California has spent the past half-decade shrinking. The state's population declined 0.5% between April 2020 and July 2025, according to the U.S. Census Bureau, and it recorded the largest net loss of one-way U-Haul customers of any state for the sixth consecutive year in the company's 2025 Growth Index. Population counts carry weight beyond demography: they feed federal funding formulas and, once a decade, determine how congressional seats are apportioned. Yet the country's youngest adults keep packing their bags for the Golden State.

U-Haul's 2026 Midyear Migration Trends National Report, which ranks states and metro areas by their net gain of one-way U-Haul trucks, trailers, and U-Box containers from July 2025 through June 2026, places California at No. 2 for Gen Z (born 1997–2012), trailing only Texas. As Fortune previously reported, the state failed to crack the top 10 for boomers or Gen X, whose moves skewed heavily toward the Southeast; San Diego, at No. 9 for Gen X, was the only California metro to appear on either older generation's list. Millennials ranked California No. 3, behind Florida and Texas.

Gen Z has hardly abandoned the Sun Belt. Texas tops the generation's list, and Florida, Nevada, Austin, Charlotte, and Houston all appear in its top 10. But the generation's choices look less like a search for warm weather and low costs and more like a search for people. After Texas and California, Gen Z's top five states are New York, Illinois, and Colorado, while its top five metros are New York City, Dallas–Fort Worth, Chicago, the San Francisco Bay Area, and Los Angeles. U-Haul said Gen Z is gravitating toward densely populated markets packed with colleges, entry-level jobs, and apartments.

That marks a shift from recent patterns that saw young workers leave San Francisco for more affordable cities such as Nashville and Orlando, and from rankings that crowned cheaper Midwest and Texas cities as the best places for new graduates.

The nation's largest job market

California's scale is difficult to match. It has been the most populous state since 1962, when it overtook New York, and even after five years of decline it counts roughly 39.4 million residents—about 11.5% of the U.S. population.

That population underpins an enormous job market, a critical factor for a generation just beginning its careers. California had 18.2 million nonfarm payroll jobs in August, more than any other state, and it led the nation in monthly job gains by adding 39,400, according to the Bureau of Labor Statistics. The state's Employment Development Department said it added 138,500 jobs over the past year.

The picture is not entirely rosy. California's unemployment rate remains among the highest in the country, and the state's Legislative Analyst's Office has warned that early-2026 job growth may have been overstated. Even so, few states offer early-career workers as many employers across as many industries, from Nvidia, Apple, and Google to Hollywood's major studios.

Costly, but so is everywhere else

California remains one of the most expensive places to live in the United States. The median value of an owner-occupied home is $734,700, and median gross rent is $2,036, according to Census Bureau data covering 2020 to 2024.

Gen Z, however, is being squeezed nearly everywhere. A record 1 in 3 adults under 35 lived with their parents in 2025, most of them employed. Because so many young Americans grew up in California, moving back home often means moving back to the Golden State. One analysis cited by Fortune found that 20% of working adults in Greater Los Angeles live with their parents, compared with 6% in the Austin metro. Others rely on family help to remain in expensive cities: a Bank of America study found that 54% of 18- to 27-year-olds pay nothing toward their housing costs.

California's taxes rank among the nation's highest, but the state also offers a broader social safety net than many others, which can cushion young workers between jobs.

The lifestyle premium

Then there is the pull that has drawn Americans west for generations. California offers beaches, mountains, deserts, and forests, and in parts of the state residents can ski in the morning and surf in the afternoon. Much of the coast enjoys a Mediterranean climate that keeps temperatures mild year-round. For many young movers, the high cost of living amounts to a worthwhile premium.

U-Haul's data carries limits. Not every mover rents from U-Haul, and not every one-way rental represents a permanent change of address. Each move is credited to the generation of whoever signs the contract, and customers must be 18 to rent a truck, so the youngest members of Gen Z are not captured. Millennials and Gen X together account for more than 60% of the company's one-way rentals. The midyear report is also an interim snapshot: the fuller picture will come with the next edition of U-Haul's annual Growth Index, the ranking in which California has posted the largest net loss of one-way customers for six consecutive years.

Still, the data suggests California's scale continues to draw young Americans in, even as the state loses residents overall—to its jobs, its people, and the family ties that bring them home.

This story was originally featured on Fortune.com