New data from the Census Bureau reveal that 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 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 to data from United Van Lines, the leading reason is to look for a new job. This is no surprise, as the state has yet to recover from 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 been losing residents to net outmigration for years. The Pennsylvania Independent Fiscal Office (IFO) forecast in 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, which already account 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 Service (IRS) data indicate that from 1992 to 2019, Pennsylvania lost a total of $106 billion in income from domestic outmigration. Another analysis reveals 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 they increased spending by an astronomical 10.7 percent.
In a November 2022 report, the IFO finds that the state’s ongoing expenses exceed its ongoing revenues. The current “surplus” stems from a temporary bump in federal funds for 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 the top ten most fiscally stable states – while Pennsylvania ranks 38th on that metric.
Migration trends show that Americans consistently move away 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 an acceleration of the state’s Corporate Net Income Tax (CNIT) cut, a key campaign proposal of Gov. 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.