Regional Migration in America

We might call it the other migration. Not the migration of semi-literate innumerate peasants from Central America, but the movement of American citizens from blue to red states.

It is not, Joel Kotkin assures us, an ideological conflict. All of the neo-Hegelians out there should cease thinking in terms of great fights between great ideas.

No, more and more people are moving from red to blue states because opportunity beckons and because they find quality of life, not to mention the business climate and the educational system, more to their liking. 

Joel Kotkin has expertise on demographic shifts, so we are happy to turn to his analysis:

In recent years, the gap between regions has narrowed. Texas, Nevada, Florida, and Arkansas experienced the nation’s highest personal income growth; in contrast, ultra-blue California ranked last, followed closely by Maryland, Massachusetts, and New York. Sunbelt states dominate the list of fastest job creators while California, Massachusetts, Illinois, and Oregon rank toward the bottom. Overall, in the past decade, the six fastest growing Southern states—Florida, Texas, Georgia, the Carolinas, and Tennessee—added more to the national GDP than the Northeast, the traditional economic powerhouse.   

Apparently, the South has risen. It is leaving the North and the coasts in the dust.

One reason lies in dopey environmental policies. Activists have gone to war against energy and, lo and behold, the price of fuel and just about everything else, will increase. Aside from having been duped by the climate lobby, the people making these new rules are innumerate. 

Until the recent wave of climate-related regulations, much heavy industry and high-tech manufacturing remained in states like California and New York. But the ascendancy of draconian climate regulation has had a strong impact on blue collar jobs, a traditional source of upward mobility. The best areas for industry, notes Site Selection Magazine, are in the Southeast and Utah, while California has lost almost 800,000 manufacturing jobs since 1990 according to the Census of Employment and Wages. Oil and gas, once a major industry in the state, is now slated for extinction, while construction and logistics growth have been slower than in competitor states.

Of course, California is actively chasing people out of the state. Its new minimum wage has caused countless small restaurants to shut down.

As for industrial growth, it has increasingly been happening in red states:

New industrial growth is taking place primarily in the South and Southeast, and in red states like Indiana and Ohio, including the preponderance of new EV and battery plants. For example, the supply chain shortage has made producing silicon chips—a California invention—a priority; yet virtually all the new planned semiconductor facilities, employing thousands of workers, are being built in Texas, Arizona, and Oregon.’

And, of course, high tech jobs are leaving the blue coasts:

To be sure, for decades jobs in technology, finance, and business services gravitated to places like San Francisco, Seattle, Boston, New York, and Chicago. Yet a recent analysis by Zen Business reports that Texas and Florida are now the country’s high-growth hotspots and are also attracting the most tech workers. The erosion of California’s lead in tech and other advanced industry jobs has been going on since at least 2005, as more jobs in advanced industries gravitate to lower tax states, largely in the South and Intermountain West, according to recent research from Chapman University and UC Irvine.

For the first time since the last century, when Massachusetts seemed a serious threat, Silicon Valley has a serious and capable challenger in Texas. The Lone Star State has been less hit by recent layoffs. Some tech linchpins have already moved their headquarters to Texas, including HP Enterprises, Oracle, and perhaps most crucially, Tesla. Many other firms like Apple, Airbnb, Amgen, Uber, and Space X are expanding largely outside of the Golden State. These trends are accelerating, notes a recent Hoover Institution study.

And then there is financial services. The glow is off Wall Street; more and more banks and trading houses are moving to Texas.

A similar dispersion is occurring in business services. For most of American history, the financial sector was based solidly on the East Coast, notably New York, with powerful firms also based in San Francisco, Chicago, and Los Angeles. But business services—a key sector for urban growth particularly—is increasingly headed primarily to red state capitals, led by Austin, Nashville, Salt Lake City, Raleigh, and Charlotte.

Just as the tech industry is dispersing to new centers like Austin, Phoenix, Nashville, and Atlanta, so too is finance. Since the pandemic, Texas and Florida have seen their finance industries grow ten times as fast as their New York counterparts. The biggest push is in Dallas-Fort Worth, which recently dethroned Chicago as the number two U.S. financial center and has started to raise capital to build a new stock exchange backed by key players.

By the numbers:

Last year, affluent migrants took almost $24 billion out of California, $14 billion out of New York, and almost $10 billion out of Illinois. Those funds ended up primarily in Florida and Texas, as well as Tennessee and the Carolinas.

Worse them, blue states are instituting social justice strategies and policies:

More serious still, as the competition was upping its game, many blue states have shifted away from growth-oriented strategies to environmental or “social justice” goals. Today, taxpayers in blue states are not rewarded with improved roads and bridges and efficient education systems, but the bill for some of the most outrageous failures—like the Second Avenue Subway, the California Bullet Train, and Boston’s Big Dig. In California, with the highest gas taxes in the country, taxpayers fume about some of the nation’s worst roads.

And, of course, local schools in blue states are calamities. The politicians and the teachers unions have conspired to ensure that children do not learn anything. The same does not prevail in red states. Parents of children in blue cities can either pay a fortune to send their children to private schools or move out of town.

Education represents an even more dire failure. According to the latest National Assessment of Educational Progress (NAEP)—commonly referred to as the “Nation’s Report Card”—California 4th graders scored lower in mathematics proficiency than those in 29 other states/jurisdictions, with only 30 percent at or above the NAEP standard. In contrast, 41 percent of Florida’s 4th graders and 38 percent of 4th graders in Texas—states that pay far less per student—scored at or above the level of proficiency in math, significantly better than their California counterparts.   

The disparities are very likely to breed resentment. Those who are totally persuaded of their superior virtue are not happy that they are losing out in the great national color war.

Please subscribe to my Substack, for free or preferably for a fee.