california texas

California is losing people to Texas, not jobs, economist says

February 12, 2013

california texas

Showdown in California

After recent changes in the California business climate, Texas Governor Rick Perry is on tour meeting with California companies about bringing their business to the Lone Star State, leaving some wondering if Texas really can benefit from people fed up with California’s taxes.

While Perry’s success or failure remains to be seen, people have long left the beaches of Cali for the hills of Texas, in fact, even in the 1980s, there were bumper stickers that Texans slapped on their cars that said “Welcome to Texas, now go home!” (or “go the hell home” in some cases). But fast forward a few decades, and after another economic crash, California is hemorrhaging people again, many choosing Austin for the liberal attitude without the high taxes.

According to Trulia Chief Economist, Dr. Jed Kolko, in a typical year, just 25,000 jobs move out of California, and 16,000 jobs move in, out of an economy of 18 million jobs. In contrast, hundreds of thousands of people move in and out of California each year.

120 people leave Cali for every 100 who move in

In 2011, 120 people left California for every 100 who moved in. The outflow peaked at the height of the real estate bubble in 2005, when 160 people left California for every 100 who came.

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Dr. Kolko asserts that the wealthy are not actually leaving The Golden State, rather middle class and lower income households are the ones fleeing. Since 2005, people with household incomes of $200,000+ were as likely to move into California as move out.

Why the move? Dr. Kolko’s research reveals that since 2005, 183 Californians moved to Texas for every 100 Texans who moved to Cali, citing Texas’ low housing costs are the primary factor, as they are 2.7 times less expensive in Texas than California. We would add that all major Texas cities besides Houston still have massive amounts of land to build on, unlike California, so there is still a lot of room to expand in the Lone Star State.

With home prices rising 10.4 percent year-over-year in California, Dr. Kolko says the flow of people out of California will increase, but according to research from the Public Policy Institute of California, jobs rarely move, therefore Perry has a big challenge ahead of him, but it wouldn’t be the first time the Governor attracted business from California to Texas, so the nation will be watching.[/span10][/row]

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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