Is working from home making it easier for Californians to migrate?
A deep dive into an important question about the future of work in California
This PPIC post has a lot of great statistics on migration trends in California. We’ve known for a while that more people are leaving the state than coming in, but the most recent statistics are even more disappointing than that: high-income workers - a group that had so far eluded the “California Exodus” - are now also leaving more than they are coming in. Further, this fact can only partly be explained by the low amounts of international immigrants since the pandemic.
I’ve commented on these statistics here, and I even wrote a short piece on these issues back in December, when the data for 2021 were first released – you can find the report at that link. I focused on migration by educational attainment instead of income status, but the conclusions are similar.
Let’s wrap our heads around the big picture: Why are people leaving California?
The most obvious answer is cost of living. It’s very expensive to rent or buy a house in California compared to nearby states. This is my and many others’ thesis.
You might think taxes play a role, but they aren’t as bad as you think: Many Californians move to Texas (it’s the top destination); Texas might have zero income taxes, but they generally have higher property and sales taxes than California, and so the balance does not work out to Texas’ benefit. There are other non-tax reasons why people are choosing to migrate to Texas.
Politics matters! During 2020-2021, the counties with the most positive net migration rates (in-migrants minus outmigrants, divided by total population) were heavily Republican. Counties and areas that were considered Democratic strongholds in the 2020 presidential election lost population internally, although they were also more likely than Republican areas to make up some of the lost population through international immigration. In other words, many Californians are leaving the state because of the political climate. (I’ve done some research on this – leave a comment if you’d like to read more.)
What about working from home? At the end of the post I linked to above, the PPIC authors offer this hypothesis:
“The losses of college graduates and higher-income households [migrating out of California] are likely related to the ability of many highly educated and highly paid workers to work from home.”
Is the prospect of working from home making it even easier for Californians to migrate?
I dove a bit deeper into these statistics, and there is some strong evidence for this hypothesis. According to the American Community Survey, in 2021, among California resident workers aged 25 and older with a Bachelor's or higher, 37.5% reported working from home. On the other hand, among California migrants (migrated out of California in 2020/2021 to another state in the U.S.) aged 25 and older with a Bachelor’s or higher, 48.9% reported working from home. Thus, it’s very possible that people who migrated out of California did so precisely because of the increased prospects of working from home.
See the chart above, which calculates the same statistic for workers without a Bachelor’s degree. Again, even among these workers (who have a lower work-from-home rate to begin with), California outmigrants in this educational group are more likely to be working from home than California residents.
The bottom line is that the “California Exodus” is real and is connected to cost of living and quality of life factors. The ability to work from home is making it even easier for Californians to say “enough is enough” and move somewhere that is cheaper and more comfortable to live.
Hi Daniel, and thanks for your dispatch on this very interesting topic. I was thinking of you the other day while reading the New York Times Magazine that came out last Sunday. The entire issue is devoted to California (and includes coverage of several factors that are compromising the quality of life for its residents). One essay, for instance, discusses swings in severe weather, suggesting that they might be affecting how Californians feel about their home state. Do you think weather-related issues could come to bear on people’s relocation decisions, or are such issues substantially less important than other quality-of-life measures?
Thanks for this Daniel. Do the data also suggest that remote work is allowing folks from expensive coastal areas to move to (somewhat) more affordable regions like the I.E. (but without necessarily leaving California)? I'd heard that as one explanation for the I.E.'s exceptional housing inflation during the pandemic. I also wonder if that might also explain some of the net loss and net gain in red and blue counties that you mention (assuming that the blue counties were more expensive to begin with).