The Great California Exodus

October 3, 2012

Dating back to the Gold Rush, Americans have long known California as the land of wealth and opportunity. This perception of California is what prompted millions of people to want to move there, but current conditions are forcing people out in droves, say Tom Gray and Robert Scardamalia of the Manhattan Institute.

Using data from the U.S. Census, the Internal Revenue Service, the state's Department of Finance, the Bureau of Labor Statistics and the Federal Housing Finance Agency, Gray and Scardamalia take a look at the decline of population rates in California, as well as possible reasons for the emigration.

  • Between 1960 and 2010 the population of California grew 137 percent.
  • Between 1960 and 1990, 54 percent of its population increase was due to foreign immigrants coming to California.
  • However, since 1990 the state has lost nearly 3.4 million residents to other states.
  • And in 2005, foreign immigration ceased to make up for the drop in domestic migration out of California.

Several economic factors can be cited as the reason for the decline in population in California.

  • Unemployment. The unemployment rate was 2.6 percent higher than the national average, which may have forced people out to look for jobs.
  • The recession hit California particularly hard as many industries such as aerospace and construction took a hit.
  • Furthermore, taxes have steadily increased since the early 1990s.
  • Moreover, a dramatic spike in housing prices may have forced people to look for homes outside of the state. This is no surprise considering there was a high demand for housing with such a big population and less space to provide people with homes.
  • Similarly, the fiscal distress that the public sector experienced made businesses hesitant because they didn't know the certainty of tax breaks and other incentives.

The exodus of people from the state is a source of concern for many policymakers in California. The migration pattern is not only an indicator of a state's health, but also impacts the economic foundation of the state. California's leaders can start by getting public sector finances straight and getting rid of regulation to incentivize businesses to locate to the state to create more jobs and wealth.

Source: Tom Gray and Robert Scardamalia, "The Great California Exodus: A Closer Look," Manhattan Institute, September 2012.

 

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