Fewer Opportunity Seekers Flee Michigan

But household mover report also suggests too few moving here

When an individual moves far away from the place where he or she may have grown up or lived for years, it means a lot. It’s also meaningful for economists, because migration may be the single best indicator of quality-of-life differences between states. People only move for important reasons, which can include following job and career opportunities, or just looking for a nicer climate or view.

The good migration news for Michigan is being considered a “balanced” state in the 39th annual United Van Lines Migration Report: The household mover reports that the number of customers heading out of Michigan was largely offset by the number moving into the state.

Specifically, of the 5,331 Michigan moves made by UVL, 52.2 percent (2,785) were people leaving the state, and 47.8 percent (2,546) were people moving in. Michigan was ranked 27th in outbound traffic versus inbound traffic (not counting Hawaii and Alaska).

Statistically balanced migration is not ideal, but it’s a huge turnaround from the 2006-to-2009 period when Michigan had the highest percentage of households moving out of the state compared to the number moving in. (In 2009, the ratio of outbound versus inbound moves was 68 percent to 32 percent.)

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What those who live in Michigan and love it want to see is their state become a migration magnet for opportunity seekers. Among other quality of life factors, this status is a recipe for having children and grandchildren who live nearby rather than half a continent away.

Some of the things that cause people to move are not subject to human control, like the average days of sunshine. Others can be controlled, and perhaps none more than public policy choices. Migration can have a profound impact on these choices going forward, and may itself be an outcome of past choices in government spending, taxes, business regulation, labor law, education and welfare policies.

Since public policies are subject to democratic control, it’s worth asking how much weight something fundamental like income tax rates has on migration decisions. That’s the question the Mackinac Center for Public Policy and economist Michael Hicks worked together to answer in 2008 when they built a statistical model designed to estimate this effect.

This is a challenging question, because while “opportunity” is a constant theme in migration studies, how different individuals define it varies. Job and career are obvious examples, but for some, it’s the opportunity to live in a warmer, sunnier place.

The model Hicks and Mackinac created suggested that every time the state raises income or other taxes on individuals by 10 percent (such as from 3.9 percent to 4.35 percent), 4,900 people move from Michigan every year thereafter.

Not coincidentally, those figures are the income tax rate changes the Legislature and governor enacted in 2007 (the levy actually increased by 11.5 percent). In 2012, the rate was shaved to 4.25 percent, where it remains.

Note that the finding didn’t just project a one-time event, but an additional 4,900 more individuals leaving the state year after year, compared to the number if the taxes were lower. If that projection was on target and has persisted it would mean that 40,000 individuals would have left Michigan since 2007.

It is also probably no coincidence that Michigan’s improvement to “balanced” migration has been accompanied by economically constructive public policy changes in the state. While income tax rates may not have improved much, a burdensome and onerous business tax was replaced by a lower and simpler version.

Michigan’s new right-to-work law may also be helping, since long-term evidence from other states shows this to be a powerful driver of economic opportunity and thus migration: The U.S. Census Bureau recently reported that between July 2014 and July 2015 a net of 480,000 Americans moved from non-right-to-work states to right-to-work states.

Michigan has been moving in the right direction on improving the public policy factors that are important to becoming the opportunity magnet residents would like to see. That the state’s migration is just “balanced” suggests we’re not there yet, and more work is needed. Opportunities to do that work should not be wasted, because they may not always be as attainable.

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