An analysis by the American Enterprise Institute found that for the most part, blue states lost population — and tax revenue — during 2021 while red states overwhelmingly gained both.
“Population inflows to the top ten inbound states range from highs of 264,000 and 211,000 for No. 1 Florida and No. 2 Texas to a 34,280 inflow to No. 10 Nevada, and outflows from the top ten outbound states were as high as 429,000 for No. 1 California, 406,000 for No. 2 New York and 153,300 for No. 3 Illinois,” said the AEI analysis by senior fellow Mark Perry.
“In total, the top ten inbound states gained slightly more than 1 million new residents from April 2020 to July 2021 and the top ten outbound states experience an outflow of nearly 1.2 million residents,” Perry continued.
AEI also put together a graphic showing the demographic shift:
Only one state that took in more residents than it lost — Nevada — is governed by Democrats, to include both U.S. senators. However, Nevada is also a “right-to-work” state, a labor concept that is generally opposed by Democrats because it is considered detrimental to unions, one of the party’s historic constituencies.
In part, Perry’s analysis sought to answer two primary questions:
— “Based on 2020-2021 net domestic migration flows from the Census Bureau data, are there any significant differences between the top ten inbound and top ten outbound states when they are compared on a variety of measures of political party control, business climate, business and individual taxes, fiscal health, electricity and housing costs, economic performance and outlook, and labor market dynamism?”
— “Assuming that many Americans and US companies “move/vote with their feet” when they relocate from one state to another, is there any empirical evidence to suggest that Americans are moving to red states that are relatively more economically vibrant, dynamic, and business-friendly, with lower tax and regulatory burdens, lower energy and housing costs, with more economic and job opportunities, from blue states that are relatively more economically stagnant with higher taxes and more regulations, higher energy and housing costs, and with fewer economic and job opportunities?”
In answering those questions, Perry noted:
— All 10 states that gained population are “right to work” states (versus two — Louisiana and Michigan that lost population). According to a study by AEI researcher Jeff Eisenach, “There is a large body of rigorous economic research on the effects of RTW laws on economic performance. Overall, that research suggests that RTW laws have a positive impact on economic growth, employment, investment, and innovation, both directly and indirectly.”
As such, Perry concludes, “it would make sense that American businesses and workers are leaving low-growth, forced-unionism states for higher-growth, RTW states with more dynamic labor markets and greater job opportunities.”
— There certainly seems to be a “partisan” nature to the population shift. Perry notes that nine of the 10 states that gained population are governed by GOP legislatures, and eight also have Republican governors. “For the outbound states, Democrats control the legislatures of seven out of ten states (including all of the top five outbound states) and 8 out of 10 of the state governor’s offices,” he wrote.
— There also appears to be a tax component. “Eight of the 12 US states ranked by the highest total state tax burden (New York, Hawaii, Connecticut, Minnesota, New Jersey, Illinois, California, and Maryland) were in the ten highest outbound US states in 2021,” Perry noted, citing a Wallet Hub study from last year.
— Business costs also appear to have factored in. Four of the 10 inbound states — Texas, North Carolina, Nevada, and Tennessee — ranked among the lowest in the category, according to a Forbes analysis; meanwhile, four states that lost population — California, Massachusetts, New Jersey, and Hawaii — had the highest business costs.
Home prices, energy costs, and economic outlook all factored into the migration as well, Perry noted.
He concludes: “There is empirical evidence that Americans and businesses ‘vote with their feet’ when they relocate from one state to another, and the evidence suggests that Americans are moving from blue states that are more economically stagnant, fiscally unhealthy states with higher tax burdens and unfriendly business climates with higher energy and housing costs and fewer economic and job opportunities, to fiscally sound red states that are more economically vibrant, dynamic and business-friendly, with lower tax and regulatory burdens, lower energy, and housing costs and more economic and job opportunities.”
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