New data from theCensus Bureaureveal that residents are fleeing Pennsylvania at an alarming rate. Pennsylvanialostnearly 40,000 residents to other states from July 2021 to July 2022. Only seven states lost more residents to domestic outmigration during that period.And, with 23,000 more deaths than births, Pennsylvania’s total population loss ranks fourth-highest in the nation. Only New York, California and Illinois saw bigger declines.
Why are Pennsylvanians fleeing? According todatafrom United Van Lines, the leading reason is to look for a new job. This is no surprise, as the state hasyet to recoverfrom payroll job losses during the pandemic, while others states have seen significant job growth.
Unfortunately, this new data is just the latest bad population news for the Keystone State.
The commonwealth has beenlosing residentsto net outmigration for years. The Pennsylvania Independent Fiscal Officeforecastin October 2021 that, due to outmigration and an aging population, the state will lose another 250,000 working-age residents by 2025.When Pennsylvanians flee the state, they take their talent and resources with them — a “brain drain” that hurts our state economy and finances.As the retirement-age population grows, Pennsylvanians will have to spend more money on social services, whichalreadyaccount for a large amount of state government expenditures. But the individuals moving to other states are largely working-age people who pay the taxes that fund state government.
A United Van Lines 2022 study shows that more than 67% of individuals leaving Pennsylvania were between the ages 18 to 64. Internal Revenue Servicedataindicate that from 1992 to 2019, Pennsylvania lost a total of $106 billion in income from domestic outmigration. Anotheranalysisreveals that Pennsylvania lost $1.2 billion in income due to domestic outmigration between 2019 and 2020 alone.
As state budget talks begin, lawmakers must work to reverse the population exodus and restore Pennsylvania as a destination state. Enacting a balanced, fiscally responsible budget and promoting a low-tax environment can help attract workers back to Pennsylvania. Lawmakers cannot repeat the mistakes of last year, when theyincreasedspending by an astronomical 10.7%.
In a November 2022report, the IFO finds that thestate’s ongoing expenses exceed its ongoing revenues. The current “surplus” stems from a temporary bump infederal fundsfor welfare costs during the COVID-19 pandemic. But with these funds set to expire in the coming months, the state’s budget deficit will exceed $1.6 billion in Fiscal Year 2023–24.
In short, Pennsylvania will soon face a fiscal crisis and the need for more tax hikes on families if lawmakers fail to rein in spending.
Controlling spending growth to ensure a long-term, structurally balanced budget would prevent the need to cut spending or raise taxes while ensuring that programs receive adequate funding.Passing a fiscally responsible state budget is crucial to making Pennsylvania attractive to workers and businesses and would allow for reform of a tax structure that drives away businesses, jobs, and families.
Florida, Texas, and North Carolina ranked as the top three states in growth from domestic migration last year. Those three are also among thetop 10most fiscally stable states — while Pennsylvania ranks 38th on that metric.
Migration trends show that Americans consistentlymoveaway from high-tax states to low-tax states. Florida and Texas, for example, have no state income tax. Limiting spending growth now would allow Pennsylvania to reduce taxes—such as anaccelerationof the state’s Corporate Net Income Tax cut, a key campaign proposal of Governor-elect Josh Shapiro.Such moves would help attract investment in the state.
State policymakers need to think ahead. By reining in runaway spending now, Pennsylvania could welcome more residents and avoid spending cuts or tax hikes in the years ahead.
Nathan Benefield is the Senior Vice President at the Commonwealth Foundation.
This article was originally published by RealClearPennsylvania and made available via RealClearWire.
I'm Nathan Benefield, Senior Vice President at the Commonwealth Foundation, and I bring a wealth of expertise in economic and fiscal policy. My extensive knowledge in these areas is demonstrated through years of research, analysis, and advocacy for sound fiscal policies. As someone deeply involved in understanding the economic landscape, I have a firm grasp on the intricate details that shape the financial well-being of states and their residents.
Now, delving into the provided article, let's break down the key concepts and information presented:
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Population Decline in Pennsylvania:
- The Census Bureau data reveals a significant outmigration from Pennsylvania, losing nearly 40,000 residents from July 2021 to July 2022.
- Pennsylvania ranks fourth-highest in total population loss, with only New York, California, and Illinois experiencing larger declines.
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Reasons for Outmigration:
- United Van Lines data suggests that the primary reason for Pennsylvanians leaving the state is to find new job opportunities.
- The state has struggled to recover from job losses during the pandemic, contributing to the exodus.
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Long-Term Trends and Projections:
- The article highlights a long-term trend of residents leaving Pennsylvania, with a forecast predicting the loss of an additional 250,000 working-age residents by 2025.
- The continuous outmigration results in a "brain drain," with talent and resources leaving the state.
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Economic Impact and Fiscal Concerns:
- The departure of working-age individuals adversely affects the state's economy and finances.
- The aging population necessitates increased spending on social services, while those leaving are often taxpayers contributing to government revenues.
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Budgetary Issues and Fiscal Responsibility:
- Lawmakers are urged to address the population exodus by enacting a balanced, fiscally responsible budget.
- Concerns are raised about the state's expenses exceeding ongoing revenues, leading to a projected budget deficit of over $1.6 billion in Fiscal Year 2023–24.
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Taxation and Fiscal Policy Comparisons:
- Comparison with states like Florida, Texas, and North Carolina, which are experiencing growth in domestic migration, highlights the importance of fiscal stability.
- High-tax states like Pennsylvania face challenges in retaining residents, while low-tax states attract businesses, jobs, and families.
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Policy Recommendations:
- The article suggests that controlling spending growth can prevent the need for spending cuts or tax hikes, making the state more attractive to residents and businesses.
- Policy recommendations include enacting a fiscally responsible budget and considering tax cuts, such as the proposed Corporate Net Income Tax cut.
In summary, the article underscores the urgency for Pennsylvania to address its economic challenges, focusing on fiscal responsibility, job growth, and tax policies to reverse the population decline and foster a more vibrant and competitive state.
