Sacramento

Engineered California

Joel Kotkin and Marshall Toplansky — Mon, 20 Jun 2022 20:28:58 -0400

Nothing so illustrates the mindset of green politics, particularly in California, as the word “natural,” which is taken to mean unspoiled, pure, and better than the workings of man. Yet few places are as fundamentally artificial, if measured by its dependency on human intervention, as California.

So why do California’s progressives, and so many others, yearn for what the historian Leo Marx dubbed the “pastoral ideal”? Much has to do with the state’s rapid population growth from 1.5 million in 1900 to nearly 40 million today, which resulted in a regime of environmental rapine that many still living experienced.

California would not exist in anything like its modern form without massive engineering. Largely dominated by desert, flammable, dry chaparral and high mountains, California depends on human-created technology to bring water to its bone-dry coast. It taps distant dams for the bulk of its electricity and food and would have never grown its population without this manufactured transformation of its natural environment. “Science,” as the University of California’s second president, Daniel Coit Gilman, put it, “is the mother of California.”

The Origins of Environmental Politics

Modern environmentalism rose in California, starting with the unsuccessful attempt by The Sierra Club to halt the flooding of Hetch Hetchy Valley in Yosemite to supply water to largely waterless San Francisco. This struggle presaged an almost endless succession of battles across the state over land use, energy, and water development. When the Sierra Club’s solutions seemed too tame, the Friends of Earth, also founded in San Francisco, generally pushed more extreme policies.

Over the last few decades, California greens have evolved. They started as largely conservationist, with a bipartisan base of affluent middle-class homeowners, who looked askance at development near their neighborhoods. By the late 1960s, however, the green agenda became increasingly shaped by visions of a dystopian future, epitomized by Stanford’s Paul Ehrlich’s 1968 Population Bomb, with its predictions of mass starvation on a global scale.

Ecotopia, published in 1975 through an obscure press, by Ernest Callenbach, an equally obscure movie critic, sold a million copies. The cult classic was followed with a 1981 prequel, Ecotopia Rising. These two books tell the story of a successful secession by greens in the northern coastal areas from the rest of the polluted, dystopic United States on the other side of the Sierra.

Ignoring the costs and trade-offs

The architects of our green policies often ignore both nuance and inevitable trade-offs. In coverage of fires, the legacy media mindlessly repeats Governor Gavin Newsom’s claim that the conflagrations are caused by climate change. Predictably, the New York Times suggests that California is “ground zero for climate disasters,” while the claims that California now fights not just fires and droughts but “climate despair.”

Read the rest of this piece at American Mind.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Marshall Toplansky is a Clinical Assistant Professor of Management Science at the Argyros School of Business and Economics at Chapman University.

Photo: Antandrus, via Wikimedia under CC 2.0 License/

California's Economy May Seem Healthy, But Just Wait for the Next Recession

Joel Kotkin and Marshall Toplansky — Wed, 25 May 2022 20:28:58 -0400

The California economy may seem healthy on the surface, with home prices soaring, Silicon Valley booming and the state government posting big multi-year state budget surpluses thanks to a massive surge in capital gains tax revenues and income tax revenues from tech stocks.

But that good news masks a dangerous period ahead.

In fact, California’s heavy dependency on tax payments from the rich and on the continued strength of the tech economy makes the state highly vulnerable in the event of a significant slowdown — or, worse yet, a full-bore global recession. According to Jim Doti of the A. Gary Anderson Center for Economic Forecasting at Chapman University, the probability of a recession starting late this year or next is very high.

Property prices are already beginning to drop in parts of the Los Angeles area. Similarly the IPO market, a major source of capital gains, is retrenching. Financial setbacks for the wealthy are problematic for the state because the top 1% of income-earning Californians pay 46.2% of all personal income taxes.

We’ve been here before. After the last recession ended in 2009, it took the state five years to get revenue from income taxes back up to pre-downturn levels. During those five years the state received about $50 billion less in revenue than if the recession had not occurred, and government was forced to cut programs by about $45 billion to compensate, according to the California Franchise Tax board.

Today, the state is even more reliant on tax revenues from its wealthy elites: Capital gains collections have increased roughly fivefold since 2010. Income taxes, mostly from the very wealthy, which barely constituted one-third of state revenues in 1980, now make up two-thirds.

A new recession, or even simply a slowdown, would place California in a very difficult position, particularly given that it continues to engage in what CalMatters columnist Dan Walters calls “an expansionist binge” of ever greater social spending and housing subsidies. Despite strong annual budgets, California suffers the highest debt of any state — $507 billion. It is projected that the cost of servicing the state’s debt in 2022 and 2023 will be approximately $8 billion annually and could grow even higher as interest rates rise.

