California Is Losing More Workers Than Any Other State

California, the most populated state in the country, is losing workers at a faster rate than anywhere else in the United States, according to a new report by the National Association of Realtors (NAR).

The Golden State is experiencing the highest number of people moving away for new career prospects. In the third quarter of 2023, the latest data set available, nearly 87,000 professionals left for opportunities in other states, surpassing its job inflows of about 69,000.

California experienced a net migration of -18,485 in that period among workers, far more than second place Illinois, where the rate was -4,598, according to NAR.

“High housing costs—particularly in areas like San Francisco and Los Angeles—coupled with a high cost of living, have driven many workers to relocate to more affordable states like Texas and Arizona,” the NAR said in its report. “California’s high state income taxes push workers to states with more favorable tax policies, such as Texas.”

The most popular states for California workers to jump ship to are Texas, with 14 percent of professionals moving to the Lone Star State, followed by Arizona, (8.5 percent) Washington (7.7 percent), Nevada (7.5 percent), and New York (6.8 percent).

Newsweek has contacted Governor Gavin Newsom’s office for comment via phone outside of regular working hours.

“California’s once-dominant appeal as the ‘land of opportunity’ is starting to erode as workers seek more sustainable living and working conditions elsewhere,” Sam Taylor, a
business consultant at LLC.org, told Newsweek.

A Larger Trend

California has been experiencing net population losses since 2000 when the Golden State enjoyed a net interstate migration of 154,000. In 2021, net losses reached 361,000. The Public Policy Institute of California (PPIC) found that a significant driver of the population decline is people choosing to move across state lines, although international migration as well as death and birth rates also contributed.

But in recent years, this abandonment trend has become more pronounced. A driving factor of the decline is the switch to working from home, spurred on by the coronavirus pandemic.

“During the height of the pandemic, the flows out of the state became so large that almost every demographic and socioeconomic group experienced net losses,” a February 2024 report from the PPIC reads. It puts the exodus, like the NAR, down to high housing costs, which it says, “remains an ongoing public policy challenge.”

However, California’s fortunes when it comes to retaining workers could be shifted in the near future, explains Charles Faigle, executive vice president of Talent Solutions, Americas at WilsonHCG.

“During the pandemic, when companies were more open to remote work and weren’t making salary adjustments, yes, people left California. Why wouldn’t they? They could keep their California salaries while living somewhere with significantly lower housing costs. That was a compelling proposition for many professionals,” he told Newsweek.

But Faigle said 2024 could end up “telling a completely different story.”

“Companies are shifting towards hybrid work arrangements rather than fully remote setups. Some people who had moved to a lower cost location working remotely are now required to be in the office several times a week,” he added. “And it works the other way too. Some companies are adjusting salaries based on employee location and so some people may head to California where salaries are typically higher. These policy shifts will actually end up driving people back into the state.”

California’s Cost-of-Living

California’s cost-of-living—the amount needed to cover basic expenses such as food, shelter, transportation, and health care—ranks among the highest in the country. According to World Population Review, California has the fourth highest cost-of-living rate at 134.5, outranked only by Hawaii, Washington, D.C., and Massachusetts. RentCafe, an apartment search website, puts California’s costs of buying and renting nearly 100 percent higher than the national average.

The cost-of-living challenge “has significantly impacted younger workers and middle-income earners, prompting many to seek more affordable markets in states like Texas, Arizona, and Nevada,” Stephanie Alston, president of recruitment company BGG Enterprises, told Newsweek.

She added: “In California, rent costs alone can exceed 30 percent of a person’s income, creating financial strain and often driving relocation to states with lower housing costs and property taxes, where incomes stretch further.”

Stress and Burnout

California cities, Stockton, Riverside, Anaheim, and Los Angeles, are also among the most stressful for workers, according to a 2024 survey from LLC.org.

Taylor said the this is down to “long commutes, high crime rates, and minimal access to affordable health care.”

“For instance, Stockton, California, ranked third, with a significant portion of workers facing long commute times (32.7 minutes on average) and high insurance costs. The overall stress score for these cities makes it difficult for workers to maintain a healthy work-life balance,” something that Taylor says is easier when living in other states.

“In contrast, states like Texas and Florida, which have lower housing costs, better job opportunities, and a more manageable lifestyle, are attracting these same workers, allowing them to stretch their income further while enjoying a lower-stress environment,” he added.