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Why Businesses and People Move to New States

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Published March 16, 2021

Many families and businesses choose where to settle based in part on government policies that make it cheaper and easier to work and live. States that make it expensive to hire workers and that adopt stringent rules over the supply of housing unintentionally encourage people and businesses to leave. States that offer simplified regulations and low tax rates provide a higher quality of life for workers and their families.

Discussion Questions:

  1. What policies make it cheaper and easier to work and live?
  2. Why is it important for states to attract families and businesses?

Additional Resources:

  • Read “California Businesses Leave the State by the Thousands,” by Lee Ohanian via California on Your Mind. Available here.
  • Read “Gavin Newsom’s Expensive Promises Meet California’s Economic Realities,” by Lee Ohanian, via California on your Mind. Available here.
  • Watch “Addressing the Housing Crisis,” with Lee Ohanian via PolicyEd. Available here.
View Transcript

When deciding where to locate, many families and businesses choose based in part on government policies.

Businesses move to states where the cost of doing business is low. Families value affordable housing, good schools, and lots of job opportunities. States that provide both grow and flourish. This dynamic is front and center in current U.S. migration trends.

Some states, like Texas, are eagerly competing for new residents by adopting policies that attract employers and workers. Low tax rates and simplified regulations make it easier to do business and build new housing, which in turn provide a higher quality of life for workers and their families.

Other states are enacting policies that have the unintended side effect of encouraging people and businesses to leave.

California, for example, has increased tax rates and passed regulations that make it expensive to hire workers, and adopted stringent rules over the supply of housing that have driven up rent and home prices.

It ranks 49th in ease of doing business. The average home price now exceeds $700,000, and renting an apartment is often over $2,500 per month.

The result? A steady stream of moving vans are leaving California and other states.

To reverse this flow, states must prioritize economics policies that make it cheaper and easier to work and live.