Read the rest of this piece at Los Angeles Times.

Marshall Toplansky is a Clinical Assistant Professor of Management Science at the Argyros School of Business and Economics at Chapman University.

California's Vanished Dreams, By the Numbers

Joel Kotkin — Fri, 15 Apr 2022 20:28:38 -0400

Even today amid a mounting exodus among those who can afford it, and with its appeal diminished to businesses and newcomers, California, legendary state of American dreams, continues to inspire optimism among progressive boosters.

Laura Tyson, the longtime Democratic economist now at the University of California at Berkeley, praises the state for creating “the way forward” to a more enlightened “market capitalism.” Like-minded analysts tout Silicon Valley’s massive wealth generation as evidence of progressivism’s promise. The Los Angeles Times suggested approvingly that the Biden administration’s goal is to “make America California again.” And, despite dark prospects in November’s midterm elections, the President and his party still seem intent on proving it.

But most Californians, according to recent surveys, see things differently. They point to rising poverty and inequality, believe the state is in recession and that it is headed in the wrong direction. Parting with the state’s cheerleaders, the New York Times’ Ezra Klein, a reliable progressive and native Californian, says the Golden State’s failures are “making liberals squirm.”

Reality may well be worse than even Klein admits. In a new report for Chapman University, my colleagues and I find California in a state of existential crisis, losing both its middle-aged and middle class, while its poor population faces dimming prospects. Despite the state’s myriad advantages, research shows it plagued by economic immobility and inequality, crushing housing and energy costs, and a failing education system. Worse than just a case of progressive policies creating regressive outcomes, it appears California is descending into something resembling modern-day feudalism, with the poor and weak trapped by policies subsidized by taxes paid by the rich and powerful.

California may conjure images of Rodeo Drive and Malibu mansions in the public imagination, but today the state suffers the highest cost-adjusted poverty rate in the U.S. The poor and near-poor constitute over one third – well over 10 million – of the state’s residents according to the Public Policy Institute of California. Los Angeles, by far the state’s largest metropolitan area, and once a magnet for middle class aspirations, has one of the highest poverty rates among major U.S. cities. A United Way of California analysis shows that over 30 percent of residents lack sufficient income to cover basic living costs even after accounting for public-assistance programs; this includes half of Latino and 40 percent of black residents. Some two-thirds of noncitizen Latinos live at or below the poverty line.

“In California, there is this idea of ‘Oh, we care about the poor,’ but on this metric, we are literally the worst,” Stanford’s University’s Mark Duggan, principal author of an economic comparison of California with Texas, told the San Francisco Chronicle.

The state’s poverty and associated dysfunction are on full display in leading cities like Los Angeles and San Francisco, where a large underclass now inhabits the streets – the once-iconic locales having become poster children for urban dysfunction. Beyond massive homeless camps, crime has become so bad that the LAPD has warned tourists it can no longer protect them. San Francisco, meanwhile, suffers the highest property crime rate in the country. Businesses like Walgreens have shut down numerous Bay Area locations due to “rampant burglaries.” Homelessness and crime increasingly dominate the state’s political discourse, particularly in these two deep blue bastions.

California also faces growing inequality. By the Gini index, a measure of the distribution of income across a population, California has the third-highest inequality behind New York and Louisiana, and has experienced the fifth largest expansion of inequality since 2010, according to American Community Survey data. California also suffers the widest gap between middle- and upper-middle-income earners of any state.

Read the rest of this piece at Real Clear Investigations.

Photo: NeoBatfreak Wikimedia under CC 4.0 License.

California's SB9 Housing Bill Starting To Sound Like Prop 13

Jerry Sullivan — Mon, 21 Mar 2022 20:28:58 -0400

That rumbling you hear in the residential real estate market is SB9—either a silver bullet or a boogeyman, depending on where you stand.

Senate Bill 9 is the latest law with the potential to reshape California. The handiwork of State Senator Scott Wiener, the bill overrides local zoning regulations to allow the development of rental properties in single-family neighborhoods. It limits rentals to four units per lot and imposes other restrictions with a stated aim of preventing real estate investors from squeezing profits out of leafy enclaves.

