Wondering Why Americans Are Running from Blue States?

Elections have consequences, but social stratification and media spin often make it difficult for the average citizen to evaluate the outcomes of many policies they support. Take for example increasing minimum wage: how many restaurant employees would continue to support this policy when their employers can no longer afford to keep them employed? How many middle-class customers paying higher prices at restaurants will believe that their loss in purchasing power is "helping" the poor? Since nobody in their gentrified social networks relies on low-paying jobs, these patrons are unlikely to know what happens behind the scenes. Do not expect the mainstream media to connect the dots. Fortunately, voting happens not only at the ballot box. Relocation data are a more definitive indicator of choice, because individuals have more control over consequences when voting with their feet.

People who favor burdensome regulations on free enterprise should be asked why so many Americans are fleeing from states on the left column of Table 1: Worst 10 for Regulations (2016) Migration per 1,000 (2016) Best 10 for Regulations (2016) Migration per 1,000 (2016) California -3.5 Colorado +6.6 Connecticut -6.2 Georgia +4 Hawaii -9.5 Indiana -0.1 Illinois -8.5 Iowa -0.9 Maine +4 Nebraska -1.8 Maryland -4 North Carolina +6.5 New Jersey -6.4 South Carolina +9.9 Rhode Island -3.6 Tennessee +6.1 Vermont -1.5 Utah +5.8 West Virginia -5.7 Virginia -1.5 average -4.49 average +3.46 Table 1: Relocation in states that differ in their business regulatory environment. Regulatory environment rankings were provided by Forbes. Relocation data was compiled from the U.S. Census by Business Insider. Based on a one-tailed T-test, the difference in migration is significant at P = 0.0002. According to Thumbtack (an online service that matches customers with local professionals), the majority of states from the left scored poorly for small business friendliness in 2015. In sharp contrast, the majority of states on the right got an "A" (Table 2). This might explain why job participation was so much higher in states on the right during the same year (Table 3). Worst 10 for Regulations (2016) Small Business Friendliness (2015) Best 10 for Regulations (2016) Small Business Friendliness (2015) California F Colorado A Connecticut F Georgia A Hawaii not scored Indiana B+ Illinois F Iowa C+ Maine not scored Nebraska not scored Maryland D+ North Carolina B- New Jersey C- South Carolina A Rhode Island F Tennessee A Vermont not scored Utah A+ West Virginia not scored Virginia A Table 2: Small business friendliness in states that differ in their business regulatory environment. Regulatory environment rankings were provided by Forbes. Small business friendliness was scored by Thumbtack. Worst 10 for Regulations (2016) White Unempl. (2015) Black Unempl. (2015) Best 10 for Regulations (2016) White Unempl. (2015) Black Unempl. (2015) California 6.0 11.0 Colorado 3.8 5.9 Connecticut 4.5 13.2 Georgia 4.0 9.3 Hawaii 4.5 N/A Indiana 4.5 7.0 Illinois 5.0 12.2 Iowa 3.2 N/A Maine 4.2 N/A Nebraska 2.6 5.3 Maryland 3.6 8.3 N. Carolina 4.8 10.3 New Jersey 5.2 10.0 S. Carolina 4.1 10.7 Rhode Island 5.2 12.2 Tennessee 5.1 7.5 Vermont 3.6 N/A Utah 3.6 N/A West Virginia 6.8 N/A Virginia 3.6 7.9 average 4.86 11.2 average 3.93 8.0 Table 3: Unemployment in states that differ in their business regulatory environment. Regulatory environment rankings were provided by Forbes. Unemployment data was provided by 24/7 Wall St. Based on a one-tailed T-test, the difference in white unemployment is significant at P = 0.005 and the difference in black unemployment is significant at P = 0.02. These relocation trends have not gone unnoticed in California, Connecticut, Illinois, Hawaii, New Jersey, Rhode Island, and West Virginia. In all instances, many people cite a lack of job opportunities and (with the exception of West Virginia) high cost of living as reasons for leaving. California was also listed by 24/7 Wall St. among the top ten states for "spreading the wealth," but the Golden State appears to be anything but a "worker's paradise." According to a study cited by the San Diego Union-Tribune, the majority of people who left California between 2007 and 2016 made less than $55,000 per year, and according to the New York Times, skyrocketing real estate prices have all but obliterated the black population in San Francisco. This black exodus is not limited to California. According to Forbes, many are also leaving Northern and Midwestern cities and moving to Sun Belt states in pursuit of better jobs and affordable housing. But what if some states on the right are getting "extra help" from Washington? According to