Middle Class Families Flee the Golden State

The Hoover Institution’s Carson Bruno took a close look at California’s migration patterns, and what he found should worry policymakers in Sacramento. Not only are Californians leaving the state in large numbers, but the people heading for the exits are disproportionately middle class working families—the demographic backbone of American society.

Between 2004 and 2015, roughly 930,000 more people left California than moved to the Golden State—just three years saw net domestic in-migration. The biggest beneficiaries of California’s net loss are Arizona, Texas, Nevada, Oregon, and Washington.

… Knowing that net out-migrants are more likely to be middle-class working young professional families provides some hints as to why people are leaving California for greener pastures. For one, California is an extraordinarily high cost-of-living state. Whether it is the state’s housing affordability crisis – California’s median home value per square foot is, on average, 2.1 times higher than Arizona, Texas, Nevada, Oregon, and Washington’s – California’s very expensive energy costs – the state’s residential electric price is about 1.5 times higher than the competing states – or the Golden State’s oppressive tax burden – California ranks 6th, nationally, in state-local tax burdens – those living in California are hit with a variety of higher bills, which cuts into their bottom line.

As we’ve noted before, many of the biggest, bluest states in the country—including New York, Illinois, and Massachusetts—have also experienced major exoduses over the last five years (although these outflows have been offset, to varying degrees, by foreign immigration). These large out-migrations represent serious policy failures, at least in California’s case: Sacramento has enacted taxes and regulations that drive up the cost of living even as they repel companies that might offer stable middle-class jobs outside of Silicon Valley.

The new statistics out of California are a bad omen for the future of the state’s doctrinaire blue model governance. As Bruno notes, if families and the young continue to flee California, the population will become older and less economically dynamic, creating a shortfall in tax revenue and possibly pressuring Sacramento raise rates even higher. Meanwhile, California faces a severe pension shortfall, both at the state and local level, that will require painful sacrifices from various constituencies—even as the state’s rapid demographic change (the state is still a magnet for foreign immigrants) could heighten political tensions. Don’t expect California’s domestic exodus to reverse itself anytime soon.