Yes, I am aware California had the largest number of departures among the states, a figure that stirs lots of exodus talk. That chatter has heated up in recent years as the state’s overall population growth stalled.
But there are plenty of culprits to the sagging population figures including a renewed hostility toward foreign immigrants — 2.9 million came to California in 2010-19, more than any other state — plus a ridiculously low birth rate, and 69,000 pandemic deaths.
Let’s also not forget that only two states — Florida and Texas — had larger numbers of out-of-staters move in.
No easy answers
These numbers are not some play on words or my defense of the state. Instead, the data reveals a critical policy flaw that’s seemingly ignored by a wide spectrum of voices: Who is actually working to get folks to move here?
It’s likely that serious promotion efforts have been side-stepped because there are no simple answers to California’s marketing riddle.
For instance, the low departure rate shows us that folks are vested in the state. Such stability, though, helps explain the powerful “NIMBY” mentality fighting new ideas that could appeal to out-of-staters.
To be fair, the state does a decent job attracting folks with big paychecks who were previously residents in other expensive cities. That’s a limited, upscale audience tied, in large part, to the state’s trend-setting tech industries.
Let me explain what my trusty spreadsheet found when it analyzed 10 years of census migration stats and state-by-state cost-of-living comparisons from the Bureau of Economic Analysis.
I split states into two groups — the bargains with a below-average cost of living and the pricey ones with above-average costs.
In the decade, the 35 low-cost states became home to 4.47 million ex-Californians while 3.24 million left the low-cost group for the Golden State. That’s a net loss of 1.23 million residents from California to less-expensive locales.
It’s a sharp contrast to migration patterns to and from the 15 expensive states — Hawaii, Washington, D.C., New York, New Jersey, Maryland, Massachusetts, Connecticut, New Hampshire, Alaska, Washington, Virginia, Vermont, Colorado, and Delaware.
Over 10 years, 1.67 million left these costly living spots for the Golden State, and almost the same number became ex-Californians. Well, there were 771 more departures than arrivals.
The price is wrong
It’s a good guess that dollars-and-cents issues lead to many goodbyes from Californians.
We’re not talking about dime-sized differences. When my spreadsheet combined population flows and the overall cost index, the bargain states were 17% more affordable than California.
That discount was largely about putting a roof over one’s head. Housing costs in the low-cost states ran 40% below California, by the bureau’s cost-of-shelter benchmark.
This is why attracting Americans to California is so tough. For example, who would trade some of the nation’s most affordable places for the fifth-priciest state, by the bureau’s count?
Attempting to cure California’s cost-of-living headaches often makes for some messy policy issues.
Take the state’s homebuilding push for affordable housing options.
Does such an effort squeeze out more luxurious housing — cutting a lure for folks from expensive places? Or would cheaper homes benefit Californians, keeping more from departing? Or perhaps all the new supply gets gobbled up by folks seeking financial incentives to move here?
Still, despite California’s blemishes, there are items to flaunt other than fabulous climate, culture, and scenery.
Look at job opportunities. Employment in those pricey states rose 15% in 2010 through 2019 vs. 18% growth in the cheap states. In California, jobs grew 21% in the same period, a gain of 3 million new jobs, the largest hiring spree in the nation.
California’s appeal can also be tied to bigger paychecks. Household incomes over the 10 years for California ran 11% better than pay in the low-cost states.
The Golden State has forever offered financial dreams. While its jobs and wages may not fill the cost chasm with other states, it’s a financial advantage worth selling — if the state’s ever in a marketing mood.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
