Why High Earners Are Leaving Pennsylvania

If you want to understand where Pennsylvania’s economy is headed, don’t start with GDP or job reports.

Start with a different number: $2.3 billion.

That is the estimated net income tied to households that left Pennsylvania in just one year, according to new data from the IRS. Pennsylvania is losing more residents than it is gaining and losing more income than it is replacing. Between 2022 and 2023, Pennsylvania experienced a net domestic migration loss of 14,880 people, ranking 38th in the nation. That amounts to a population decline of roughly 0.11% from domestic migration alone.

On its face, that figure may not seem alarming except when put into context of former residents taking $2.3B with them.

Among the states setting the pace for growth, South Carolina grew its population by more than 1 percent from domestic migration alone. Delaware, North Carolina, Tennessee, and Idaho are not far behind.

Pennsylvania continues to gain residents from nearby states, particularly New York, New Jersey, and Maryland. Presumably, Pennsylvania is a more affordable option to stay in the Northeast Corridor. Yet, those gains from neighboring states are more than offset by losses to the South.

Florida alone accounted for a net outflow of nearly 10,000 Pennsylvanians, with North Carolina, South Carolina, Texas, and Georgia also drawing significant numbers.

The income data is where things get concerning. The average adjusted gross income of those leaving Pennsylvania was $86,900, compared to $77,300 for those moving in. That means new Pennsylvanians are earning 11% less than those who left the state.

The age breakdown is even more eye-opening. Every age cohort posted net outflows, from young adults to retirees. This is not a story of one group opting out. It is a broad-based pattern, suggesting structural forces at work rather than a temporary shift.

Notably, nearly two-thirds of the total income loss was concentrated among households earning $200,000 or more. That is the kind of loss that matters most. High-income households are often employers, investors, and anchors in their communities. When they leave, the effect is not just fiscal, it is economic and civic.

So, what is driving it?

Cost of living plays a role, but it is not the full explanation. Pennsylvania remains relatively affordable compared to coastal peers. The more likely drivers are a mix of tax structure, regulatory friction, housing supply constraints, and the uneven pace of job growth in high-demand sectors.

The contrast with high-growth states is telling. Places like the Carolinas and Tennessee are not just cheaper. They are easier to build, expand, and navigate. That perception, whether entirely fair or not, shapes decisions. Pennsylvania, by contrast, too often feels harder than it needs to be.

Five years ago, US Steel famously opted not to invest $1.5 billion in Pennsylvania due to byzantine permitting and regulatory delays. That investment landed in Arkansas instead. Adding insult to injury, former Arkansas Gov. Asa Hutchinson quipped that the US Steel facility in Arkansas would be complete before Pennsylvania could even permit construction.

As evidenced this year by Eli Lilly’s blockbuster announcement to build a $3.5 billion facility in the Lehigh Valley, Pennsylvania state government is taking steps to change its reputation as a state that wants business to relocate here.

Part of that shift happened with one key bureaucratic reform proposed by state Senate Republicans and adopted by the state’s Democratic governor: “deemed approved.”

By imposing firm deadlines on state permitting, and automatically approving projects when agencies fail to act, the SPEED program replaces delay with predictability. That change matters.

Investment follows certainty. Energy projects, manufacturing, and infrastructure can now move at the speed of capital, not government. In a state long defined by regulatory friction, the reform demonstrates that growth depends less on incentives and more on removing obstacles.

The IRS migration data is three years old.  Hopefully, updated data will show Pennsylvania’s migration trend reversing. 

In the end, migration data is not just about where people are going. It is about what they believe is possible when they get there.