Can California Be Saved?
Some conservatives regard California as a lost cause, its economy and society doomed to decline. Yet despite its awful regulatory regime, the state retains its natural bounty and an edge in many key industries. California’s atrocious business environment is the chief threat to its position—but if lawmakers can engineer a policy turnaround, then the Golden State’s ultimate demise is far from guaranteed.
California’s declining lead in tech reflects the erosion of an older consensus, when both parties supported economic growth by investing in physical and human infrastructure. The state recovered, for example, after the post–Cold War aerospace collapse, most notably in the San Francisco Bay Area. Even today, California holds on to much of its lead in innovative industries. We at Chapman University’s Center for Demographics and Policy recently examined the state’s relative strength, finding, according to the 2021 Census of Employment and Wages data from the Bureau of Labor Statistics, 43 industries in which California boasted at least double the national level of employment on a per-capita basis.
Many of these are cutting-edge industries. Take, for example, agriculture technology, especially products that boost yields amid increasingly onerous climate regulations. California’s farmers have suffered, until this year, through a drought and unstable water supplies. But no place has been more agriculturally innovative. Agrifood-tech startups in the state gathered $5.6 billion in venture capital in 2020, more than the next four states combined—and 20 percent of the worldwide total.
Next, consider the space industry. San Diego, Los Angeles, and Orange Counties have well over double the national average of space workers and companies. The intellectual capital created by these firms often spills over into other technology sectors. According to the Bureau of Labor Statistics, California is home to 115 space-related companies, well ahead of second-place Florida and more than five times as many as in Texas. This sector and aerospace provide 500,000 high-paying jobs.
Perhaps most critical is the computing industry, which includes the core technologies that come from semiconductor design, as well as associated applications and services. Semiconductors are the nation’s fifth-largest export and California’s largest. Overall, California employs 695,000 more computer-related workers than any other state, including 250,000 more than Texas.
Yet California is losing ground in virtually all the above areas. The state has experienced slower growth in the broad group of computer- and math-based industries. Occupational employment statistics from the Census Bureau rank California 22nd in percentage growth of jobs in that sector from 2017 to 2022, well behind the leading states (Tennessee, New Mexico, Utah, and Florida).
Read the rest of this piece at City Journal.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Marshall Toplansky is a widely published and award-winning marketing professional and successful entrepreneur. He co-founded KPMG’s data & analytics center of excellence and now teaches and consults corporations on their analytics strategies.
Photos: California agriculture by ‘risingthermals’, under CC 2.0 License,landscape by Bureau of Land Management in Public Domain, Hollywood sign by Clement P, under CC 4.0 License, Air Force photo by Senior Airman Lawrence J. Sena
