Amidst predictions of a political “red wave” in the upcoming mid-term elections, an economic wave has been building for years with no end in sight as companies flood out of blue states and into red states.

And as a result of its political divisions, America appears to now be dividing itself into prosperous, high-growth states and states that are suffering a chronic decline. But Democrat-run states believe their abortion policies could be a key factor in attracting companies back.

Caterpillar and Citadel, which in June announced their exit out of Illinois, are only the latest firms to leave high-tax, high-regulation states. Tesla, Hewlett Packard, Oracle, and Remington are also among the hundreds of companies flocking out of California, Illinois, New York, and New Jersey to business-friendly places like Texas, Florida, Arizona, and Tennessee. Relocating companies have spanned industries including tech, finance, media, heavy manufacturing, autos, and firearms.

“There is a great migration going on, and I expect it to accelerate,” Glen Hamer, president of the Texas Association of Business, told The Epoch Times. “When the Caterpillars and the Elon Musks relocate, it’s an advertisement to the entire country and the entire world that something positive is going on in that state. And there is a multiplier effect.”

According to a 2022 survey of 700 CEOs, the top states for business were Texas, Florida, Tennessee, Arizona, and North Carolina. The worst were California, New York, Illinois, New Jersey, and Washington.

Even companies like Apple, which did not move its headquarters to Texas, chose to establish its second-largest campus for employees there. Amazon selected Houston as one of its prime hubs. Ford, Volkswagen, and Nissan chose Tennessee as the location for major new manufacturing facilities. And in some cases, entire industries like firearms, which are being targeted by legislation and lawsuits in blue states, are moving south.

“It’s a broader trend that we’ve been tracking for the last 15 years,” Lee Schalk, Vice President of Policy at the American Legislative Exchange Council (ALEC), told The Epoch Times. ALEC tracks state economic trends in their annual report, “Rich States Poor States.”

“You won’t see companies moving to states like New York, California, and New Jersey,” Schalk said. “They’ll be moving out of those states into neighboring states, where the policies are a little bit better, or they’ll be making the big move to places like Texas, Florida, North Carolina.”

“Texas was one of the first states to recover all the jobs it lost during the pandemic,” Hamer said. “Now we have a workforce that is at an all-time high, and the economy has diversity and strength. Whether it’s energy, manufacturing, health care, technology, finance, you name it, the Texas economy is firing on all cylinders.” Texas has attracted 250 new corporate headquarters since 2015, Hamer said.

When jobs leave, people leave with them. According to the U.S. Census, Democrat-run states California, New York, New Jersey, Michigan, and Illinois together lost 4 million people between 2010 and 2019, the so-called “leftugees.” During the same period, the states with the greatest influx of people were Florida, Texas, Tennessee, Ohio, and Arizona.

States have been able to attract companies by cutting taxes, reducing red tape, and establishing right-to-work policies. In 2013, North Carolina passed a landmark tax reform package to cut corporate and personal income taxes. The business income tax there is now 2.5 percent and will be phased out entirely over the next several years.

Contrary to expectations that states would bankrupt themselves by cutting taxes, an influx of companies and new residents often boosts state revenues from property taxes, sales taxes, and personal income taxes, even when the percentages are reduced. Florida attracted 624,000 new residents in 2020, along with more than $40 billion in income, equating to an estimated $23.7 billion in new tax income. Florida has enjoyed two decades of net in-migration, amounting to a total income gain of $197 billion.

North Carolina’s latest budget included a deal to phase out corporate income taxes while also giving teachers a raise and even padding its “rainy day fund,” Schalk said. “North Carolina has been able to do that because not only have they been bold on lowering taxes, but they’ve also gotten the spending side under control.” And when companies move in, they bring intangible benefits with them as well.

“Any sort of civic organization loves it when they hear that a blue chip company like Caterpillar is relocating to our state,” Hamer said. “It means these executives are going to be serving on all sorts of different boards of directors, the local art museum, opera, or the chamber of commerce. When companies relocate their individuals, they become deeply ingrained in the community. They contribute time and treasure to activities that make the community more vibrant.”