But SB9, in its potential for unintended consequences, is beginning to take on the feel of Prop 13, the law Californians passed by referendum in the late 1970s that struck a fundamental chord among voters, limited property taxes and touched off the Reagan Revolution. Prop 13 spared homeowners any significant property tax hikes, as intended, but also pushed local economic development to adjust by shifting too hard toward the sales taxes to be collected from strip malls, auto dealerships and the like.

Cities throughout the state are trying to slip SB9’s punch altogether, setting new design standards that would render rental units economically infeasible, or forwarding far-fetched claims about wildlife preservation.

Dismiss that as disingenuous NIMBYism if you’re looking for an easy out.

Anyone looking for a better understanding, however, should think again as Wiener and other self-described progressives cast SB9 in moralizing tones.

Housing is so expensive, they say—and California’s economy is so inequitable—that we must allow rental properties everywhere, local preferences or laws be damned.

Reserve some circumspection, also, for the American Enterprise Institute and other self-described conservatives who tend to cast SB9 in the lecturing tones of market orthodoxy. They see it as a breakthrough in individual property rights.

Read the rest of this piece at The Real Deal.

Jerry Sullivan is a senior editor at The Real Deal. You can follow him @SullivanSaysSC

Photo credit: Los Angeles by Kevin under CC 2.0 License.

Does California Know What Time it Is?

Jerry Sullivan — Fri, 25 Feb 2022 20:28:58 -0500

Has the California proposition changed fundamentally? And does it matter for real estate?

The answer to the first question is yes—the state had a net population decline in 2021, the first drop since it began annual counts more than a century ago. That followed another historic reversal, noted in 2018, when the number of Californians leaving the state exceeded new arrivals from around the world for the first time.

Those trendlines matter in ways that the periodic headlines about California being over – a periodic theme in the national media for decades – never did.

And they matter to real estate, especially in Southern California—a place that willed itself out of chaparral country, midwifed the birth of Hollywood, invented the Jet Age, redefined the American Dream and became a West Coast bookend to Ellis Island.

All of that grew out of a real estate hustle that peddled parched land as paradise. The scheme relied on constant population growth, presuming eternal desire for Southern California’s lifestyle and land.

The recent dip in population suggests that presumption has been punctured.

The decline is real – an empirical data point. It also aligns with perceptions in many precincts that Southern California’s promise is being spoiled by public corruption, homeless encampments, and a push for residential density that flies in the face of the backyard-as-rec-room culture that has defined the place.

There are more specific reasons for concern in a recent report from Chapman University titled “Restoring the California Dream,” penned by Joel Kotkin and Marshall Toplansky.

You can check the report yourself here—but for now consider this brief excerpt and the challenge it sums up:

“Nearly 80 percent of all jobs created in the state over the past decade paid less than the median income, a percentage far below our prime competitors. The inconvenient truth is that in key metrics such as housing costs and income growth, most Californians are doing worse than their counterparts elsewhere.”

A clear takeaway is that California can no longer be sure it is a magnet for newcomers from around the nation and world. Texas beckons, and for every person who just has to live near the ocean there are eight or 10 who just want their own house. California can no longer count on Californians either. Florida looks better to a lot of well-heeled folks who have grown tired of getting hit with tax hikes only to see the public sector fail to perform the basic chores of government—shelter for the homeless in Los Angeles, public safety in San Francisco, getting unemployment checks sent out of Sacramento during a pandemic.

The report from Chapman makes a lot of sense but is gaining little traction with public officials. That’s likely because the public sector has gotten a reprieve from a reckoning thanks to a gusher of tax revenue from initial public offerings and capital gains on shares of tech outfits from Silicon Valley to Silicon Beach.

Read the rest of this piece at The Real Deal.

Jerry Sullivan is a senior editor at The Real Deal. You can follow him @SullivanSaysSC

Photo credit: Pixnio clock; photo of Los Angeles by Doc Searle under CC 2.0 License, illustration by R. Howard.

How Cato Sold Out California Property Owners

Randal OToole — Fri, 28 Jan 2022 20:28:58 -0500

In September, 2021, California Governor Gavin Newsom signed a bill abolishing single-family zoning. This bill was a victory for the Yes in Other People’s Back Yards (YIOPBY) movement, as well as for urban planners who sought to densify California urban areas, which are already the densest in the nation.

It was also a victory for the Cato Institute, which was proud of the fact that it was working hand-in-hand with left-wing groups that sought to force Californians to live in ways in which they didn’t want to live. Cato’s work was led by Michael Tanner, whose previous experience with housing issues was nearly nil. In supporting this movement, Cato and Tanner ignored everything I had written in two books and seven policy papers for Cato over the previous fourteen years.

