America’s ‘Golden State’ is losing its luster

For the first time in a century, California experienced a net population loss in 2020. Businesses are also leaving in droves. The apparent cause: political excesses of the Left Coast that destroy the state’s once enviable quality of life and business conditions.

A picture of an empty shopping cart in a California desert California residents
California’s elected officials neglect social and business needs to indulge in socialist pipe dreams. © Getty Images

In a nutshell

  • California’s natural splendors no longer make up for its worsening problems 
  • Sacramento’s brand of progressivism is causing an exodus of residents and firms
  • Many citizens are relocating to states with lower taxes and less regulation

Wildfires have blackened more than 2.5 million acres of California, including the world’s largest grove of ancient sequoias, and destroyed more than 3,600 homes and businesses. Meanwhile, more than 90 percent of the state suffers extreme drought, disrupting the hydroelectric power generation needed for one million homes. Throw in the recent 25,000-gallon oil spill off the Pacific coast, and the news from America’s “Golden State” is anything but bright.

Far worse, though, are the conditions wrought by progressivism run amok, including California’s worsening poverty rates, homelessness and population loss. The well-to-do can still afford the state’s excessive taxes and punishing regulation, but the sparkle of Hollywood and Silicon Valley no longer obscures the plight of the have-nots.

The exodus

For many Californians, the state’s natural splendors have long compensated for Sacramento’s profligacy and authoritarianism. But their numbers are dwindling. For the first time in a century, the state experienced a net loss of population last year, as tens of thousands of people departed for more advantageous locales such as Texas and Florida. Those two states have gained 621,000 resettlers between them since 2012.

The states benefitting from California’s woes are largely the political antitheses of the Left Coast.

Altogether, California has lost more than 2.6 million more residents than it gained from other states in the same period – an emigration equal to the combined populations of San Francisco, San Diego and Anaheim, according to analysts Joel Kotkin and Wendell Cox

Businesses, too, are fleeing the state, which was ranked second-worst in tax climate nationwide by the Tax Foundation (bettering only New Jersey – no great feat). A recent study by Spectrum Location Solutions revealed that a record number of companies have departed California for more business-friendly locations since 2008. More than 13,000 firms, including Oracle Corporation, Hewlett Packard Enterprise, Charles Schwab Corporation and Tesla Inc., took with them $77 billion in capital and 275,000 jobs.

It is both noteworthy and consequential that the states benefitting from California’s woes are largely the political antitheses of the Left Coast, and the shift will be felt in Washington. In the upcoming congressional reapportionment, California will lose a seat in the U.S. House – the first such contraction since statehood was conferred in 1850. In contrast, Florida will gain a seat, and Texas will gain two. 

Social and economic malaise

The state’s September 2021 unemployment rate of 7.5 percent was second-worst in the nation; only Nevada posted a marginally higher rate of 7.7 percent. California also accounted for nine of the 15 metropolitan areas with the worst rates of unemployment nationwide. 

Higher rates of poverty accompany declines in household income. California’s Supplemental Poverty Measure (which accounts for expenses and government transfers) averaged 15.4 percent between 2018 and 2020 – the highest among all 50 states, according to the U.S. Census Bureau. (The District of Columbia had a rate of 16.5 percent.)  

Manufacturing constitutes the single largest industry sector leaving the state, which helps to explain, in part, the 40 percent decline in California manufacturing jobs (as a proportion of total employment) in the past two decades. NISSEI America Inc., a plastics manufacturer, relocated its Anaheim headquarters to Texas in June. A corporate statement about the move noted San Antonio’s “very attractive environment for future growth.” Similarly, Flannery Trim, a manufacturer of wall system components, closed its California facility after 46 years for a new headquarters and distribution center in Fort Worth. According to Nick Talley of Dallas-based Bradford Commercial Real Estate Services, “Those coming from California are clearly attracted to Texas’ pro-business climate and better tax laws.” 

Indeed, California trails other states in key indices such as academic achievement while exceeding them in violent crime and the cost of living. That is no small wonder as, for example, California’s Proposition 47 reclassified a large group of theft and drug crimes from felonies to misdemeanors, and Proposition 57 eased the conditions for early release for repeat offenders, offenders who commit multiple crimes against multiple victims, and those guilty of “especially egregious conduct.”

There are few places anywhere that top the cost of California housing. The median price of a California home hit a whopping $700,000 this year, according to the California Association of Realtors, compared to a U.S. average of $304,000. 

California’s political elites may not heed the message, and reform will be slow in coming.

No surprise, then, that 28 percent of the nation’s entire homeless population – some 162,000 people – live on the streets of California. That flood of human misery is as much a disaster as a tsunami. As noted by the Wall Street Journal, “Homelessness means hepatitis outbreaks and deadly encampment fires. It means parks, beaches and sidewalks strewn with needles and human waste. It means urban chaos.”

Federalism’s beauty

Once a beachside tourist attraction, the Los Angeles neighborhood of Venice is so overrun with homeless people that locals have dubbed it “Venice-zuela.” And so dismal are the living conditions in the San Francisco Bay Area that 56 percent of residents in a recent survey said they were likely to leave the region within the next few years. Even Walgreens is pulling out, closing 22 of its San Francisco stores because of rampant retail theft. Author Michael Shellenberger’s new book on urban chaos is titled “San Fransicko: Why Progressives Ruin Cities.”

California Democratic Governor Gavin Newsom’s failure to ameliorate the problems was a major factor in provoking the recent recall effort against him. Instead, the governor signed legislation mandating gender-neutral marketing of toys and toothbrushes in large department stores, prohibited the removal of a condom without consent during intercourse and banned the sale of new gas-powered leaf blowers and lawnmowers. He also banned restaurants from supplying ketchup packets and other disposable condiments unless explicitly requested by customers.

The Newsom recall effort was unsuccessful at the ballot box. However, a great many citizens are voting with their feet by relocating to states where elected officials do not routinely indulge in socialist pipe dreams, fantasize about the environmental apocalypse, or entertain delusions of their own grandeur. But with plenty of billionaires staying put, California’s political elites may not heed the message, and reform will be slow in coming. Other states will benefit, though, and that is the beauty of American federalism.

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