California’s cost of living pushes people to move to Arizona

ORANGE COUNTY, California – A company that manufactures workbenches and lab furniture is relocating to Goodyear to save money, while creating 30 new jobs in Arizona.

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Matt McConnell, director of sales and marketing for IAC Industries, said the move will increase the stability and longevity of his business. IAC is located in Brea, California.

“The commercial property costs in California versus the commercial property costs in other states” made the decision easy, he said.

And it’s not just businesses. It’s also families.

McConnell said IAC has 20 employees who have moved already or are committed to moving to Goodyear.

Arizona gained 107,628 residents in 2017, one of largest population gains among the nation, according to Census Bureau estimates. The rapid growth should contribute to a promising job market and a strong recovery in housing, analysts told Cronkite News.

Taxes also are much lower in Arizona than California. California residents pay nearly twice as much state income taxes. The individual income tax rate is 4.54 percent in Arizona. It’s 9.3 percent in California, according to the Arizona Sun Corridor.

According to the North American Moving Services, in 2017, California was one of the top five leading states in the U.S. for people moving out of the state. Arizona is the top state for inbound moves, with 60 percent of people moving to Arizona last year.

Following Arizona is Idaho, North and South Carolina, and Tennessee among the top inbound states for 2017.

Joel Kotkin, presidential fellow in Urban Futures at Chapman University, said the migration of people and businesses from California to Arizona will result in more jobs.

According to the U.S. Census American Community Surveys, more than 30,000 people have left California for Arizona in each of the past three years.

“As you get older,” Kotkin said. “Your big concern is going to be ‘How do I keep my equity at a high enough level so that I can live off my savings?’”

Matt McConnell, director of sales and marketing for IAC Industries, said his company’s move from California to Arizona will increase the stability and longevity of his business. (Photo by Micah Alise Bledsoe/Cronkite News)

Kotkin refers to people who move from states with high costs of living to states with low cost as “equity refugees.”

Equity refugees have more money to buy and invest in less-expensive housing in states like Arizona.

Oscar Wei, senior economist at the California Association of Realtors, said the cost of living and doing business in California clearly are main factors in California-Arizona migration patterns.

When you compare home prices of California to Arizona, Wei said, “California is about 60 percent higher than Arizona in general in terms of the state median price.”

According to NerdWallet, the cost of living in Orange County is 56 percent higher than living in Phoenix.

McConnell of IAC Industries said moving to Arizona will benefit the company as well because employees will get more property for their money.

IAC will continue to operate out of Brea, but its manufacturing operations have completely relocated to Goodyear. IAC is looking to fill 30 positions with hopes of being fully operational in Goodyear by the beginning of May.

This story is part of Elemental: Covering Sustainability, a new multimedia collaboration between Cronkite News, Arizona PBS, KJZZ, KPCC, Rocky Mountain PBS and PBS SoCal.

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