Click here to download the report (link opens in new tab or window).

Cato hired me in 2007 explicitly to work on urban land-use and transportation issues. When it did so, it noted that my previous “work showed that urban planning was not making cities more livable, but instead was increasing congestion and making housing less affordable.”

During my first year, Cato published my 416-page book, The Best-Laid Plans, which showed that urban planners had an irrational mania for density that was making housing less affordable in regions that attempted to stop the growth of low-density suburbs. In the same year, Cato published a paper that I wrote showing that San Jose’s urban-growth boundary was rapidly densifying that city to the detriment of congestion and affordability, along with two other papers on housing issues.

In 2009, Cato published The Myth of the Compact City, a paper I wrote showing that all the arguments for densification were faulty. We didn’t need to force people to live in high densities to save farms, forests, and open space because all the urban areas of the country occupied just 3 percent of the nation’s land area. Nor would density reduce air pollution or greenhouse gas emissions: people living in dense areas actually use more energy for transportation than those in low densities because they drive in more congested conditions, while multifamily housing uses more energy per square foot than single-family homes.

The Nightmare of Densification

In 2012, Cato published American Nightmare, which showed that the vast majority of Americans—most surveys indicated around 80 percent—either happily lived in or aspired to live in single-family homes. In fact, more than 75 percent of households did live in single-family homes in Idaho, Indiana, Kansas, Michigan, Nebraska, Ohio, and Pennsylvania–states that weren’t trying to control urban sprawl–while states trying to limit suburban growth including California, Hawaii, Oregon, and Washington had rates well below 70 percent.

American Nightmare also showed that the desire for single-family housing went back at least into the nineteenth century, but transportation had been the main barrier to that dream. Early cities were dense because the main form of transportation was on foot, so people who didn’t want to walk long distances to work often lived in multifamily housing. The development of steam-powered commuter trains in the 1830s, electric streetcars in the 1880s, and affordable mass-produced automobiles in the 1910s allowed successively lower-income people to live in single-family homes.

American Nightmare further showed that the desire for single-family housing was strongly associated with the desire for homeownership. Census data show that nearly 83 percent of occupied single-family homes are occupied by their owners, while nearly 87 percent of multifamily dwellings are occupied by renters.

Read the rest of this piece at The Antiplanner.

Randal O’Toole, the Antiplanner, is a policy analyst with nearly 50 years of experience reviewing transportation and land-use plans and the author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future.

Photo: F Grammen, via Wikimediaunder CC 0 1.0 Public Domain.

Report: Restoring the California Dream

Joel Kotkin and Marshall Toplansky — Thu, 20 Jan 2022 20:28:58 -0500

This newly released report examines how the California dream can be restored for California's middle- and working-class families. An excerpt follows:

What is happening to the California dream? For some it still comes true, but for many, and perhaps most Californians, the state increasingly fails to provide ample opportunities to start a business, buy a home or move up to the middle class. The state’s performance on these issues is the ultimate test of the ‘California model’ and its validity for the rest of the nation.

We face two seemingly discordant realities. In technology, culture and lifestyle, California remains the envy of the world. The state’s aggregate economy—its GDP—has continued to grow faster than the national average, in large part due to the enormous surge of wealth created in the tech sector, where California is home to 53 of the country’s 500 largest firms and four of the country’s seven most valued firms, all in tech.

California’s 2020 $3.2 trillion GDP would make it the world’s fifth largest national economy if it were a standalone country, just behind Germany. It accounts for 14% of the US GDP, while our 40 million people account for slightly under 12% of the country’s population. The Golden State, by that metric, still punches above its weight. Yet for most Californians, the economic reality is far from rosy. Even as the state creates an ever-higher number of billionaires—24 added just last year—California workers have not shared in the prosperity. Nearly 80% of all jobs created in the state over the past decade paid less than the median income, a percentage far below our prime compet-itors. The inconvenient truth is that in key metrics such as housing costs and income growth, most Californians are doing worse than their counterparts elsewhere.

Overall, California now underperforms its main competitors, notably Arizona, Texas, Washington and Utah in many sectors of the economy—manufacturing, professional business services, construction and energy—that once provided steady, high-wage employment. The loss of major corporations in distribution, engineering, aerospace and technology also has eroded our economic diversity and key sources of long-term, middle-class employment.

Low real wages, combined with the very high price of real estate, have created a profoundly divided California. The primary task before us is to restore California’s opportunity culture, and by doing so, create prosperity for a broad section of California’s middle and working-classes. Our great state needs to restore its historical promise to its citizens.

