With all due respect to Billy Joel’s “Allentown,” the tune which best describes Pennsylvania today would likely be “Movin’ Out.” For years, Pennsylvania has seen residents (particularly younger ones) move on to greener pastures—resulting in an aging population, stagnant economic growth, a loss of Congressional seats, and a growing tax burden on remaining residents.
During the 1990s, Pennsylvania lost over 250,000 net residents to interstate migration—the 5th highest state total, according to the U.S. Census. That trend has continued in recent years, at a slower pace, as Pennsylvania lost another 28,000 net residents to other states from 2000-2006. For the past several years,United Van Lines has classified Pennsylvania as a high “outbound” state, meaning more moves out of the state than into it. In 2007, 57% of shipments were moves out of Pennsylvania.
As of 2006, over 75% of Pennsylvania residents were born in the commonwealth—the 3rd highest percentage among states, trailing only Michigan and Louisiana (big population losers of late). Certainly, some Pennsylvanians think their state is the best place to live. But it is clear that Pennsylvania is not an attractive place to move to from most other states.
Naturally, climate plays a role in state-to-state migration, given that the big losers are mostly northeastern states, while southern states are big winners. But that fails to explain why California has been losing residents to other states, while Oregon, Washington, and South Dakota are attracting new movers. It should be noted that in addition to cold winter weather, states in the Northeast have a couple of other variables in common—high taxes and heavy government regulation.
A recent report by Arthur Laffer and Steven Moore, Rich States, Poor States, looks at the economic climate of the 50 states. Laffer and Moore find that the big winners—on measures of internal migration, job growth, and per-capita income—were states with low personal income taxes and with voluntary unionism laws. The overall level of taxation, recent increases (or decreases) in taxes, minimum wage laws, and educational freedoms were other factors.
Evidence on Pennsylvania movers supports these findings. In 2006, Pennsylvania lost almost 8,000 taxpayers (with $373 million in gross income) to other states, with Florida, North Carolina, and Virginia, as the top destinations. But Pennsylvania actually attracted residents, on net, from our neighbors New York, New Jersey, and Maryland. On the other hand, Delaware was a popular destination state for former Pennsylvanians. While New York and New Jersey rank among the highest taxed states in the U.S., and Maryland is moving in that direction, Delaware has the lowest tax burden of any state in the region.
Over the last several years, Governor Rendell and state lawmakers have sought to improve Pennsylvania’s economic climate by handing out grants and tax incentives to politically selected companies and industries. These economic development programs and corporate welfare giveaways have failed to yield results—not only in Pennsylvania, but in other states that have tried the same strategy. In fact, states that spent more per capita on “economic development” had slower economic growth than those that spent less.
In contrast, states with low and declining tax rates, and fewer government regulations were those that experience economic growth, and are attracting new residents from places like Pennsylvania.
Only by limiting the growth of government spending, reducing regulation, and lowering the tax burden on working residents and businesses can Pennsylvania achieve economic health and prosperity. Pennsylvania can again become an attractive place to start and raise a family. If we change the policies that have been driving residents away, perhaps we can adapt another Billy Joel tune and get people singing “Say goodbye to Hollywood … and hello to Pennsylvania.”
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Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.
Author’s Note: Resources and data on interstate migration can be found here. Neither “Movin’ Out” nor “Say Goodbye to Hollywood” concerns state migration patterns; song titles were used for rhetorical purposes.