Voting with their feet: Washington among the winners as Americans migrate to states to expand opportunity

Americans have a history of picking up and moving to increase their chances for a better life. (This remains true, despite some recent reports to the contrary.) And, Washington has been among the beneficiaries of that geographic mobility in search of economic opportunity. 

Economist Mark Perry takes a close look at mobility patters in a recent post for the American Enterprise Institute. Perry writes,

US state-to-state migration flow data for 2017 became available recently from the Census Bureau and this is an update to an earlier post based on 2016 data that attempts to answer the question: What significant differences are there, if any, between America’s top ten inbound and top ten outbound states when they are compared on a variety of measures of economic performance, business climate, business and individual taxes, fiscal health, and labor market dynamism?

To answer the question, Perry examines “ten different measures of economic performance, labor market dynamism, business climate, tax climate and fiscal health…” The results are summarized in this table.

Washington is among the top 10 destinations for domestic in-migration. Perry concludes,

Based on state-to-state migration data from the Census Bureau for 2017, the migration patterns of US households (and businesses) followed predictable patterns, reflecting differences among states in economic growth, tax burdens, business climate, labor market robustness and fiscal health. To answer the questions posed above, there are significant differences between the top ten inbound and top ten outbound states when they are compared on a variety of measures of economic performance, business climate, tax burdens for businesses and individuals, fiscal health, and labor market dynamism. There is empirical evidence that Americans and businesses do “vote with their feet” when they relocate from one state to another, and the evidence suggests that Americans are moving from statesthat are more economically stagnant, fiscally unhealthy states with higher tax burdens and unfriendly business climates with fewer economic and job opportunities, to fiscally sound states that are more economically vibrant, dynamic and business-friendly, with lower tax and regulatory burdens and more economic and job opportunities.

The Wall Street Journal editorial board examines migration patterns and finds a “high-tax state exodus.”

The eight fastest-growing states by population last year were located in the West or South (Nevada, Idaho, Utah, Arizona, Florida, Washington, Colorado and Texas).

And what do you know? These states have also experienced rapid employment and GDP growth spurred by low tax rates and policies generally friendly to business and job creation. Nevada, Arizona, Texas, Washington, Utah, Florida and Colorado ranked among the eight states with the fastest job growth this past year, according to the Bureau of Labor Statistics. Nevada, Texas, Washington and Florida have no income tax.

Editorials don’t permit much discussion of nuances. For more details on Washington’s tax structure and how it functions, we recommend this Washington Research Council report. The distribution of the tax burden matters, of course, and the absence of a state income tax, as the WSJ suggests, has been considered a plus for the state’s economic development. The state Commerce Department promotes Washington by noting as one of its strengths,

Washington is one of a handful of states that have no personal or income tax.

The competition for population growth – perhaps hard to understand for residents of one of the fastest-growing states – is intense. Pew Research underscores the stakes, reporting on a controversial policy initiative: “Pay to Move.”

Starting in January, programs in Vermont and Tulsa, Oklahoma, will pay people to relocate to those places if they work remotely. Other resident recruitment strategies in Florida, Kansas, Maine, Michigan, Minnesota and Vermont include weekends that tempt tourists to stay, discounted rent, student loan assistance and free land.

“It’s a departure — very much a sharp departure” from Vermont’s traditional programs, said Joan Goldstein, commissioner of the Vermont Department of Economic Development. “We need people.”

It’s an unproven strategy.

[Doug[ Farquhar [program director for rural development with the National Conference of State Legislatures] sees “pay to move” as “somewhat of a desperate plea: We need educated people to come here and stay here.” He cautions that little research has been done on the effectiveness or sustainability of the strategy.

We recommend the Pew Stateline article. And, we note, that the issues discussed parallel concerns raised within larger states, like ours, about the challenges facing rural communities. 

An important takeaway: Washington, for now, is among the winners. As lawmakers return to Olympia later this month, they may be well advised to consider the policies that allowed our state to be a desirable destination for employers and those seeking economic opportunity. It’s clear that the competition is intensifying.