People move for many reasons: family, job opportunities, tax advantages, better climate…the list goes on. But, as the economic conditions persist and inflation remains high, the cost of living is becoming a more popular reason for people to move. Unfortunately, life in major metropolitan areas has become too expensive for some. Here are 5 states Americans are fleeing to save money and find a better quality of life for their budget.
The Cost of Living Index
Every year, the U.S. Bureau of Labor and Statistics collects data from each state to compare the cost of living across the country. It then ranks each state based on the cost of living, or the bare minimum you need to afford basic living expenses such as housing, transportation, healthcare, utilities, and groceries.
As a means of measurement, it then created the cost of living index which provides a standard comparison from state to state. A score of 100 represents the national average. Currently, the average American household spends $5,111 per month on living expenses, or $61, 334 per year. A score below 100 means the cost of living is below average. Meanwhile, states with scores over 100 indicate that the cost of living is higher than the national average.
5 States Americans Are Fleeing to Save Money
So, what are the most expensive places to live? And, which states are Americans fleeing to save money?
1. New York
The Empire State claims the top spot for several reasons. First and foremost, a recent study from the Pew Research Center shows that New York had the single greatest population loss in the country. From 2020 to 2021, 1.58% of New Yorkers left the state. Although it was higher than in previous years, it has been a continuous trend.
Secondly, it has one of the highest cost of living index scores at 148.2. Housing expenses are 2.3 times more expensive than the national average, with the average single-family home valued at $373,880. Meanwhile, the average rent is over $1,700 for a two-bedroom apartment here. And, these averages are much higher if you are only looking at the costs to live in New York City. Those who live in the city have a median rental rate of $5,878 per month for a two-bedroom apartment.
Lastly, people here will find it harder to save and pay down debt. The living wage in New York is $110,225, but the average income is only $111,054. This leaves many living paycheck to paycheck, and looking to New Jersey for financial relief.
2. Hawaii
Hawaii has long claimed the title of the most expensive state. It has an index score of 193.3, reflecting that the cost of living here is nearly double the national average. Furthermore, the cost of housing is triple the national average, with the median value of a single-family home of $730,511. Even renting is expensive at $1,651 per month for a two-bedroom apartment. And since many items have to be shipped to the islands, groceries also cost about 50% more as well.
However, it still has one of the lowest poverty rates. Living wages are estimated to be $107,702 per year while the average income for a family of four is slightly higher at $118,223. Yet according to the analysis, Hawaii still experienced a population loss of -0.71% in 2021 alone, more than double previous years. This migration likely shows those who moved, seeking some relief from the price of living in paradise.
3. California
Although the cost of living here has always been notoriously high, inflation has made it even more expensive to live in the Sunshine State. The current index score is 142.2, over 40% more than the national average. The price of gas makes transportation costs here the second-highest in the country. And, housing expenses are more than twice the national average. The median value of a single-family home is $683,996 while the average rent runs about $1,600 per month. But, you can expect it is much higher in larger cities like San Francisco and Los Angeles.
With these prices and current wages, it’s hard to keep up with the cost of living. The current living wage is set at $110,255, but the median income is only $105,232. When you look at these figures, you can understand how it has the highest rate of homelessness in the country.
Life in California has become unsustainable for so many, that they have decided to seek greener pastures elsewhere. During the span of the study, California saw a population loss of -0.66%. And, this figure will likely increase as economic conditions persist.
4. Massachusetts
The Commonwealth of Massachusetts takes the fourth spot on our list of states that Americans are fleeing to save money. An index score of 135 makes it the fourth most expensive state to live in. However, it should be noted that the cost of living in Boston is much higher than in other areas of the state.
On average, residents of Massachusetts pay 77% more than the national average for housing. The average single-family home runs $518,203 and the median rent is about $1,360 a month. But, you will need triple this figure if you are looking in Boston. People in the Bay States also pay nearly 20% more for healthcare and groceries here.
However, it also has the highest household income in the nation at $140,309 while living wages are set at $121,414. But a population loss of -0.53% by 2021 proves that wages alone are not enough to keep people from leaving.
5. Illinois
Looking at the consumer price index and an index score of 94.3, Illinois may seem out of place on the list. However, it has one of the highest population losses with -0.89% growth from 2020 to 2021. This is the eighth consecutive year with 69% of all moves going out of state.
So, why are so many people leaving? The analysts at Kiplinger believe it is because Illinois is the least tax-friendly state for the middle class, with higher than average income, property, and sales taxes.
However, it is also important to point out that the figures for Chicago are drastically different from the rest of the state. And with almost 22% of the state’s population, it’s worth looking at Chicago on its own. The cost of living in the city is 33% higher when compared to the rest of the state and 25% higher than the national average. In this context, it makes more sense. Between the high cost of living and bitter winter weather, it’s no wonder people are looking for milder conditions.
Final Thoughts
Although many Americans are fleeing these states to save money, we can’t assume that the only reasons are financial. However, one thing is for certain; people are moving in search of a lower cost of living and a better quality of life.
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