Last year, California witnessed a significant exodus of tens of thousands of professionals, as the state’s exorbitant cost of living and high taxes made it increasingly challenging to retain talent. Additionally, fewer individuals moved into the state during this period.
According to a report published by the National Association of Realtors, California experienced a net loss of nearly 87,000 professionals last year, with only 69,000 individuals relocating to the state.
According to the latest report from the Bureau of Labor Statistics, California’s unemployment rate increased to 5.4% last month, making it the second highest in the nation. This data is significant and highlights the current state of the job market in California.
In September and October of last year, California experienced an unemployment rate of 5.3% and 5.1% respectively. During the same period, Nevada had a slightly higher unemployment rate of 5.7%.
According to the NAR report, workers who were previously located in California chose to relocate to more affordable areas like Texas and Arizona. This data was obtained from the US Census Bureau.
Texas emerged as the primary destination for individuals fleeing California, reaping the greatest benefits from the exodus. The report reveals that a notable 14% of professionals who departed California in 2023 chose to establish their new homes in the Lone Star State.
In total, Texas welcomed 7,036 professionals, with 12% of them originating from California. Montana, a state that has experienced significant economic growth since the pandemic, welcomed around 1,200 professionals through net migration, with almost 10% originating from California.
Arizona, a state with similarly favorable tax policies, attracted 9% of professionals who relocated from California. Eight percent of people who left California opted to relocate to Washington State, while 7% decided to move to neighboring Nevada. It is worth noting that Texas, Washington, and Nevada do not impose a state income tax.
According to the NAR report, California experienced the highest net migration loss among all states, with over 18,000 people leaving the state.
According to Nadia Evangelou, a senior economist for the National Association of Realtors, California’s high state income taxes are causing workers to relocate to states with more favorable tax policies.
“The impact of a shortage of affordable housing extends beyond potential home buyers, as it also hampers the state’s capacity to retain valuable talent.”
Illinois experienced the second largest net migration loss, as 4,598 professionals left the state. According to the report, New Jersey experienced a net loss of 1,810 professionals, while New York saw a decrease of 1,698 workers.