An unwritten rule of journalism says: “if it bleeds, it leads”. Regarding the exodus from the Golden State, this rule is not applied.
California has been the dream destination for generations and became the most populous state in 1964. But California’s share of the US population peaked in 2003 and fell below 12% in 2020 for the first time. since 1998.
The total population is ultimately impacted as the contributions of births and international migration cannot compensate for the loss of California’s national residents. As we document in the Pacific Research Institute’s new study “California Migrating,” the state has lost more domestic residents to other states than it has gained from those who have moved in since 2010, according to the reports. IRS data.
This domestic migration away from California is attributed to quality of life and economic concerns. Rising crime, urban plague, and growing inconvenience, such as the worst traffic in the country, are eroding the state’s quality of life.
From an economic perspective, residents face high housing costs, high priced energy, high cost of living, and high taxes. Exorbitant taxes and unaffordable housing costs alone turn California’s average 14 percent income premium over other states into a net income deficit of almost 20 percent.
The companies have also given up on California. Since 2008, thousands of people have moved in whole or in part elsewhere.
Among those who have left are “top companies” such as Hewlett-Packard, whose foundation is credited as the birth of Silicon Valley; You’re here ; SpaceX; and Charles Schwab, who started in San Francisco 50 years ago. Mitsubishi, Nissan North America, Toyota Motors North America, Oracle, Palantir Technologies and Jacobs Engineering are also on the list.
These relocations do not happen in a vacuum and produce real consequences. When successful businesses flee, the state loses well-paying jobs, creating “a huge problem” for the state, says Lee Ohanian, professor of economics at UCLA and senior researcher at the Hoover Institution.
Four years ago, the Pacific Research Institute commissioned a survey of 200 leaders from the technology, manufacturing, cleantech and energy sectors. They overwhelmingly cited the state’s anti-business climate and high cost of living as reasons for leaving or not expanding to California.
As people and businesses leave, economic opportunities dry up, threatening California’s future and making it harder for policymakers to address long-term structural issues, such as unfunded pensions for public employees in California. state or necessary investments in roads, highways and bridges.
The good news is that since public policies drive the exodus, public policies can reverse it.
To make housing affordable, the state should reform the California Environmental Quality Act (CEQA). The recently enacted California Senate Bills 9 and 10 allow more housing, these zoning reforms are still limited. A comprehensive reform of the CEQA will help reduce the public deficit in the supply of housing.
Solving California’s energy poverty problem requires repealing state policies on energy and global warming. California cities should stop banning natural gas, and taxpayers should not be held accountable for infrastructure upgrades by energy monopolies such as PG&E, which put residents at serious risk and mismanage facilities. Gas and electricity are expected to be affordable and reliable in California with more competition for consumers.
The spending changes are expected to address the government’s short- and long-term fiscal imbalances. Short-term reforms should bring General Fund spending closer to the state’s average annual economic growth in order to reduce the volatility of fluctuations in state budgets. Long-term fiscal imbalances such as unfunded pensions and outdated infrastructure should also be addressed, while tax reform should improve the incentive to work and save in California and reduce volatility in state income.
Quality of life issues should be addressed by repealing recent criminal justice reforms, such as Proposition 47, which compromise the safety and security of residents.
State leaders should take advantage of private charities to help tackle the homelessness crisis in a sustainable way, with a focus on the root causes of the problem.
Californians do not need to resign themselves to a future characterized by increasing economic hardship, declining quality of life and increasing emigration of people and businesses. These negative trends are the direct result of misguided government policies and can be reversed by implementing the right reforms.
Fundamental political reforms also give journalists the opportunity, once again, to violate the mantra “if it bleeds, it leads”. But this time to account for the resurgence of California.
Wayne Winegarden is Senior Business and Economics Researcher at the Pacific Research Institute. Kerry Jackson is a member of the Center for California Reform at PRI. They are the authors of the new “California Migrating” study, which can be downloaded from www.pacificresearch.org.