California's economy was in crisis long before COVID. For most of the 20th century, more Americans were moving into California than moving out of it. According to the Manhattan Institute for Policy Research, from 1960 to 1990, California had a net growth of 4.2 million Americans from other states. From 1990 to 2010, California suffered a net loss of 3.4 million people.
This trend has continued in the past decade, with a net loss in domestic migration every year. In 2018 alone, 691,000 Californians left the state and only 501,000 Americans moved into it.
While California's population has continued to grow due to natural births and a net gain of international migrants, California's population growth has been declining, and it was heading toward negative growth before COVID. Among other drivers of this trend, the high cost of living has made the state unaffordable to the middle class.
Earlier this year, Joel Kotkin, a Presidential Fellow in Urban Futures at Chapman University, provided a series of insightful reports on why California's middle class is collapsing. In 2018, the average annual pay for all private sector jobs in California was $78,668. From 2008 to 2018, California created 1,835,364 jobs. Approximately 48% of those jobs paid less than $40,000 annually, and less than 15% of them paid more than $100,000 annually.
In 2018, 12.8% of Californians lived off wages that placed them below the federal poverty line, including 17.4% of California's children. According to the Public Policy Institute of California, if we used a cost-of-living adjusted poverty rate, almost 15 million Californians – approximately 38% – are either living in or near poverty.
As late as 1969, the median home values in California were only 20% higher than in the rest of the country. By 2015, the median price for a home in California was two and a half times that of the rest of the nation. The average rent in California is 50% higher than in the rest of the country. Out of 381 metropolitan areas in the United States, 14 of the top 25 least affordable metropolitan areas are in California.
This phenomenon was caused by state legislators who limited the supply of housing in cities through an "urban containment" strategy. The supply was limited, but the demand kept going up. California must free up more land for housing.
In 2016, only 25%t of residents in the Bay Area and 34% of residents in Los Angeles could afford to buy a house. This disproportionately impacts people of color and young people.
Silicon Valley and Hollywood cannot save California by itself. California cannot continue to have some of highest taxes and most burdensome regulations in the country and expect that companies and people will stay.
Even Hollywood films and television shows have moved production out of California to cut costs. Republicans and moderate Democrats must work together to help fix California's housing problems and make the state more business-friendly.
To attract more jobs, California's politicians must reduce taxes and simultaneously improve education. In 2018, California's poorest students ranked 49th out of 50 on the National Assessment of Educational Progress.
The wealthiest people can afford to leave the state. The poorest Californians cannot easily pack up and go elsewhere.
Those who are living outside of California should take note. Should the Democrats win the White House and both houses of Congress, they will be in a position to make the rest of America look more similar to California. After all, when it comes to California's problems, Democrats and the policies they have championed are largely responsible.
Ronald Reagan was the last Republican governor of California to have both the State Assembly and the State Senate with a Republican majority. In 1970, the Democrats won control of both houses of the California state legislature. Since 1970, the Democrats have never lost control of the state Senate, and the Democrats have controlled California's State Assembly for 48 of the last 50 years.
The Democrats have controlled the governorship for 13 of the last 21 years. The lone exception was when moderate Republican Arnold Schwarzenegger was governor.
California represents the apex of progressive public policy. The housing crisis in California has shown us that economic liberalism cannot help the middle class. The people of California, and the rest of the country, need moderates in both parties to work together to restore both the California Dream and the American Dream.
Robert Zapesochny is a researcher and writer whose work focuses on foreign affairs, national security and presidential history. His work has appeared in a range of publications, including The American Spectator, the Washington Times, and The American Conservative. For several years Robert worked closely with Peter Hannaford, a senior aide to Ronald Reagan, as the primary researcher on four books and numerous columns. Robert has also worked on multiple presidential, national and statewide campaigns, including as a field office staffer for the Bush-Cheney campaign. Due to his own Russian-Jewish heritage, Robert has a keen interest in the history of U.S.-Soviet relations. In 2017 he was the co-organizer of an effort that erected commemorative statue of Ronald Reagan and Mikhail Gorbachev in Moscow. Robert graduated with a major in Political Science from the University at Buffalo, and received his Master's in Public Administration, with a focus in healthcare, from the State University of New York College at Brockport. When he's not writing, Robert works for a medical research company in Rochester, New York. Read Robert Zapesochny's Reports — More Here.
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