California's key challenge is not to produce wealth, but rather to spread its blessings more widely. Housing may well be the key issue; more than 70% of Californians surveyed consider the state's housing costs as “a very serious issue,” and more than half are considering a move out.

View and download the full report here.

Joel Kotkin is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University, Executive Director of the Urban Reform Institute, and an internationally-recognized authority on global, economic, political and social trends. His most recent book, The Coming of Neo-Feudalism is now available for order.

Marshall Toplansky is a widely published and award-winning marketing professional and successful entrepreneur. He co-founded KPMG’s data & analytics center of excellence and now teaches and consults corporations on their analytics strategies.

California's Economy is Weaker Than it Looks

Joel Kotkin — Tue, 18 Jan 2022 20:28:58 -0500

Whisper it, but the $45 billion surplus Gavin Newsom has projected for California next year isn’t quite what it seems. In fact, the bulk of that surplus is largely due to the earnings of a few giants such as Google, Apple and Meta (formerly Facebook), as well as a handful of IPOs.

This inconvenient truth hasn’t stopped the Governor from proposing a record-high $286.4 billion budget that will focus on education, health spending for undocumented residents, and expanding the state’s already massive social spend.

Indeed, even with a surplus, the state legislature seems determined not to lower taxes but to raise them. Newsom plans to implement a single payer health care system funded by massive new taxes on business and higher income revenues, raising what is already the nation’s highest rate. On top of that, the legislature seems ready to impose other wealth taxes on the very rich who keep the state afloat.

Yet the reliance on the elites — the 1% who account for half the state’s income tax — could prove troubling once the current stock market boom ends, and the IPO picture darkens. The state tax and regulatory regime has already kneecapped most other sectors of the economy, including both blue collar industries like manufacturing, energy and construction. And much of this has been accelerated by a growing exodus of companies, including such iconic firms as Tesla, Oracle, HP Enterprises, Charles Schwab, Bechtel, Parsons Engineering, and others. Meta has reportedly purchased thirty-three floors in an Austin high rise.

Despite professing to be the start-up capital of America, California’s leaders simply ignore or dismiss any notion of economic peril. But the reality is stark: this is a state that suffers the country’s highest cost-of-living adjusted poverty rate, the largest gap between the middle class and the rich, among the most crowded housing, and the second lowest homeownership rate. Post-pandemic it also has the nation’s highest unemployment rate.

These facts are rarely discussed in the predictably pro-Newsom media. The party line is that such attacks reflect the political bias of Right wing “haters”. Yet what California needs is not media or academic shills, but a willingness to confront the state’s emerging neo-feudal structure that, amid unprecedented wealth, has done little for most residents. Only a course correction, and change of consciousness, can restore the state to its former greatness.

This piece first appeared at UnHerd.

Photo: Gage Skidmore, via Flickr under CC 2.0 License.

Trouble in Paradise: The Crumbling California Model

Joel Kotkin — Tue, 04 Jan 2022 20:28:58 -0500

Some horrified conservatives dismiss California as the progressive dystopia, bound for bankruptcy and, let’s hope, growing irrelevance. Progressives, for their part, hail the Golden State as the avatar of a better future, the role model for a new, more environmentally friendly and socially just economic order. They often dismiss critiques as conservative misinformation.

Yet California is not doomed, at least in the near term, nor is it anything like a model of social democracy. As long as its tech oligarchs produce enormous profits and generate wealth, California remains fiscally flush for the near term, and the evolving economy, long on digitization and constant entertainment, works to the state’s historic strengths. Key industries such as space and biomedical research also offer promise.

The big problem with the California model is that it does not work for most Californians, who suffer from the highest poverty rate (cost of living adjusted) in the country. Despite being home to three of the nation’s four most expensive housing markets, California has among the lowest cost-adjusted median income of any state, as demographer Wendell Cox notes. Although not particularly hard hit by pandemic fatalities, California continues to recover more slowly than the rest of the states and now suffers the highest unemployment rate in the country — including nine of the 16 metros with the greatest joblessness. Even as the tech oligarchy has reaped record profits and expanded its wealth to unprecedented levels, California ranks as the second-worst place to find a job of all the states. Thank God for Hawaii!

A New Economic Model?

Flush from his recall triumph, Governor Gavin Newsom, along with the legislature, seems determined to double down on his attempt to shape California as the model for the progressive future. He claims that our state is “the envy of the world” and the model of social justice. “Unlike the Washington plutocracy,” he boasts, “California isn’t satisfied serving a powerful few on one side of the velvet rope.”

