A Tale of Two States

Would you rather live in California or West Virginia?

California is the state with thousands of miles of oceanfront property, Silicon Valley, Los Angeles, San Diego and San Francisco.

Aerial view of San Francisco, CA
www.skyviewpictures.com

West Virginia is the state with thousands of miles of twisting roads through mountainous terrain, shuttered coal mines, the Kanawha Valley, Charleston, Huntington and Morgantown. Charleston, the largest city in West Virginia, has a population of just over 50,000. Charleston would not be anywhere near the top 100 cities by population in California.

Aerial view of Charleston, WV
www.city2map.com

You would think that California's natural advantages would see people flocking to the Golden State.

You would also think that people could not get out of the Mountaineer State fast enough in the wake of the Obama administration's war on coal and the economic challenges facing the state.

If you think that you would be wrong.

For the ten year period 2005-2014, California saw a net migration loss (more people moving out of the state than moving into the state) of 1.3 million people. That ranks California 49th out of 50 states on that measure.

On the other hand, West Virginia saw a net migration gain of 16,719 people over the same period. The number is not large but it still ranks West Virginia 24th out of the 50 states.

What is more surprising (and perhaps is the reason for the net migration numbers) is that West Virginia actually had greater cumulative growth in the state's GDP over the same period (+50.4%, Ranking 10th) than California did (+40.3%, Rank 22nd). This is despite the fact that West Virginia's coal industry was under attack during those years while California was the home to innovations such as the iPhone, Twitter and Uber during that same period?

How do you explain it?

Arthur Laffer, Stephen Moore and Jonathan Miller attempt to do so in their annual Rich States, Poor States:ALEC-Laffer State Competitive Index which ranks that states on various economic policy variables.

California ranks 46th out of the 50 states on the study's economic outlook index.

California ranks 50th (worst in the U.S.) in a number of categories.

Top Marginal Personal Tax Rate.
Personal Income Tax Progressivity.
Average Worker's Compensation Costs.
Right to Work State.

It ranks 49th in state minimum wage and 47th in the state liability survey (which measures judicial impartiality and tort litigation treatment).

West Virginia has a lot of room to improve on the index but its economic outlook rank is still 12 spots better than California.

What is particularly interesting in looking at the study is that if you look at the top 25 states in terms of economic outlook, 21 out of the 25 states with the most positive economic outlook rankings voted for Trump. This included all of the top 12. Only 4 voted for Hillary.

On the other hand, 17 out of the bottom 25 voted for Clinton including all of the bottom 10.

Could it be that West Virginia might have a better handle on its economic future than California?

Could it be that the voters in Trump states might have better judgment on what the country needs than do the voters in the Clinton states?

This study says that this just might be the case in both instances.

(Hat tip to reader JWA for referring me to the Rich States, Poor States study.)