It’s well-known that people have been moving from coastal US states to the Sunbelt for many years now. But who’s moving? Is it the upper middle class fleeing higher taxes or searching for cheaper houses, or perhaps the poor fleeing high costs of living? Put another way, is the above-average growth in per capita income in many Northeastern and West Coast metropolitan areas a matter of actual growth, or simply of pushing the poor out to the Sunbelt, whose per-capita income growth is often anemic?
All data in this post is courtesy of Aaron Renn’s Telestrian service, which cribs numbers from the IRS, Census Bureau, and other sources and presents them in a reasonably searchable manner. The IRS keeps track of intranational migration in the form of tax exemptions, which allows us to figure out the migration trends in terms of people (exemptions), households (returns), and income (adjusted gross income). This way we can figure out if the people moving out of a region are richer or poorer than the average. Although the IRS misses a lot of people and much income, it is still the best available source in the US for migration statistics. The more accurate American Community Survey tabulates very coarse migration statistics.
Observe also that the IRS data is given per year, which allows us to look at zoomed-in trends. For example, here is California’s migration with each state as well as the rest of the world from 2000 to 2009. Here is somewhat worse-presented data for New York State. It turns out that migration marginally increased California’s per capita income, and had practically no effect on New York’s; in other words, their growth is real, and doesn’t come from pushing the poor away.
More precisely, we have the following observations:
– In both California and New York, the difference in income between immigrants and emigrants is very small; immigrants are slightly richer in California, $27,098 vs. $26,209, and slightly poorer in New York, $29,876 vs. $30,810.
– Overall both immigrants and emigrants are slightly poorer than the statewide per capita income. However, the effect is very small: according to the IRS, California’s per capita income in 2009 was $28,569 and New York’s was $31,617. Were it not for migration – that is, if people had lived in 2009 where they’d lived in 2000 but still earned the same income – California’s per capita income would’ve been $28,243, i.e. 1% lower, and New York’s would’ve been $31,689, i.e. 0.1% higher.
– The richest migration occurs between high-cost coastal states, especially between New York and California, while migration between those states and the Sunbelt is much poorer.
– The poorest large group of immigrants in both states is international immigrants. In both cases they were about 9% of total immigrants, so they can’t have dominated the numbers too much. Thus Jane Jacobs’ story that great cities take in poor immigrants and churn out a middle class, considered on the state level, is only partially confirmed by this data.
– Emigration to the Sunbelt’s bubble states – from California to Arizona and Nevada and from New York to Florida – was predominantly a 2005-7 phenomenon, and decreased markedly after the bubble crashed.
– Emigration to other Sunbelt states was more of a mixed bag. Georgia and North Carolina, both partial bubble states, also look like partial bubble states in the migration numbers, with emigration from New York and California peaking in 2005-8, but less prominently than with the proper bubble states. Emigration from California to Texas looks like that to a bubble state, despite Texas’s strong economy through the recession; but emigration from New York to Texas and from both states to Colorado remains steady.
– The biggest difference between immigrants and emigrants is not income but household size – emigrating households were much bigger (1.95 vs. 1.7 in California), but still much smaller than the statewide average (2.23 according to the IRS, much lower than the actual average but comparable with the above numbers). This is only partially consistent with the explanation that those regions attract singles and DINKs and turn away families.
The story I started this investigation with is that New York and California predominantly turn away the middle class, which would be seen in middle-class emigration and low-income immigration; my recollection, coming from merely eyeballing the data, had been that immigrants were much poorer. This should be consistent with the breakdown of the cost of living in dense city regions: housing is unaffordable if your ideal of how to live is having a car and a single-family detached house that’s less than an hour away from work; if you’re flexible about car ownership and don’t mind small apartments, then New York and California are quite affordable.
But what we actually see is that both immigration and emigration between those states and the rest of the world is middle-class. The people moving to the Sunbelt really are being priced out. It’s hard to distinguish pricing out from cashing in on high housing prices, but the lower-income characteristic of this emigration suggests the former. The upshot is that policies reducing the cost of housing could stem this tide while at the same time having no effect on poverty and the need for social services. While it’s heinous to try to price out the poor, as the richer parts of the Bay Area and many other regions do, this is not what is being done here.
Let me close by linking without much comment to the same data for Texas. The IRS recorded a total income of $475,109,477 in 2009 and a total population of 19,235,926, i.e. a per capita income of $24,699. As in California, immigrants are a little poorer than emigrants and both are a little poorer than the average. Controlling for this effect as above would raise per capita income to $25,002, a 1.2% rise.