New data from the Census Bureau shows residents are fleeing Pennsylvania at an alarming rate. Pennsylvania lost nearly 40,000 residents to other states from July 2021 to July 2022. Only seven states lost more residents to domestic emigration during this period. And with 23,000 more deaths than births, Pennsylvania’s total population loss is the fourth-highest in the nation. Only New York, California and Illinois saw larger declines.
Why are Pennsylvanians fleeing? According to United Van Lines, the main reason is to find a new job. That’s no surprise as the state has yet to recover from job losses during the pandemic, while other states have seen significant job growth.
Unfortunately, this new data is just the latest bad population news for Keystone State.
The Commonwealth has been losing residents through net emigration for years. The Pennsylvania Independent Fiscal Office forecast in October 2021 that the state will lose an additional 250,000 working-age residents by 2025 due to emigration and an aging population. When Pennsylvanians flee the state, they take their talent and resources with them—a “brain.” runoff” that harms our state economy and finances. As the retirement-age population grows, Pennsylvanians will have to spend more money on social services, which already account for a large portion of government spending. But the people who move to other states are mostly working-age people who pay the taxes that fund the state government.
A 2022 study by United Van Lines shows that more than 67% of people leaving Pennsylvania were between the ages of 18 and 64. Internal Revenue Service data shows that from 1992 to 2019, Pennsylvania lost a total of $106 billion in income to domestic emigration. Another analysis shows that between 2019 and 2020 alone, Pennsylvania lost $1.2 billion in income due to domestic emigration.
As the state budget talks begin, lawmakers must work to reverse the population exodus and restore Pennsylvania as a target state. Adopting a balanced, tax-responsible budget and promoting a low-tax environment can help attract workers back to Pennsylvania. Lawmakers can’t repeat last year’s mistakes when they increased spending by an astronomical 10.7%.
In a November 2022 report, the IFO finds that the state’s current expenditure exceeds its current income. The current “surplus” stems from a temporary increase in federal funding for welfare costs during the COVID-19 pandemic. However, with those funds phasing out in the coming months, the state’s fiscal deficit will exceed $1.6 billion in fiscal 2023-24.
In short, Pennsylvania will soon face a financial crisis and the need for more family tax hikes if lawmakers don’t rein in spending.
Controlling spending growth to ensure a long-term, structurally balanced budget would avoid the need for spending cuts or tax hikes while ensuring programs receive adequate funding. Enacting a fiscally responsible state budget is critical to making Pennsylvania attractive to workers and businesses, and would allow reform of a tax structure that drives out businesses, jobs and families.
Florida, Texas and North Carolina ranked as the three states with the highest growth from internal migration last year. These three also rank in the top 10 most fiscally stable states — while Pennsylvania ranks 38th on this metric.
Migration trends show that Americans are constantly migrating from high-tax countries to low-tax countries. Florida and Texas, for example, have no state income taxes. Limiting spending growth would allow Pennsylvania to cut taxes — such as accelerating the state’s net income tax cut, a key campaign proposal by Governor-elect Josh Shapiro. Such moves would help attract investment in the state.
State politics needs to think ahead. By curbing uncontrolled spending, Pennsylvania could welcome more residents and avoid spending cuts or tax hikes in the years to come.
Nathan Benefield is Senior Vice President of the Commonwealth Foundation.
This article was originally published by RealClearPennsylvania and made available via RealClearWire.