Getty Images; Alyssa Powell/Insider
There's a battle for people brewing — and the Sunshine State is winning
The sun is shining bright on Florida. The population of the aptly named Sunshine State exploded over the coronavirus pandemic: Florida added roughly 752,000 residents from July 2019 to July 2022 and is now the fastest-growing state in the US according to Census Bureau estimates.
For over two decades, the dense metropolises of the Northeast, California, and the Pacific Northwest attracted migrants from other states and abroad with jobs in high-growth industries like tech and finance. But that era has come to an end — at least for now. The flexibility of remote work, the boom in entrepreneurship, and the availability of gig work have led to a migration away from the industrial centers of the past. States like New York and California that relied on the allure of high-earning industries to attract and maintain residents are seeing people leave for fair weather and more affordable places.
While it's increasingly clear that Florida came out on top during the dramatic shake-up of the pandemic, there are also early signs that younger generations of Americans are more willing to move around for new opportunities. That means states will have to compete even more aggressively for new residents to keep their economies and budgets afloat. This interstate battle for people is already taking shape — and it isn't just cloudless skies that are tilting the scales toward Florida. The state has managed a balance of affordability, quality of life, economic opportunities, and governance that many Americans are looking for. For other states to compete, they will need to pay attention to what Florida is doing right.
A sunny disposition
While the pandemic opened up the floodgates of interstate migration, the trend toward Florida and other Sun Belt states began well before 2020. Over the past several years, Florida, Texas, North Carolina, South Carolina, Tennessee, and Georgia have seen the largest gains in domestic migration — but even among this fast-growing cohort, Florida stands out. The state's population jumped by 1.9% from 2021 to 2022 — a net gain of 417,000 new residents — marking the first year since 1957 that Florida held the distinction of America's fastest-growing state. California and New York, on the other hand, lost 180,000 and 114,000 residents respectively. Since the start of the pandemic in 2020, the contrast is even more stark: Florida welcomed 655,000 new people, according to Census estimates, while New Yok and California have seen their population fall by a combined 903,000.
Some commentators have worried that Florida's growth is a sign of America's impending doom as our population ages and sails off into retirement, leaving fewer young workers to support the economy. But contrary to these concerns, both young and old people have moved to the peninsula. "Florida has different attractions for different people," William Frey, a senior fellow and demographer at the Brookings Institution, told me. The state's brand has evolved from a place for retirees to a hub for techies and entrepreneurs: In an analysis of census data by the online consumer-information service SmartAsset, two of the 10 hottest cities for millennial movers in 2021 were in Florida.
All this population growth has been a blessing for Florida's booming $1.4 trillion economy — already the fourth-largest in the country. Florida had the second-highest rate of job growth in 2022, according to the Bureau for Labor Statistics, adding about 440,000 jobs over the course of the year. The state is also tied for the sixth-lowest unemployment rate at just 2.7%, well below the national rate of 3.4% and trailing only much smaller states like Alabama and South Dakota. And for the first time since the government started collecting state-level statistics in 1990, the number of employed people living in Florida has surpassed that of New York.
This influx of new people is also inspiring more businesses and entrepreneurs to move to the state. According to data from the Economic Innovation Group, Florida had the third-highest rate of new business formations per capita in 2022, behind only Wyoming and Delaware. And the state's three main metro areas — Tampa, Orlando, and Miami-Fort Lauderdale — have also seen their economies boom thanks to the growth of industries like finance and healthcare. This has helped drive low unemployment rates and higher-than-average wage growth in those metros.
What other states can learn from Florida
While much of the conversation about state competition has centered on politics, which certainly affects where people choose to live, there are a broad swath of economic and cultural factors that influence whether people are moving in or out. Florida is winning people over for a few key reasons.
Floridians pay no income tax and fewer taxes overall than people in states like New York, California, or Massachusetts. A 2020 journal review found that taxation did have an impact on migration, particularly among white-collar knowledge workers with the ability to more easily move. But a low tax rate isn't the only thing people care about. Plenty of states including Alaska, South Dakota, and Wyoming have no state income-tax burdens but did not see as much migration. For those who have the flexibility, a major consideration is also a state's level of services: What do they get for what they pay?
