Sunday, January 6, 2013

United Van Lines Migration Study vs U-Haul Index

I thought this was interesting since several news sources have referred to it.  And at first glance it doesn't look too bad for CA.  Below is the map United Van Lines has on their website which shows which states have a high migration of people moving in, out or balanced -  where the numbers of people who are moving in and out are about the same.

From this map, CA looks to be balanced.  But... is it really?  

First of all the Unitd Van Lines study only looks at the traffic of THEIR trucks.  They don't inlcude Atlas or Mayflower, etc.  United is supposed to be the biggest, so we can assume that the other van lines probably track United to some degree.

Also, you have to ask yourself: who uses large van lines for moving?  The answer is: companies who hire highly compensated emmployees.  Are you an engineer?  A manager?  A firm executive?  Then companies will pony up the money to use a major mover. 

Are you a cook?  A hotel worker?  A hair dresser?  Then the answer is you are probably on your own.

And that is where the U-Haul index really comes in handy.  And it's easy to do.  Here's the original article that talks about it:

In each of the six city pairs, the one-way truck rental rates going to cities in the business-friendly states are much higher than the rental rates in the opposite direction, by a factor of about 2 to 1 on average. Since the equipment is exactly the same for a one-way rental in either direction (a 26-foot truck), and since the distance is exactly the same, we can assume that U-Haul dynamically prices its one-way rentals based largely on the relative demand for trucks in each direction. If there are about 360 people moving and renting one-way trucks from Detroit to Houston for every 100 people moving from Houston to Detroit, we could then explain a pricing differential of $2,215 for a truck from Detroit to Houston (high demand) that is about 3.6 times higher than the $617 to rent a truck going in the reverse direction (low demand). The other pricing differences in the chart would explain differences in relative demand for the other city pairs.

Therefore, the significant differences in U-Haul one-way truck rental rates complements the Forbes rankings, by suggesting an outmigration of trucks and people from the lowest ranked states, with those people and trucks heading towards the most business-friendly states. Fortunately, the American people and businesses can vote with their feet, and with their one-way truck rentals, and that is apparently what the U-Haul data show they are doing—moving away from places like Detroit and Providence with high unemployment and business-unfriendly environments, to cities like Fairfax, Fargo, and Houston that rank high for business climate in the Forbes study.
So, where are we now?  This article published in November shows the following information for Uhaul trucks used between San Francisco, CA and San Antonio, TX:
One of the best indicators of a state’s economic health, according to John Merline, writing in Investor’s Business Daily, is the “U-Haul Index” (first publicized by economist Mark Perry) to see what people are paying to move into, or out of, the state. Renting a 20-foot truck one way from San Francisco to San Antonio, Texas, for example, costs $1,693. Going in the other direction, however, costs only $983 for the same truck.
This gives a ratio of 1.72.  In other words, it's 1.72 times as expensive to rent a UHaul truck going SF to SA than the other way.

I did a quick check on UHaul's website. Things haven't changed much.  From the screen snapshots you can see it is still by far more expensive to rent a Uhaul OUT of CA than the other way.  The 20 foot trucks are way at the bottom of the snapshot:

The price for escaping CA got a bit more expensive.  But this might be just the local cost of renting is higher.  So we'll say for now that nothing's really changed.

There is no doubt that although there is a balanced flux of higher income people coming and going, those who earn less and must foot the moving bill themselves are exiting CA faster than entering.  What this says is that the upward mobility from lower incomes to higher incomes in CA has essentially STOPPED.  It says that people have discovered that the only way they will be able to get ahead is to just move out and take their chances somewhere else.  Who can blame them?


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  3. This is really very interesting. I think that the Uhaul index is very telling. Thanks for doing this excellent article.

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  4. When I left NY in 2005, I had to drive into Pennsylvania to find a Uhaul trailer--tells you a lot.