By Charlie Copeland, Director

Center for Analysis of Delaware's Economy & Government Spending

January 26, 2024

 

 

Our previous analyses discuss Delaware's inbound migration of retirees from our regional neighbors (PA, NJ & MD) and outbound migration to the more prosperous Southeast (FL, TX & NC). This final analysis in the "Migration Series" focuses on outbound migration to the West Coast.

 

Despite a decade of significant population loss, California is the recipient of a large portion of Delaware's outbound migration (6.2%). In addition to California, Oregon and Washington also receive Delaware's outbound migration (7.4% and 5.1%, respectively, according to recent available data from the US Census Bureau). 

 

In aggregate, almost one in five Delawareans move to the West Coast. It turns out that these three states (CA, OR & WA) have significantly better schools and, generally, stronger economies than Delaware. Below, we investigate this in more detail.

 

 

GDP GROWTH: Delaware vs. the West Coast States

 

Over the past 25 years, Washington State and Oregon have outpaced Delaware in GDP growth. California has lagged behind its neighbors and Delaware. However, a young Delawarean might be lured to Washington, Oregon, and even California because it remains a dominant technology hub.

 

Graph 1.0 

(Source: St. Louis Federal Reserve Gross Domestic Product: All Industry Total by State, Millions of Dollars, Annual, Not Seasonally Adjusted, Normalized Base Year 1997)

 

 

PER CAPITA INCOME LEVEL: Delaware vs. the Southeast States

 

As recently as 20 years ago, Delaware's per capita earnings compared quite favorably to the West Coast. However, economic mismanagement by Delaware's government has degraded its economy to the point where Washington's and California's incomes are about 25% higher than in Delaware. Even Oregon, the West Coast's earnings laggard, has now passed Delaware. (see Graph 2.0 below).

 

Given the strong economies in Washington and Oregon, plus the large technology industry in California, the West Coast will likely continue to outpace Delawareans' per capita incomes and continue to lure workers away.

 

Graph 2.0

(Source: St. Louis Federal Reserve State CPI data - Per Capita Personal Income in Delaware, Dollars, Annual, Not Seasonally Adjusted)  

 

 

LOCAL TAX ENVIRONMENT: Delaware vs. the West Coast

 

The tax structure of the West Coast states is horrible, but Delaware's tax structure is equally bad. Only Washington State has middle-of-the-road taxation. In the battle for worst, Delaware is very competitive with the West Coast.

 

Table 1.0: 2024 Business Climate Index (DE vs. CA, OR, & WA)

 

(Source: 2024 Tax Foundation)

 

 

PUBLIC SCHOOLS: Delaware vs. the West Coast 

 

As noted in the last two "migration series" of analyses, Delaware's failing public school system (as graded by the federal government) means that Delaware families might be choosing to move elsewhere due to our extremely poor schools.

 

Comparing 4^th and 8^th graders in Delaware to these West Coast states shows that Delaware comes in dead last (see Graph 3.0 below).

 

Graph 3.0

(Source: US Department of Education - National Assessment for Education Progress)

 

 

CONCLUSION

 

Why would 20% of Delaware outbound migration move 3,000 miles away to the West Coast? 

Our analysis indicates that it could be driven by the allure of stronger economic opportunities, higher wages, and much better schools in those states. To paraphrase newspaper editor Horace Greeley, "Go West, young Delaware techie - and bring your family, too!"

 

In summary, almost half of Delaware's outbound migration heads to FL, TX, NC, CA, OR, and WA, while a majority of incoming residents, especially retirees, originate from PA, NJ, and MD. This scenario is a recipe for disaster. Without significant changes in its tax, regulatory, and education systems Delaware's demographics and prospects will continue to decline. 

 

 

NOTE: This was the third and final migration analysis conducted by CRI. The first analysis shows that Delaware's net inbound migration primarily consists of retirees - not typically the demographic for fostering robust economic growth. The second analysis indicates outflows towards the Southeast (one-third of the outbound migration) are motivated by their stronger economies, favorable tax conditions, and superior education systems. This final analysis suggests that (despite a poor tax environment) the lure of the West Coast's economic and earnings prospects, plus educational offerings, entices one in five Delawareans to move out West.