Demographics Destined to Hold Pennsylvania Back?

Last year, Pennsylvania lost one person to another state every 12.5 minutes. In total, the state’s net domestic migration rate was negative: 41,607 more people moved out of Pennsylvania than moved into the commonwealth.

This exodus is nothing new. The state’s net migration rate has been negative since at least 2011.

While Pennsylvania's total population rose last year, growth has been historically slow. The tepid growth is driven by a “natural increase” (more births than deaths) and international migration.

The chart below illustrates this dynamic.

As we've pointed out in the past, Pennsylvania’s projected demographic trends could exacerbate the state’s fiscal problems. Over the next decade, the population will grow older, which could lead to a demand for more government services, with fewer taxpayers to support such demands.

To avoid this fiscal calamity, the state needs to create an environment conducive for strong economic growth. Economic growth fosters self-sufficiency, thereby reducing the need for government assistance (while higher incomes mean greater tax collections too). 

This raises an important question: How do policymakers create economic growth and attract more people to Pennsylvania?

It starts with reducing the tax burden on working people. Over the last five years, the states with the largest migration losses had a higher average tax burden (10.93 percent) than the states with the biggest migration gains (8.84 percent).

Skeptics who dismiss low taxes as a driver of population migration point to another magnet: weather. More people are certainly moving from the Northeast to warmer climates in the South. But this doesn't hold true everywhere. From 2010-2015, Hawaii (14th highest tax burden) and California (6th highest tax burden) collectively lost more than 284,000 people. Meanwhile, North Dakota (33rd highest tax burden), which isn't exactly known for its hospitable climate, gained 53,048 people over the same time frame. 

I'd wager most people would prioritize a decent living for their families over the climate in any given state. If they make the former a higher priority, low tax states will, more often than not, be their destination.