Removing Barriers in Nebraska Part Two: Where Are Nebraskans Moving?


So what does Nebraska have that is attracting new residents or what is causing people to move to other states? This brief will discuss Nebraska’s migration trends with other states and also discuss which states Nebraska should be compared to when discussing changes in public policy to attract new residents.

Taking a look at the fastest growing states as measured by population growth, Nebraska doesn’t come close to making the list.

Alaska, Arizona, Colorado, Florida, Idaho, Nevada, North Carolina, North Dakota, South Carolina, and Texas are the states that are attracting the largest inflow of new residents, while Nebraska ranks 27th in a 10-year window.
 

This tells us that people aren’t moving to Nebraska when compared to other states. It also tells us that the people deciding to leave Nebraska are looking for something that Nebraska doesn’t have. When individuals move from one state to another, it can have significant impact on the economic growth of both the losing and receiving state.  Examining the states that are attracting the highest number of migrants specifically from Nebraska allows potential insight into which states are offering better opportunities precisely for the types of workers and skills present in Nebraska. The top states[1] where Nebraskans moved during the 2013-14 year are Iowa, Texas, Missouri, California, Colorado, and Kansas. 
 

Figure 1

 

While it is alarming that Nebraska isn’t growing in population above the national average, to properly assess the impact from interstate migration, we need to take into account more than the number of people moving, but the total income they are taking with them. While migration is a strong indicator of people voting with their feet, a few more variables should be taken into account when comparing states.
 

In our first brief of this series, we outlined ‘Why Growing Nebraska Matters’ along with the key economic growth indicators used to measure growth.  To summarize, the states’ productivity (GDP) and income are performing in the top ten states nationally, while job growth and population growth are both below the national average.  After a thorough analysis of these growth metrics, we must not only be concerned with the number of people moving into and out of Nebraska, but the total income they take with them. 
 

According to IRS data on Taxpayer Migration from 'How Money Walks', Nebraska has lost $3.07 billion in annual adjusted gross income as reported on IRS tax returns to other states between 1992 and 2014.[2] The states attracting the most people and income from our state are Nebraska’s competitors when it comes to maintaining and growing the economy. Without a skilled and productive workforce, Nebraska cannot expect to continue to see GDP or income growth, which will directly affect new employment opportunities.
 

Figure 2


 

To compare from the reverse, states from which Nebraska has gained the most inbound income are California, Illinois, North Dakota, New York, and New Jersey. These are the states that residents are leaving to come to Nebraska, and should definitely not be considered as states with better policies. In fact, avoiding the policies of these states is equally, if not more important, than adopting the policies of the successful states.
 

Following the population migration alone will paint a somewhat skewed picture.  Nebraska is losing a large number of citizens to California, yet California is also a state where we receive the most inbound income.  That is because the population data in Figure 1 is simply measuring the total number of people moving in and out of a state.  The ‘How Money Walks’ data differ slightly because it is not a simple count of individuals, but weighted by income. This measure attempts to quantify the impact of the mobility on government tax bases and the overall economy.

Assessing the measures discussed in the first brief, we have narrowed the list of states to which Nebraska’s policies should be compared.  There are 11 states that ranked highly on two or more measures of economic growth, but only five of which are states to which Nebraska is directly losing a significant number of residents in migration. In a sense, the states attracting the most Nebraskans away are Nebraska’s competitors when it comes to maintaining and growing the economy.  Using the states identified through migration helps shorten the list, as these are Nebraska’s true competitors. Although Missouri is clearly an economic competitor to Nebraska in terms of income and population, substantially more Nebraskans are relocating to Iowa, which is why Iowa is a comparison state.  Although a less favorable state from a cursory review of tax rates, there are policies that exist in Iowa that are attracting Nebraskans and worth a concentrated analysis when comparing successful growth policies.

That means the five states common to all these factors are Arizona, Colorado, Florida, Iowa, and Texas.

Figure 3

The purpose of identifying these comparison states is to find out what migration to these states tells us about the barriers that exist to growing Nebraska. 

In a review of economic literature,[3]  there are four key areas that have been identified as critical when discussing growth and prosperity:

  • Fiscal policy where reasonable and appropriate taxes are levied and the government spends its money on a core set of public goods without moving into areas that can be handled more appropriately by the private sector;
  • A legal and judicial system that works fairly to enforce and support private ownership rights and contract law;
  • Regulatory policy that subjects its regulatory code to reviews and is wary of the many unintended consequences of regulation; and
  • A state that supports free trade internally, promoting a robust entrepreneurial climate without unnecessarily limiting entry into occupations or industries that lessens competition. 

Now that we know Nebraska is in competition with Texas, Florida, Arizona, Colorado, and Iowa, our subsequent briefs will use available data from our state competitors to investigate our differences in the key areas that affect economic growth and prosperity.

Removing Barriers in Nebraska Part Three: How Our Taxes and Spending Compare, will be released on July 27. Click here to return to the series main menu.

Endnotes:


[1] Source: U.S. Census Bureau from 2014 American Community Survey 1-Year Estimates of State-to-State Migration Flows [https://www.census.gov/hhes/migration/data/acs/state-to-state.html].

[2] See Brown, Travis H. How Money Walks: How $2 Trillion Moved Between the States, and Why It Matters. St. Louis, MO: Pelopidas, LLC, 2013, and the data is available at the How Money Walks website [http://www.howmoneywalks.com/].

[3] For a review of this literature and more in-depth descriptions see Gwartney, James D., Robert A. Lawson, and Joshua C. Hall. (2015). Economic Freedom of the World 2015 Annual Report. Vancouver, B.C.: Fraser Institute; and Hall, Joshua C., and Robert A. Lawson. (January 2014). “Economic Freedom of the World: An Accounting of the Literature.” Contemporary Economic Policy, 32(1), 1-19.

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