The Sunshine State has experienced massive migration from states like New York
Florida has consistently been the top location for millions of Americans’ spring breaks and summer vacations, but in recent years it’s also become one of their most preferred destinations to move to. For more than a decade, Florida has remained the top destination for Americans leaving their home state.
This trend was exacerbated by the COVID-19 pandemic, both because of the work from home craze that’s allowed employees to live in a different state than their employer and general favorability for the state’s aversion to lockdown restrictions.
The mass influx to the Sunshine State has been happening long before the pandemic. Between July 2019 and July 2020, more than 252,000 people moved to Florida, marking the fifth consecutive year that the state held the top spot for net migration. Even before COVID, nearly two-thirds of Florida residents migrated to the state, with one-fifth coming from a foreign country.
But from April 2020 to April 2021, almost 330,000 people moved to Florida, equal to roughly 903 people moving to the state each day.
The thousands of people moving in are part of a national trend of citizens leaving blue states for red states. Texas has become the hub for people fleeing California, Tennessee for Illinois, and Florida for New York and other domestic migrants from the northeast. And making itself a migration hub has clearly paid off; the state has gained over $200 billion in investments and economic activity from other states in the past two decades.
So why are people moving to Florida? It’s largely because of the state’s low taxes, job opportunities, and light regulatory and business-friendly government, all of which make the cost of living affordable for many lower- and middle-class Americans.
Low taxes make the state’s cost of living more affordable
Florida is one of nine states with no income tax, which makes it very attractive to upper-income households from states like New York and New Jersey, which have a top individual income tax rate of 10.9% and 10.75%, respectively. But it’s also attractive to low-income and middle class families, who say their move to Florida has to do with the affordable cost of living.
And it’s not likely to change anytime soon; the state constitution prohibits the state government from imposing an income tax. Levying any new taxes or dues of any magnitude requires a two-thirds supermajority of both state House and Senate.
Florida’s other taxes are also low or mild. The sales tax averages around 7%. Further, a corporate tax rate of only 5.5 % ensures consistent economic growth over time.
This makes Florida incredibly affordable without sacrificing the quality of life of its residents. That’s not to say the state is one of the cheapest in the nation. Electricity and utilities are the most notable examples of pricey services, especially in comparison to the rest of the nation.
Job opportunities thanks to a business-friendly environment
Florida is one of the most powerful economic forces in the country, with a GDP of $1 trillion and one of the most diverse economies. That’s why one major reason people move to the state is to seek out better career opportunities.
Obviously there’s the tourism industry, with the state being home to Disney World, Universal Studios (which includes Harry Potter World), and LegoLand. But tourism isn’t even a major job provider.
Florida has a robust aviation and aerospace industry, thanks to it being the home of the Kennedy Space Center. It also is home to a booming clean technology indsutry, with over 11,750 cleantech companies registered in the state. It’s also ranked second in the country for pharmaceutical and medical manufacturing and hosts 46,000 healthcare establishments.
The state also boasts vibrant sectors of defense and homeland security, tech, and financial services. For example, the mayor of Miami announced in recent years that the city is striving to become the crypto capital of the world, with the mayor opting to receive his paychecks in cryptocurrencies. It’s the home to major companies like Burger King, Circle K, Office Depot, Royal Caribbean International, the ADT Corporation, Hard Rock Cafe, and Spirit Airlines.
And the state is a major international exporter. The state exported $55.5 billion worth of goods in 2021, making it the 7th largest exporter in the United States. That includes exports in aircraft parts, phones, machines, circuits, and more.
But why does Florida boast such a vast array of industries? It’s in large part because of its busines-friendly environment. Florida consistently ranks as one of the best states for business. Orlando and Miami top Wallethub’s charts for the most business-friendly cities in the country, with Jacksonville at No. 7 and Tampa at No. 10.
What do we mean by business-friendly? The state has no payroll taxes and only a 5.5% corporate income tax rate, which is why it’s ranked No. 4 for best business tax climate. It has a streamlined permitting process, which makes it easy and relatively cheap to apply to form businesses such as a multi-member limited liability company. And again, the lack of an income tax makes it an attractive destination for rich investors and entrepreneurs.
It’s why more than two dozen large corporations have migrated from California.
Small government and response to the COVID-19 pandemic
Florida has one of the least burdensome regulatory environments in the country. In 2015, it ranked No. 1 for economic and personal freedoms by the Cato Institute, and has stayed at No. 2 since then. The Fraser Institute also ranked it No. 2 for economic freedom out of all jurisdictions in North America.
The low regulatory burden and tamed state intervention in housing regulations are part of the reason that the typical price of a home in Florida is slightly lower than the national median sales price. For context, California home prices are more than double the national average.
Democrats in the state even argue that its government is small, which makes it hard for them to garner votes. One phenomenon in the state is its Hispanic population not identifying with the Democratic Party because it is largely composed of Cubans, who cite any enlargement of the government as making the state like the country they and their ancestors fled.
Florida also has school choice, which allows public funds to follow students if they attend a school they aren’t assigned to by their zip code. Florida is frequently listed as one of the best states for school choice, even at times ranking No. 1 for school choice. The state has four education voucher programs, including scholarships and tax credits. The state’s friendliness to school choice has been cited as a reason for moving by some demographics, including the Jewish community.
In addition to school choice, the state kept public schools open during the pandemic, one part of the Sunshine State’s incredible performance during the COVID-19 pandemic, which has also served as a major draw for people looking to flee strict lockdown states.
Notably, Florida has the highest proportion of senior citizens in its population, nearly 20%. And while around three-fourths of all COVID deaths in the U.S. have been among those over 65 years of age, Florida ranks No. 30 for age-adjusted COVID deaths.
Gov. Ron DeSantis ended the state-wide lockdown in May 2020, refusing to impose further restrictions and mask mandates, and later refusing to institute vaccine requirements. The overall mortality rise in the first year of the pandemic was considerably lower in Florida (14.8%) than the national average (16.9%), not to mention the staggering rates observed in California (18.6%) and New York (30.1%). Its COVID performance has been remarkably better than California and New York.
There are certainly some issues where the state could improve, such as with burdensome occupational licensing or certificate-of-need laws. But its government is much more restrained than other states with comparable populations.
Conclusion
The reasons we’ve discussed aren’t the only variables at play. People often cite the year-round sunshine and cultural diversity, among other factors. But states like California, Georgia, and Hawaii offer those same benefits. What makes Florida different is its lower tax rates, diversified and booming economy, friendliness to businesses, and relatively small government atmosphere.
That’s something other states with beautiful beaches and diversity can’t really offer.
