Why Californians Are Leaving

Gavin Newsom is hiring a New York PR firm to sell California — ahead of his likely presidential bid — at a cost to taxpayers of $19 million.

Why does California need outside help? After all, as Newsom likes to remind us, the state is one of the largest economies on earth.

But the governor’s actual record could be a problem for his presidential bid. Hence his familiar solution: To portray California as a vibrant economy, and to counter “myths driven by misinformation and political rhetoric.”

To be sure, California has a huge GDP, based mostly on the assets of the tech oligopolies.

The tech legacy has left California with four of the world’s seven trillion-dollar companies by valuation, and the highest number of billionaires. But the state is hardly the “social justice” model, “the envy of the world” that Newsom likes to crow about.

Instead, California has become the epicenter of neo-feudalism, with roughly half the nation’s homeless population. California has the highest unemployment rate of any state, and also suffers the highest cost-of-living-adjusted poverty rate.

The Public Policy Institute of California estimates another fifth live in near-poverty — roughly 15 million people in total.

Yet despite the disparities, Newsom has been forced to oppose the unions’ proposed 5% wealth tax on “billionaires,” largely because the state is dependent on the roughly 100,000 taxpayers with incomes above $1 million. These amount to one-half of 1% of all tax returns filed in the state, but also account for about 40% of all California personal income taxes.

Then there’s the small matter of unfunded pension and retirement liabilities, which are estimated to be around $1 trillion.

US News places California, despite the tech boom, as 42nd in fiscal health among the states. The state’s Legislative Analyst Office projects continued operating deficits through 2028.

The rich and ultra-rich — many of whom are already leaving — are all that stands between the state and fiscal disaster. Without their outrageous income, the whole system tilts toward failure.

One reason for this dependence lies in the sad fact that the income outlook for the rest of the population is far from bright.

Newsom’s neo-feudal California has hemorrhaged 1.6 million above-average-paying jobs in the past decade, more than twice as many as any other state. It has created five times as many low-wage as high-wage jobs.

Even as places like Texas were booming across almost all sectors, the only middle income new jobs created in California have been in government-financed health care and government itself.

Newsom now crows that the California-centered AI boom will come to the rescue. But the new technology seems most adept at reducing high-end jobs. Nationally, information jobs are down to 2017 levels. Economist Gad Levanon estimates the country’s biggest declines in high-end tech and business service jobs since 2022 have been in the Bay Area, San Diego, Sacramento and Los Angeles.

Wallet Hub recently ranked the state last in delivering services relative to tax burden. The “bullet train,” which Newsom has refused to kill, continues to devour billions, and seems unlikely to be finished in his lifetime. The LAX Automated People Mover, another heralded transit project, is already a billion over budget and three years late.

Meanwhile, California’s students perform at among the lowest rates in the country. Almost three of every five California high schoolers are not prepared for either college or a career.

Newsom’s policies, particularly on energy, also make it a no-go zone for blue collar professions that tend to pay well. Although Newsom predictably blames Trump for surging gas prices, Californians have long suffered  the highest energy prices in the continental US, double the national average. Much of this is attributable to its very high tax on gasoline.

Read the rest of this piece at California Post.

 

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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 and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com, follow him on Substack and Twitter @joelkotkin.

Photo credit: Frantik via Wikimedia under CC 3.0 License.