Should I stay or should I go? A deeper look at why people move
I have written a lot about why people decide to move from one place to another. I generally discuss taxes because, for one thing, research shows that they are one factor that drives people’s decisions on where to live and work and, for another, they are something that policymakers control and can use to influence these decisions unlike other factors like, say, “recreation” or “weather and climate.”
To repeat: taxes are not the only factor which drive people’s decisions over where to live and work. If they were, everyone would be moving to Alaska: they are not. A Minnesotan could eliminate their state individual income tax burden entirely by moving to South Dakota, but that comes at a cost. They might well be moving away from friends and family. And, with all due respect to Sioux Falls, it lacks a lot of the amenities which a resident of the Twin Cities has access to: bars and restaurants, museums, theaters, and galleries, professional sports teams etc. The point is that while Minnesota’s high taxes are a “push factor” in migration decisions, it does have some “pull” factors in its favor.
But what happens when it loses those “pull” factors? Downtown Minneapolis is dying. If all those bars and restaurants are closed, if it is too unsafe to go to all those museums, theaters, and galleries, and if the professional sports teams suck, then you might as well be in Sioux Falls.
The same applies across the board. Minnesota has long boasted below-average crime and above-average schools as “pull” factors; what happens when violent crime is above average and schools are rapidly falling below?
And what happens when those factors lose their pull? Yesterday, I wrote about research which found, among other things, that people are increasingly valuing affordability over “neighborhood” in deciding where to live. What that shows is a decline in the relative importance of those bars and restaurants, museums, theaters, and galleries, and professional sports teams relative to affordability. This plays to the advantage of a place like Sioux Falls where, according to the National Association of Realtors, the Median Sales Price of Existing Single-Family Homes was 16% lower in 2022 than in the Twin Cities.
Minnesotans, to put it bluntly, often sneer at their neighbors for lacking many of the amenities they have. But, as those amenities both degrade in themselves and decline in the relative value people place on them, that will have to stop.
So, no, people’s migration decisions are not a simple function of tax rates and I have never said that they are. But we must admit that they are a “push” factor. And, if we insist on making that “push” stronger by increasing them, we have to pay closer attention to our other “pull” factors. Sadly, the recent record there isn’t great either.