Evaluate house hack deals with our free House Hack Calculator →

The California Exodus LIE

Is everybody leaving California and making more money in Texas? Um, actually, no.

There’s a recent trend of YouTubers making videos about why they’re leaving California. Conservative commentator Ben Shapiro can’t take it anymore and is moving his whole company to Nashville. Joe Rogan’s going to Texas. Elon Musk made headlines when he threatened to move Tesla out of Palo Alto, but so far, it’s actually just a threat.

When it comes real estate YouTubers, Graham Stephan is moving to Las Vegas – though it’s worth noting that he’s keeping his Los Angeles home and all of his California real estate. And Meet Kevin has a whole series of videos called “Leaving California” in which he bashes the state but, side note, he’s not actually leaving.

Frankly, Kevin, I love your style. You found another trend, you hopped on it, you make a lot of good points about California’s problems, and I hope you keep that gubernatorial aspiration alive.

But here’s the thing: the so-called California exodus is a lie. It’s malarkey, it’s fake news, it’s BS. Allow me to explain.

Debunk #1: Actually look at the numbers!

Firstly, the number one reason why it seems like so many people are leaving California is because there are so many people in California to begin with.

Roughly 1 of every 8 Americans lives in California. That’s over 39.5 million people. That’s more people than live in Washington, Oregon, Nevada, Idaho, Utah, Arizona, Montana, Wyoming, Colorado, and New Mexico combined. Of course more people left California last year than any other state. There’s just so many more of us.

But when you adjust for population and look at the per capita trend, more people left Alaska, Hawaii, New York, Illinois, Connecticut, Louisiana, and New Jersey than left California last year. That’s eight states losing residents faster than California. Where are the YouTube videos about the Connecticut exodus or the New Jersey exodus?

Debunk #2: Taxes are higher, but so is income!

Secondly, the big argument everyone makes is that California taxes are so bad that residents have no choice but to leave. This is ridiculous, and I’ll tell you why. We Californians pay state income tax, it’s true, but we also make more income.

Let’s compare your typical California family to families in, say, Joe Rogan’s new home state of Texas and Ben Shapiro’s new home state of Tennessee.

The average median income for a California family is $87,759. In Texas, the median family makes $68,248, and in Tennessee, the number is $59,249. Texas and Tennessee have no state income tax, so their state tax burden is $0 whereas – oh no! – our beleaguered California family is being crushed under California’s state income tax burden of $5,330.

Where does that leave us in terms of take-home pay? Our median California family is still $11,000 wealthier than their Texan counterparts and $19,000 better off than a median family in Tennessee.

Debunk #3: But now I can work from anywhere!

Another scenario that gets a lot of attention is the prospect of high-earning skilled workers flooding out of California en masse. Especially now that Google and Facebook and all these tech companies are letting their employees work from home. Won’t all of these employees leave California for a state with no state income tax? We’re talking about individual earnings here, so imagine a single guy and or gal designing apps in San Francisco or Austin or somewhere in Tennessee.

You’re probably thinking, “Yeah, but if a Facebook coder is making $137,000 in San Francisco and decides to move to Texas, won’t he or she keep that salary in Texas?” The answer, I assure you, is NO!

Cost of labor is one of the biggest, if the not the biggest, expense for any business. The reason why companies like Facebook and Google have set up offices in places like Austin is to have access to the equally qualified and relatively cheaper labor pool that lives there.

If a coder at Google tells the company that his new mailing address will be in Texas, you can rest assured that Google will introduce him to their new program for self-relocated work-from-home employees in Texas (a pay cut).

Where does that leave our high-earners in terms of take-home pay? Once again, you come out ahead in California.

Considering ALL of the Variables

I know what you’re thinking. California is a high cost-of-living state. Making more money in California doesn’t necessary mean you’re better off than somebody making less money in Texas or Tennessee. And I’ll tell you what: at least that’s a legitimate argument against living in California. But to decry the state income tax, in isolation of any other variable, as California’s death knell is just absurd.

I do have a caveat. If you’re a YouTube personality, and you make two million dollars a year by shooting videos in your garage about how you make two million dollars a year, then yeah, you’ll probably benefit financially by leaving California. And if you’re a podcaster who just signed a one-hundred-million dollar contract with Spotify, then sure, your bank account will probably benefit from a move out of California.

But for the rest of us, staying in California is a financially sound move.

California’s not perfect. It’s moniker as the Golden State has obviously taken some wear as its population doubled from 1940 to 1960 and then tripled from 1960 to now. We have a problem with affordable housing, and our biggest cities have a serious problem with homelessness. Ironically, those who leave the state because of these problems are actually helping out those of us who stay.

In other areas, we’re doing okay. California’s GDP growth and poverty rate are right in the middle of the pack compared to other states. Our K-12 education system ranks below average, unfortunately, but still ahead of Tennessee, as well as Oregon, Arizona, and Nevada – all states purportedly flooded with Californians.

And in some areas, California’s doing great. US News and World Report ranks California out of the fifty states as having the fourth-best higher education system, the fifth-best natural environment, and get this: the number one business environment in the country.

What? How is that possible?

Despite the onerous tax burden, Californians file more patents per capita than the residents of any other state. And more venture capital as a percentage of GDP is invested in California companies than the companies of any other state. So bottom line, business is booming in California. Go figure!

And here’s one more ranking from US News and World Report: California ranks #1 for overall public health.

In fact – and this is the statistic I like the most – outside of Hawaii, Californians have the longest life expectancy of all Americans at 81.6 years. Moving to Texas is going to chop 2.5 years off your life on average. And moving to Tennessee? You’re looking at 5.5 fewer years of being alive.

I don’t mean to get too morbid about this, but Ben Shapiro has made a big deal about bringing his whole 75-person company with him to Nashville. 75 is a lot of people. If the average life expectancy in Tennessee is 5.6 years shorter than in California, then Ben Shapiro has about 420 years of death on his hands. And I thought he was a pro-lifer.

But I digress. California’s not perfect, but there’s a whole lot to love about this state and all the reason in the world to stay. We’re not the only spot in America that’s been pretty beat up by 2020, and I’m looking forward to brighter years ahead as I live out my remaining 81.6 of them right here in California.

See for yourself

Use my House Hack Calculator to see how much wealth you could be building.