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One Saturday afternoon, when he could have been watching basketball, Gov. Glenn Youngkin instead was at his computer, playing around with a database on homebuilding statistics.
He didn’t like what he found.
That discovery will have to wait just a bit while I explain the significance of the governor of Virginia spending his spare time researching construction stats.
Since 2013, Virginia has repeatedly seen more people move out of the state than move in. The state is still gaining population — just more slowly — because births outnumber both deaths and the net out-migration. That period of time covers four different governors from two different parties but I’ve only seen one of them focused on that particular status — our current one.
Youngkin talked about this out-migration a lot during his campaign — granted, it wasn’t a snappy applause line — and he’s continued to talk about it as governor. That’s what led to me having a chance recently to sit down with the governor to talk about the latest migration statistics.
“It’s a huge indicator of how we’re doing, and I don’t mean how we’re doing politically but how we’re doing delivering results,” Youngkin said. “It’s one of these great simple measures — are people voting to come here faster than they’ve voting to go somewhere else?”
I’ve written about these numbers many times before but let’s recap them: When Virginia’s net out-migration began a decade ago, it was confined to those over 65. In other words, retirees who were generally moving to more southern climes — the classic snowbird phenomenon. As the years have gone by, we’ve seen other age cohorts join that out-migration until the point where in some years we’ve seen net out-migration in every age cohort. Those outflows have also been so much bigger among working-age adults that the out-migration among those 65 and older isn’t really that significant. These figures bounce around a lot so statisticians caution against hanging too much on any one report; better to focus on long-running trends. Still, the most recent trends contain both good news and bad news.
The good news: The rate of out-migration is slowing down. We’re still losing people, just not at the rate we were, although part of that is because fewer people are moving anywhere.
The not-so-good news: While Virginia has been losing people, North Carolina has consistently been gaining people.
From July 1, 2021, to July 1, 2022, Virginia lost 23,952 to net out-migration while North Carolina gained 99,796 through net in-migration.
From July 1, 2022 to July 1, 2023, Virginia’s net out-migration slowed to 6,985 while North Carolina’s net in-migration stayed pretty consistent at 97,264.
For Youngkin, the problem — and the solution — is pretty simple. Virginia’s biggest population outflows are to North Carolina and Florida, with Georgia and Texas further behind. “These are places where the taxes are lower,” Youngkin said. These are also all places with fast-growing metro areas that are generating jobs. He sees those things as connected.
“At the end of day you see North Carolina lowering their taxes, Georgia lowering their taxes, Florida already has no income tax,” he said. “This is a real thing for us.”
When Youngkin refers to low taxes, he’s referring specifically to income taxes, because all those states he mentioned have higher sales taxes. According to the Tax Foundation, Virginia’s cumulative sales tax rates are actually the lowest on the East Coast among states that have a sales tax (Delaware and New Hampshire don’t have any). However, the Tax Foundation shows that Virginia has the second-highest income tax rates in the South, behind only South Carolina, and that’s what Youngkin believes the driver is. “I think people pay attention, they really do,” he said.
The correlation between migration and income taxes is not a perfect one. The census shows 16 states are, like Virginia, experiencing net out-migration. Of those, half have lower income tax rates than Virginia, half higher. However, some of those states may be more relevant to Virginia than others. The out-migration from places such as Alaska and North Dakota may be driven by factors other than taxes — cold weather and limited job opportunities may weigh heavier on the scale than low taxes. For Youngkin, what’s relevant is that four of the five states that Virginia borders have lower income taxes (Maryland is the exception), and that’s what he says matters most in the marketplace. Virginia is also losing population to all four of those states, according to the U.S. Census Bureau.
He finds it perplexing that Democrats in the General Assembly don’t see the same figures and come to the same conclusion: that we’re at a competitive disadvantage. “They say things like ‘It’s the weather.’ It’s North Carolina!” Youngkin said. Maybe weather’s a factor in people moving to Florida, but that doesn’t explain why the Virginia-North Carolina border is a sharp dividing line on domestic migration. “The weather in North Carolina and Virginia isn’t that much different,” he said, but the migration figures sure are.
“In my view, the core problem on net migration is that Virginia has been losing the battle on convincing people that they should build their lives here, and that’s why job growth and bringing down cost of living, coupled with excellent education and safe communities, translates into winning states,” he said.
In this case “bringing down the cost of living” doesn’t just mean lowering taxes, but also lowering the cost of homebuilding, and that’s why Youngkin spent part of that one Saturday afternoon rummaging through homebuilding statistics. “I was curious: What is wrong with our supply of housing?” he said.
The answer, he believes, is that we’re not building houses fast enough — because local governments have made the process too slow. “There’s a supply and demand issue,” he said. “Right now you spend almost a quarter of the cost of building a house on zoning and permitting and paperwork, particularly in Northern Virginia. You see land use is so restricted. We just need more houses.”
Virginia’s population outflows are driven primarily by Northern Virginia. The latest census estimates show that in the past three years, 26,200 more people have moved out of Fairfax County than moved in.
That database the governor consulted shows that Charlotte is building houses twice as fast as Northern Virginia — and they’re cheaper. The precise figures, from Construction Coverage, which analyzes data from the Census Bureau and Zillow, shows that in 2022 the Charlotte metro authorized 23.9 new housing units for each existing 1,000 units. By contrast, the figure in the Washington metro was 12.8.
“Cities like Charlotte, like Austin, like Charleston [South Carolina] and Jacksonville, Florida — they just build more houses,” Youngkin said. “And so guess what happens when you have a big demand — Nashville, as well — people are building houses to meet that demand, the price stays lower. But when it takes you forever just to get a building permit and [there are] so many restrictions that there are far fewer houses being built, the price goes up.”
I’m sure there’s a contrary point of view to that somewhere, perhaps multiple ones when it comes to land use and affordable housing, but this gives you some insight into how the governor sees the world — and the demographics that are reshaping the state. Here’s one contrary view: In a commentary published in Cardinal a year ago, Del. Vivian Watts, D-Fairfax County, disputed that high state taxes are why people are leaving Northern Virginia, in particular. Instead, she said the main problem is that Virginia hasn’t invested enough in transportation, and that insufficient state investment in education forces localities to raise real estate rates instead. Youngkin, though, is focused on income taxes. “We’ve got to stop giving people excuses to move someplace else,” he said.
We’re about a year out from another governor’s race. I’d love to hear what those candidates think should be done about Virginia’s net out-migration — or whether it’s a problem at all.
In this week’s newsletter:
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- I look at the conflict over the state budget, where Gov. Glenn Youngkin is touring the state to call it “the backward budget” and make the case for tax cuts, and Democratic leaders have launched their own tour to tout what they see as the best things in the two-year spending plan.
- State Sen. John McGuire, R-Goochland County, has picked up four endorsements from U.S. Rep. Bob Good’s backyard — three Campbell County supervisors and one former Campbell County supervisor who says, “I sat right next to Bob on the Campbell County Board of Supervisors so I’ve seen him in action, and that’s why I’m supporting John McGuire.”
- I reveal what the two Roanoke Valley legislators pictured above were talking about during the governor’s visit to Roanoke last week: Head was explaining to McNamara how Cardinal’s new app works, and why he should download it.