NCPA - National Center for Policy Analysis

The Great California Exodus

April 26, 2012

For decades, California was regarded as the domestic paradise of the United States, lush with beautiful views and ample resources.  This no longer seems to be the case.  While many insist that those who reside in California are among the happiest in the country, studies show that Californians are increasingly pursuing happiness elsewhere.

In an interview with demographer Joel Kotkin, the Wall Street Journal found that this exodus of California residents is enormous in scale -- with potentially profound impacts.

  • Nearly 4 million more people have left the Golden State in the last two decades than have come from other states.
  • This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving.
  • According to Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45; in other words, young families.

Mr. Kotkin's analysis has found that the driving factors behind families' decisions to move to states like Nevada and Texas include:

  • State and local government restrictions on development have artificially limited housing supply and put a premium on real estate in coastal regions.
  • The cap-and-trade law AB32 will raise the cost of energy and drive out manufacturing jobs without making even a dent in global carbon emissions.
  • The renewable portfolio standards, which mandate that a third of the state's energy come from renewable sources like wind and the sun by 2020, will further raise California's already-high electricity prices.
  • The state government's corporate tax structure earned it the designation of having the "48th worst business tax climate" in the country by the Tax Foundation.
  • Individual income taxes also tower high, with those making more than a million dollars paying a top rate of 10.3 percent -- the third highest in the country.

According to Kotkin, these upwardly mobile families are fleeing in droves, leaving behind a permanent lower class and a lavish upper class.  This has resulted in the gradual shrinking of the middle class and an altogether dysfunctional social dynamic.

Source: Allysia Finley, "Joel Kotkin: The Great California Exodus," Wall Street Journal, April 20, 2012.

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