Debunking Myths: Characteristics of Stayers & Leavers in New Jersey

Posted on April 30, 2011



For this one, the graphs pretty much tell the story. I’ve had these data sitting around for a while and just never got around to making the graphs. I’ve used data on migration patterns across cities and states from the American Community Survey in the past. The American Community Survey data are annual survey data which, among other things, include information on employment status, place of residence, place of work, wage income, household income and a bunch of other useful stuff. Since 2000, ACS has been doing annual data collection and has increased sample sizes from 2005 to 2009, increasing the questions that can be addressed with the data. The ACS data also include questions regarding whether the respondent lived in a different location the previous year. Since you have the current year location, whether an individual lived elsewhere the previous year, and where they lived, it’s relatively easy to tabulate characteristics of individuals who a) live in New Jersey in the current survey year but lived elsewhere the previous year, (Moved In)  b) live in another state in the current year, but lived in New Jersey the previous year (Moved Out), or c) lived in New Jersey in the current and previous year (STAYER).

The idea for this post had come about a long time ago, when I kept hearing over and over again how New Jersey’s taxes (which I wrote about here)  are driving out the state’s highest income (and most productive) residents. As usual, this statement was spun in a number of ways referring loosely to wealth, or income, or “rich” versus poor, but always with the implication that those who otherwise would contribute most to state tax revenues by virtue of their income are the ones headed for the exit. These claims were typically based loosely on a highly questionable secondary report of an earlier study, using data from the earlier part of the decade.

Here’s my quick run at the ACS data on individuals between the ages of 25 to 65 – the majority of wage earners.

Note that the ACS doesn’t survey absolutely everyone. It’s based on a sample. A pretty big sample for these years, but a sample nonetheless. As a result, to project the findings to the total population, one has to use weightings provided in the data (person weight, in this case).

Figure 1. Total numbers of 25 to 65 year olds coming and going

The first figure shows roughly similar numbers of 25 to 65 year olds coming and going. If anything, a few more are coming each year than going.

Figure 2. Income from Wages for those Coming and Going

Figure 2 shows that the income from wages for those coming in is slightly higher than for those leaving.

Figure 3. Household income for those Coming and Going

Household income is also marginally higher for those coming than for those leaving over time.

Figure 4. Education Level of those Coming and Going

This figure shows that on average, those coming into New Jersey have higher levels of education than those leaving. The blue bars, from associates degree or higher, through every higher level of education, are higher than the red bars. That is,those coming into New Jersey tend to be more likely to have a BA or higher, an MA or higher, or a professional or doctorate degree than those leaving New Jersey.

Figure 5. Household Income by State Moved To

Part of the rhetoric – mostly radio talk blather from NJ 101.5 – is that all of those high income earners headed to the exits are headed straight toward those lower tax burden and lower cost of living states like the Carolinas and Florida.  Well, as it turns out, the higher income earners that are leaving NJ – those that have higher household income than those who stay in NJ – happen to be moving to Massachusetts, California or New York – not states that one would typically call tax safe havens – but then again – most of the rhetoric regarding high and low tax states is misguided anyway. Those headed to Southern states and to Pennsylvania tend to have lower household income than those who stay in NJ and tend to have lower income than the average leaver.

TOTAL “MOVED TO” States

Note – The difficulty here is that with the ACS data, income is only reported for the current year, not previous income. So, income levels in this graph are income levels after the move, or in the state moved to and not the income level of the household when in NJ the previous year. That said, it is certainly the case that an income of $60k to $80 in those southern states would not otherwise be over $100k in NJ but for the supposed difference in total taxes. Yes, that lower income may provide comparable housing, etc., but that difference is largely a function of housing price and assessed value, not effective tax rate.

NPR Story: http://www.npr.org/blogs/money/2011/04/29/135813061/studies-rich-dont-flee-high-tax-states

Posted in: Jersey