Fleeing the Golden State
Fifty years ago my family moved to California from the Midwest for better opportunities. At the time California had the best highways, the best schools, more space and a vibrant growing economy.
This fall, both my children moved out of California to other states. Why? For better opportunities.
Once referred to by Theodore Roosevelt as the “west of the west,” California is now sending more people to other states than it is getting in return, according to the Tax Foundation. From 1990 to 2010 there was a loss of 3.4 million residents to other states — 80 percent of what it gained in the previous 30 years. Since 2005, the population has only grown in California because of foreign immigration and a high birth rate. Over the last few years only births over deaths has made the difference. In 2010 California, for the first time, failed to gain any new congressional seats.
Who is leaving California? Retired people and the middle class are leaving. According to a UCLA study of the 4.4 million adults over 65 in the state, 28 percent struggle to make ends meet. Their reliance on fixed income is the primary cause of these struggles among the elderly who cannot handle the increasingly high housing costs, fees, taxes, gas prices, among other things.
Younger, well-educated people, and skilled workers pursuing the American dream are fleeing for a better quality of life. Excessive regulations on property development imposed by California’s “smart growth” or urban containment policies, has resulted in astronomical home prices and rents, the main drivers of the “out push” in California. The densest urbanized areas in the nation are Los Angeles, San Francisco/Oakland and San Jose (in that order). According to the 2010 Demographia Residential Land and Regulation Cost Index, a land use restriction index of 13.2 in San Diego (verses 2.4 in Minneapolis) added $220,000 to the cost of a San Diego home.
Besides exorbitant home prices, these policies result in a one-bedroom apartment in San Francisco averaging $3,500 a month. With the rule that housing costs should be no more than 25 percent of income, this small apartment would require an annual salary of $168,000. With housing the biggest element of household budgets, these high costs result in reduced discretionary income, leading to a lower standard of living and poverty, exactly the opposite goal of these urban planners. Even rural Nevada County is feeling the pain of these unintended consequences with record low homes for sale and rental properties with increasingly higher rates.
These housing problems force workers to look for housing farther away from work. Forty percent of the population of the Inland Empire (the far eastern periphery of the greater Los Angeles area) commutes to Los Angeles, Orange or San Diego county. Bay Area commuters into San Francisco put up with BART strikes and an antiquated freeway system virtually unchanged in 40 years. Commuters spend sometimes hours a day getting to and from work in atrocious traffic.
Compounding long commutes, Californians also suffer the highest gas prices in the nation, paying 30 cents per gallon in gas tax, and, since California is losing tax revenue due to hybrids and electric cars, the legislature is considering raising the current gas taxes. Even with record high state revenues, Governor Brown is telling lawmakers they are going to have to enact new “fees” and taxes to pay for repairs to crumbling highways, among those a $65 fee on vehicle registration and taxes on services (such as beauticians, accountants, lawyers). These new “fees” and taxes come with even more unelected rule-making bureaucrats and bigger government.
Fiscal instability in state and local governments sends the message of out-of-balance budgets, growing pension obligations and dwindling essential services–a harbinger of more taxes to come. California already has the highest state sales tax in the nation.
Twenty three percent of the state’s population is below the poverty line. One third of the nation’s welfare recipients and almost 25 percent of the nation’s illegal immigrants reside in California. With a fleeing middle class and the highest number of the nation’s billionaires, there is a trend toward the super-rich and the super-poor. The Center on Budget and Policy Priorities has ranked the Golden State as having the third-worst income inequality in the nation from 2008 to 2010.
As California goes, so goes the nation? I hope not.
Linda Erdmann lives in Grass Valley.
I am generally disappointed in the depth of the economic analysis and the decision to use the Rise Gold economic and jobs projections as the baseline for the analysis.
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