Jul 11, 2023 - Business

Why sunny states are eating Massachusetts' lunch

Illustration of a briefcase combined with an emergency exit sign

Illustration: Annelise Capossela/Axios

Six fast-growing states in the South ā€” Florida, Texas, Georgia, the Carolinas and Tennessee ā€” now add more to the national GDP than the Northeast, the perennial powerhouse, writes Axios' Mike Allen.

Why it matters: The pattern is evidence of the growing influence of parts of the country far from New England and New York.

  • It's not just about the coasts and the bubbles anymore: Americans are spreading out, physically and economically.

Those six southern states' new muscle is part of a "$100 billion wealth migration" as the U.S. economic center of gravity tilts south, Bloomberg reports.

  • The switch happened during peak pandemic. There's no sign it'll reverse.

Zoom in: Massachusetts landed in the bottom five U.S. states for net inbound migration last year, meaning more people leave than move in.

  • Even with an annual influx of students and a burgeoning medical and tech economy, Massachusetts' high cost of living keeps people from putting down roots.
  • Only Louisiana, Illinois, California and New York saw more people leave.
  • Maine ranked fourth for net inbound migration and New Hampshire 17th.
Data: Bureau of Economic Analysis. Map: Simran Parwani/Axios Visuals

Between the lines: The people who are moving out are among the highest earners, according to a Pioneer Institute study. More than 60% of the wealth Massachusetts lost in 2021 came from those earning $200,000 or more annually.

  • The report's authors attribute much of the out migration among the wealthy to the state's tax policy and surtax on incomes over $1 million.
  • Lawmakers and Gov. Maura Healey are deliberating over a tax relief package meant in part to keep wealthy families from leaving.

Zoom out: In total, Massachusetts lost around $900 million in adjusted gross income to out-migration in 2012.

  • That number nearly quintupled to $4.3 billion in 2021, thanks in part to the pandemic.

By the numbers: Nationally, a flood of transplants helped steer about $100 billion in new income to the Southeast in 2020 and 2021 alone, while the Northeast bled out about $60 billion, Bloomberg writes from IRS data.

The Census Bureau said in May that nine of the nation's 15 fastest-growing cities were in the South.

  • Of the nine fastest-growing cities in the South, six were in Texas.

The bottom line: For years, the U.S. population has been trending south and southwest. Now money and economic activity are following, and that's a warning sign for the Bay State's future.

avatar

Get more local stories in your inbox with Axios Boston.

šŸŒ±

Support local journalism by becoming a member.

Learn more

More Boston stories

No stories could be found

Bostonpostcard

Get a free daily digest of the most important news in your backyard with Axios Boston.

šŸŒ±

Support local journalism by becoming a member.

Learn more