Californians have always taken great pride in the idea that many innovative social and economic trends that begin in the Golden State eventually spread to the rest of the country and become part of the fabric of American life.
Californians also regularly boast that they are almost like a nation state within the United States and its true; if California were an independent country it would have the 5th largest economy in the world.
But there are some trends gripping California today that the rest of the country hopes won’t come to their states anytime soon.
Hidden underneath the pride of California being a model for the rest of America, the skyrocketing cost of living and housing affordability coupled with the highest rates of income inequality and homelessness are causing more people to consider leaving the state than wanting to move here.
For the first time since the Gold Rush of 1849, California’s population growth has slowed. In fact, the 2020 census will most likely result in one less seat for California in the House of Representatives for the first time in its history.
Along with the loss of a Congressional seat, California will also lose billions of dollars in federal funds that are distributed on the basis of population. This will have severe budget impacts because the state is extremely dependent on those federal dollars to help pay for healthcare and other expensive social services.
So why the slowing population growth when California’s economy appears to be humming along in the Silicon Valley and other high-tech corridors in the state?
In fact why are 53% of Californians, according to a January 2019 report by Edelman Intelligence, considering moving out of the state? Even more alarming for California policymakers is that an astounding 63% of millennials are considering leaving the once Golden State. The reason: California’s high cost of living.
In the 1930s when the nation was in the grips of the Great Depression, California was the “promised land” where there was work and opportunity. A great internal migration ensued as people came from economically depressed parts of America in search of a better life.
California prospered and became the great economic engine that was an integral part in arming America to fight World War II. Its economic muscle was essential to the economic growth of the postwar boom.
There was affordable housing. Its highways, water systems, and other critical infrastructure were the envy of the world. Its public schools were second to none and its state colleges and university system produced a skilled and educated workforce.
Because of its great size, modern California built a network of highways that not only carried commerce but also transported workers from their homes in the suburbs to their places of employment in urban areas. Farmers could get fresh produce to market and lumber from her forests could be transported to build homes for the ever-growing state.
California fueled its growth with a vibrant oil and gas industry. In the early 1900s California was the largest oil producing state in America and as of 2012 it still ranked in the top three states for oil production. Refineries produced gasoline for its cars and natural gas provided fuel to heat homes and provided electricity from gas-fired power plants.
And while its oil production has been reduced through regulation and environmental concerns, California’s appetite for oil and gas has not subsided. We still consume 43 million gallons of gas per day, 13 million gallons of diesel and 10 million gallons of jet fuel.
Heavy state taxation and fees on each gallon of fuel have brought California’s prices to the highest in the nation. And the taxes collected per gallon of gas and diesel which is supposed to be spent on building new roads and maintaining existing ones has been squandered.
According to the Federal Highway Administration, California ranks near the bottom as the 7th worst state in road infrastructure in the United States.
While housing affordability ranks as the highest concern for people who are moving out of California, the high cost of gasoline isn’t far behind. As workers who have long commutes pay higher and higher prices at the pump it means they have less to pay for other necessities like food and housing.
Likewise, as fuel prices soar higher, the cost of that food at the grocery store and anything else that moves by truck will get higher as producers pass along their increased costs to consumers.
And that brings us full circle back to the question, why are people leaving California?
Simply put, it has become unaffordable.
The high costs and high taxes on the basic necessities like housing, food and fuel are driving people to seek opportunity in places where they can own their own home, pay less for groceries and put gas in their tank without breaking the bank every time they fill up.
The great American internal migration which produced California’s growth during the Great Depression and the postwar boom is slowly reversing itself.
What some California politicians dismiss as a trickle of disgruntled residents could soon turn into a flood of skilled workers lending their talents to other states.