California experienced a significant outflow of workers last year, as tens of thousands of professionals left the state due to its cost of living and high tax rates.
According to a report by the National Association of Realtors, California saw a net loss of about 18,000 workers, with nearly 87,000 professionals departing while only 69,000 moved to the state. The report also comes after data from the Bureau of Labor Statistics revealed last month that California’s unemployment rate hit 5.4 percent, the second highest in the country.
The report highlights the increasing challenges posed by California’s high cost of living, particularly in cities like San Francisco and Los Angeles, where housing costs remain among the highest in the nation.
“High housing costs—particularly in areas like San Francisco and Los Angeles—coupled with a high cost of living, have driven many workers to relocate to more affordable states like Texas and Arizona,” the report noted.
Among professionals leaving California, 14 percent moved to Texas, 9 percent relocated to Arizona, and smaller percentages settled in Washington (8 percent) and Nevada (7 percent).
The state’s high-income taxes are also cited as a factor that is pushing workers to relocate.
“California’s high state income taxes push workers to states with more favorable tax policies,” explained Nadia Evangelou, a senior economist for the National Association of Realtors, according to SFGATE. Evangelou added that the lack of affordable housing is another barrier to retaining talent, saying that it “doesn’t just impact home buyers, it also affects the state’s ability to retain talent.”
While California had the largest net loss of job switchers in the country, Illinois and Louisiana also ranked high for worker outflows. Meanwhile, states like Virginia, Texas, and Tennessee saw the most significant net job migration gains.