We can see, in aggregate numbers, some justification for crowing. A writer at Bloomberg claims that the state has “the best economy” in the world, pointing to the bloated stock prices of the major tech firms, soaring home values, and the enormous wealth creation accruing to a relative handful. Other writers insist that California will continue to dominate most of its key industries, owing to its innovation and capital resources.

Yet it’s time now to see what California’s “success” is all about. It reflects a new kind of economy — dominated by a few large companies, with an elite workforce, a large service class, and a population increasingly dependent on wealth redistribution. This emerging oligarchic regime, however progressive it likes to label itself, is more feudal than egalitarian, more hierarchical than competitive, financed largely by the same tech giants who help fund Newsom’s successful defeat of the recall.

For most, the reality on the ground is increasingly challenging. The state is now the second-most unaffordable state for home-buyers, a particular challenge for Millennials, and it suffers the highest rate of “doubling up” — only our friend Hawaii does worse. California has the largest gap between middle and upper wage quartiles in the nation, and it has a level of inequality greater than that of Mexico and closer to that of Central American countries such as Guatemala and Honduras than to such “progressive” developed counties as Canada and Norway. According to the state Legislative Analyst’s Office, 20 percent of state wealth is held within 30 zip codes that account for just 2 percent of the population. Less than 33 percent of state wealth is held within 1,350 zip codes that house 75 percent of Californians.

Read the rest of this piece at National Review.

Photo: On the street in Pomona, California by Russ Allison Loar via Flickr under CC 2.0 License.

Here's Why California is Losing Population for the First Time

Joel Kotkin and Marshall Toplansky — Sun, 02 Jan 2022 20:28:58 -0500

California is suffering a major demographic reversal, one that threatens both the state’s economic future and the durability of its progressive model.

The numbers speak for themselves: The Golden State’s population has started declining for the first time, with new data from the state Department of Finance showing a population loss of 173,000 for the year ended July 1, 2021—a number that includes more than 56,500 pandemic related deaths, mostly of older Californians.

Net domestic migration hit a decade-long low, ballooning from a loss of 34,000 in 2012 to 277,000 in 2021. Over the last 10 years, California lost more than 1.625 million net domestic migrants—more than the population of Philadelphia. Altogether, 2.7 million more people—a population larger than the cities of San Francisco, San Diego and Anaheim combined—have moved to other states from California than the other way around over the last 20 years, and immigration is no longer making up the difference.

Many in the state’s media and political establishment insist that the demographic decline is a “myth” concocted by red-state haters. It’s not. The state that attracted America’s domestic migrants through the 20th century is losing millions of them in the 21st century.

This isn’t the Rust Belt of the 1970s, but the exodus out of the state and especially its metropolitan areas seems to be accelerating. From 2000 to 2020, Census Bureau estimates indicate that metro Los Angeles has lost 2.2 million net domestic migrants, metro San Francisco 400,000, metro San Diego 200,000 and metro San Jose 400,000—even as the rest of the state saw a net gain of 600,000.

Some California boosters comfort themselves by insisting the people leaving are mostly poor or old. But an analysis of IRS data from 2012 to 2019 indicates that 85 percent of those leaving are in their prime earning years of 25 to 64. In 2019, the largest share of net domestic migrants, 27 percent, was in the 35-44 age category, while 21 percent were aged 55-64. At the same time, the state is seeing a decline in the young, restless new arrivals who have traditionally driven California’s innovative and entrepreneurial economy.

In fact, Los Angeles between 2013 and 2017 ranked only behind New York City for the largest net loss of millennials, notes Brookings Many younger people now choose Dallas-Fort Worth, Austin, Houston, and Denver metros, as well as Riverside-San Bernardino, Sacramento and smaller interior metros in California. The days when California could depend on accruing brain power appear to be at an end. During the 2010s, California’s rate of college educated (BA and above) residents 25 and over rated 34th among the states, lagging the increase in the national rate and well behind such key competitors as Florida and Texas.

Critically, this is not an exodus primarily of the poor. Only 14 percent of the increased net domestic migration from 2012 to 2019 has been among those making less than $25,000, according to IRS data, while those making more than $100,000 accounted for 38 percent of the exodus (and the rate of departure was even higher for those making far more).

Read the rest of this piece at Daily Beast.

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston, a Senior Fellow with the Frontier Centre for Public Policy in Winnipeg and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.

Photo: Pixabay under CC 0.0 License.