By Allysia Finley - The Wall Street Journal
Low- and middle-income residents are fleeing the state. Sacramentos liberal policies may bear much of the blame.
During the Great Depression some 1.3 million Americansepitomized by the Joad family in John Steinbecks The Grapes of Wrathflocked to California from the heartland. To keep out the so-called Okies the state enacted a law barring indigent migrants (the law was later declared unconstitutional). Los Angeles even set up a border patrol on the city limits. Soon the state may need to build a fence to keep latter-day Joads from
leaving.
Over the past two decades a net 3.4 million people have moved out of California for other states. But contrary to conservative lore there has been no millionaires march to Texas or other states with no income tax. In fact since 2005 California has experienced a net
in-migration of households earning more than $200000 according to the U.S. Censuss American Community Survey.
As it happens most of Californias outward-bound migrants are low- to middle-income with relatively little education: those typically employed in agriculture construction manufacturing hospitality and to some extent natural-resource extraction. Their median household income is about $40000two-thirds of the statewide medianand about 95 earn less than $80000. Only one in 10 has a college degree compared with 30 of Californias population. Roughly 40 of the people leaving are Hispanic.
Even while Californias Hispanic population has grown by more than 1.5 million since 2005 thanks to high birth rates and foreign immigration two Hispanics have moved out for every one that has moved in from another state. By contrast four Hispanics from other states have settled in Texas and Arizona for every three that have left.
Its not unusual for immigrants or their descendants to move in pursuit of a better life. Thats the history of America. But it is ironic that many of the intended beneficiaries of Californias liberal government are running for the state lineand that progressive policies appear to be whats driving them away.
For starters zoning laws which liberals favor to control suburban sprawl have constrained Californias housing supply and ratcheted up prices. As Harvard public-policy professor Daniel Shoag documents in a working paper land restrictions became common in high-income enclaves during the 1970scoinciding with the burgeoning of Californias real-estate bubbleand have increased income-based segregation and inequality.
Housing in California is on average 2.7 times more expensive than in Texas. The median house costs $459 per square foot in San Francisco and $323 in San Jose but just $84 in Houston according to chief economist Jed Kolko of the San-Francisco based real-estate firm
Trulia . Housing in California is cheaper inland than on the coast but good luck finding a job. The median home in Fresno costs $95 per square foot but the unemployment rate is nearly 15 compared with 6 in Houston.
Californias staggering labor and energy costsit has the nations most stringent fuel and renewable standardshave helped kill hundreds of thousands of manufacturing jobs in Californias interior. Note: Those are jobs that traditionally served as entry points to the middle class. The Golden State has shed a third of its manufacturing base over the past decade. And while the U.S. has added nearly 500000 manufacturing jobs over the past two years Californias heavy industry continues to erode.
Campbell Soup announced in September that it was closing its 65-year-old plant in Sacramento which employed 700 workers and shifting production to North Carolina Ohio and Texas.
Chevron is moving 800 technical positionsin other words jobs that arent physically stationed on California rigsto Houston.
Non-manufacturing businesses are also moving or expanding operations where labor land energy and capital are cheaper.
Comcast announced in the fall that it is moving 1000 call-center jobs out of California because of the high cost of doing business.
Facebook eBay and LegalZoom have opened up Texas offices in the past few years while PayPal Yelp and
Maxwell Technologies have pushed into Phoenix.
Meanwhile small businesses that cant leave California so easily have been slow to invest because they are financially squeezed. Rents are prohibitive and Sacramento takes 9.3 of every dollar over $49000and 13.3 over $1 millionthat an individual or small business owner earns.
By contrast small businesses in Texas have been sprouting like bluebonnets in the spring to meet the demands of an expanding population. More people mean more mouths to feed bodies to clothe and homes to build. All told Texas has added twice as many jobs as California has since 1990. Californias rate of job growth since the recession ended in June 2009 has trailed Texass by two-thirds.
In a sharp reversal of the 1930s Texas and the Sun Belt have supplanted the Golden State as a magnet for jobs and people while California has become Americas leading labor exporter. Democrats however dont seem to mind so long as the state maintains its high-tech hegemony.
In his State of the State address this year Gov. Jerry Brown boasted: We have the inventors the dreamers the entrepreneurs the venture capitalists. . . . When I first came to Sacramento
Steve Jobs and
Steve Wozniak had not yet invented their personal computer. There was no wind-generated electricity and we didnt have the nations most advanced building and appliance efficiency standards as we later adopted.
Recall however that the Okiespoor as they may have beenprovided a gigantic pool of labor that fueled Californias postwar boom and helped transform the Golden State into the worlds eighth-largest economy. The Democrats who have had firm control of the state during its years of decline would do well to remember that a societys most valuable asset is always its people regardless of their wealth or clout.
Ms. Finley is an editorial writer for the Journal.
