NCPA - National Center for Policy Analysis


January 19, 2009

Since 2000, California's job growth rate has lagged behind the national average by almost 20 percent.  Rapid population growth, once synonymous with the state, has slowed dramatically.  Most troubling of all, domestic out-migration, about even in 2001, swelled to over 260,000 in 2007 and now surpasses international immigration, says Joel Kotkin, presidential fellow at Chapman University. 

Out-migration is a key factor, along with a weak economy, for the collapse of the housing market.  Simply put, the population growth expected for many areas has not materialized, nor the new jobs that might attract newcomers, adds Kotkin:

  • In the past year, four of the top six housing markets in terms of price decline have been in California, including Sacramento, San Diego, Riverside and Los Angeles.
  • The Central Valley towns of Stockton, Merced, and Modesto have all been awarded the dubious honors of the highest foreclosure rates in the nation during the past year.

All of this suggests a historical slide of California's role as a bastion of upward mobility:

  • In 1946, Californians enjoyed the nation's highest living standards and the third highest per-capita income, and as recently as the 1980s, Californians generally got richer faster than other Americans did.
  • However, in 2008, median household income growth trailed the national average while the already large divide between the social classes grew faster than in the rest of the country.
  • Today, California has the 15th highest poverty rate in the nation; only New York and the District of Columbia fare worse if the cost of living is factored in.
  • Indeed, after accounting for cost of living, L.A., Monterey and San Francisco counties -- all places known for concentrations of wealth -- have poverty populations of 20 percent.

Is there hope for the Golden State?  Perhaps, although California likely will never regain its past preeminence, says Kotkin.

Source: Joel Kotkin, "Sundown for California," The American, November/December 2008.

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