Calif. lost more workers than it gained as professionals flee to low-tax states like Arizona, Texas

Tens of thousands of professionals left California last year while fewer moved in to the state as the exorbitant cost of living as well as high taxes make it harder to retain talent.

California lost nearly 87,000 professionals last year while just 69,000 relocated to the state, according to a report published by the National Association of Realtors.

The data comes on the heels of a fresh Bureau of Labor Statistics report which found that California’s unemployment rate ticked up to 5.4% last month, the second highest in the nation.

Unemployment in California stood at 5.3% in September and 5.1% in October of last year. Nevada was the only state that had a higher unemployment rate — 5.7%.

The NAR report, which relied on data from the US Census Bureau, found that workers once based in California opted to move to more affordable locales including Texas and Arizona.

Texas was the biggest beneficiary of the California exodus. According to the report, 14% of professionals who left California in 2023 took up residence in the Lone Star State.

Texas also took in a total of 7,036 professionals. Of those, 12% came from California.

Montana, a state which has seen rapid economic growth since the pandemic, saw a net migration of nearly 1,200 professionals — with nearly one out of 10 hailing from California.

Arizona, another state with comparably favorable tax policies, absorbed 9% of professionals who left California.

Eight percent of those who left California chose Washington State while 7% moved to neighboring Nevada. Texas, Washington and Nevada do not have a state income tax.

California suffered the largest net migration loss — more than 18,000 people — of any state, according to the NAR report.

“California’s high state income taxes push workers to states with more favorable tax policies,” Nadia Evangelou, a senior economist for the National Association of Realtors, told SFGATE.

“The lack of affordable housing doesn’t just impact home buyers, it also affects the state’s ability to retain talent.”

Illinois net migration loss was the second largest — with 4,598 professionals leaving the state.

New Jersey reported a net loss of 1,810 professionals while New York shed 1,698 workers, according to the report.