John Tierney in the Atlantic, most Republican-dominated states manage keep their taxes "artificially low" because they are "subsidized" by the federal government. This narrative has been used by other columnists to ridicule conservatives who promote limited government. Conveniently, they omit some important reasons why Washington spends more on these states: many Western states contain large portions of federal land that are inefficiently managed by the Department of the Interior. In addition, other flyover states and portions of the Sun Belt are inhabited by a disproportionate number of retirees and working-class Americans, who consume more federal benefits. For the sake of argument, suppose that federal expenditures are the main reason some states on the right are doing so well. (Let's call this our "null hypothesis") To test our null hypothesis, suppose we limit our sample to the ten states that were ranked in 2018 by Wallet Hub as the "least dependent" on federal spending. Even when comparing only these states, differences in cost of living and job participation are still statistically significant (Tables 4 and 5). Regulatory Rank 35-45 (2017) Value per dollar (2018) Regulatory Rank 2-22 (2017) Value per dollar (2018) Connecticut $0.92 Colorado $0.97 Delaware $1.00 Kansas $1.11 Illinois $1.00 Minnesota $1.03 New Jersey $0.88 Utah $1.03 Massachusetts $0.94 Virginia $0.98 average $0.95 average $1.02 Table 4: Cost of living in the ten least "federally dependent" states sorted by differences in business regulatory environment. Regulatory environment rankings were provided by Forbes. Dependency rankings were determined by Wallet Hub. Cost of living data were provided by Michael Sauter in USA Today. Based on a one-tailed T-test, the difference in cost of living is significant at P = 0.03. Regulatory Rank 35-45 (2017) White Unempl. (2015) Regulatory Rank 2-22 (2017) White Unempl. (2015) Connecticut 4.5 Colorado 3.8 Delaware 4.3 Kansas 4.1 Illinois 5.0 Minnesota 2.9 New Jersey 5.2 Utah 3.6 Massachusetts 4.4 Virginia 3.6 average 4.7 average 3.6 Table 5: Unemployment in the ten least "federally dependent" states sorted by differences in business regulatory environment. Regulatory environment rankings were provided by Forbes. Dependency rankings were determined by Wallet Hub. Unemployment data were provided by 24/7 Wall St. Data for black employment are excluded because the lack of data for Utah made the sample size too small. Based on a one-tailed T-test, the difference in white unemployment is significant at P = 0.002. Low inflation and high job participation are not the only advantages of a good business environment. Business-friendly states are also better at balancing their budgets (see graph). When state and municipal governments cannot pay their bills, less affluent residents are hurt the most. In 1975, Gerald Ford's treasury secretary, William Simon, was demonized by the media for his unwillingness to bail out New York City. Simon justified his refusal by saying New York's ongoing deficit spending would lead to bankruptcy, followed by "the cruelest tax of all – inflation, under the guise of being compassionate" (my emphasis). Regulatory environment rankings were provided by Forbes. Fiscal health rankings were provided by the Mercatus Center at George Mason University. Some regulations are needed for safety and the environment, but people who equate regulatory streamlining with Armageddon should read up on how the airlines industry evolved after Jimmy Carter signed the Airlines Deregulation Act of 1978. Even though travelers complain more today about the quality of service, the option of cheaper flights has been a godsend for less affluent Americans, who would otherwise be suffering through 30-plus-hour bus rides every time they visited faraway relatives. America is the only nation in the world that was founded on the principle of enumerated powers, but limited government cannot prevail without a critical mass of conscientious grown-ups who cherish their liberties and limit their reliance on government to protecting their natural rights. The mass exodus from states where citizens traded away their freedoms for "equality" should serve as a cautionary tale for voters and policymakers who still believe they can tax and regulate their way to higher living standards. People on the move carry all kinds of baggage, and not all of it is tangible. America's survival may rely on whether or not refugees from these failing states choose to double down on the socialist delusion that prosperity grows out of the barrel of a gun. Antonio Chaves teaches biology at a local community college. His interest in economic and social issues stems from his experience teaching environmental science.