Despite having a budget half the size of New York's and a larger population, Florida, by many metrics, is able to do significantly more with the taxes it collects. State and local spending totaled $9,300 a Floridian in 2019, less than half New York's $19,500 a resident. But compared with New York, Florida has a lower poverty rate, less wealth inequality, a quarter of the number of homeless residents, and higher high-school graduation rates. On more subjective metrics like well-being, Florida is consistently ranked highly, with Naples, Florida, topping the list for highest well-being among cities in a 2018 Gallup survey. New York ranked among the bottom 15 states.
Florida is also outshining New York and other major population centers in tackling the soaring cost of housing. The state issued 212,206 building permits for residential units in 2022, compared with just 41,254 in New York and 118,065 in California. This building boom creates a larger stock of housing that keeps prices more affordable: 17.6% of all housing in Florida has a value of less than $100,000, whereas in New York the rate is in the single digits. As a result, 69% of Floridians are homeowners compared with only 54% of New Yorkers — and fewer people in Florida are homeless.
A theory from the economist Mancur Olson suggests why states like Florida get more out of their tax spending than others and avoid the kind of political gridlock that's contributed to the soaring cost of living in places like New York and California. According to Olson, a higher concentration of narrow interest groups leads to what is known as institutional sclerosis, which stymies innovation and collective action. But instead of holding up new projects with endless reviews and delays, Florida has worked to balance community input and the need to speed up approval of critical projects. This has helped fuel its house-building boom and deliver quality-of-life improvements like the new high-speed rail network, Brightline, which is on the way to connecting the state's major metro areas.
The economist Charles Tiebout also hypothesized that people shop around for a preferred package of government taxes and spending in the same way they make any major purchase like a home or car. So not only can tax competition be a deciding factor for people who vote with their feet, but if they don't like one jurisdiction's governance, they will consider the town or state nearby. The differences between Florida and New York's economies suggest that there's an optimal tax policy and an optimal level of government spending that states should be targeting.
What's the matter with Florida
As sunny as things appear right now, there are clouds forming on Florida's horizon that could threaten its newfound status. In particular, the clock is ticking on the climate crisis: Surging sea levels and increasingly severe hurricane threats are already forcing residents out of the Florida Keys. And more of the state is facing what climate scientists call a "triple threat from water": rising sea levels, storm surges, and extreme rainfall. It is difficult to imagine a scenario in which Florida manages to avert all these crises forever while managing other risks such as the heat, which has steadily risen in recent decades.
A recent study found Florida real estate to be overvalued by more than $50 billion because of unaccounted flooding risk — a bubble that could eventually burst. The state has spent hundreds of millions of dollars to mitigate the crisis, hiring chief resilience officers, and Miami has gone as far as hiring chief heat officers to try to keep residents cool. But to keep its destination status, the state will need to develop a sustainable path to addressing these issues.
Another limitation of the state is its lack of public transportation. While the state opened up a high-speed rail last year with plans to expand it, decades of underinvestment in rail and public transit certainly handicapped economic activity and has made it harder for poorer Floridians to escape poverty.
And while Florida's cost of living ranks in the middle among the 50 states, the state's median wages are significantly lower than most states' — though they are climbing fast. And real median household income in 2021 was $59,000, $13,000 lower than in New York and roughly $30,000 lower than in the three highest states: New Jersey, New Hampshire, and Utah. Florida as a whole may be a bargain, but the steep rise in cost of living and influx of new residents in major cities like Miami and Tampa threaten to make these locales unaffordable. If efforts to reduce cost burdens or the climate crisis become a larger threat, the trade-off for prospective residents could shift. Local residents may also move to more affordable parts of Florida. But given the size of the pivot to the state, a full-on reversal of the population shift seems unlikely.
For states, it's about blocking and tackling
Florida certainly has its problems, but its recent appeal offers a glimpse into what Americans are looking for in a home state nowadays. Other parts of the US may not be able to replicate the Sunshine State's great weather or luxurious beaches, but they can learn from Florida's efforts to build a dynamic economy and effectively deliver public services.
States will have to change their decision-making if they want to keep residents — much less attract new ones. The battle for people is on, and if leaders take this competition seriously, they will be forced to provide better services and a high quality of life at a fair cost to residents. And in the end, that will mean better outcomes for all Americans.
Emil Skandul is a writer on technology and urban economics, and a Tony Blair Institute fellow.