Good news, bad news about California
A son once told his father that he had both good news and bad news and asked his dad which he would like first. The father said, “Give me the good news first.” So the son says, “The good news is that the air bags in your car work perfectly.”
California is a state with both good news and bad news. The good news is that we remain an economic powerhouse with the world’s fifth largest economy, the Bay Area remains the epicenter of venture capital, we have a diverse population, great climate and recreational opportunities that are unparalleled.
Yet despite all this good news, California still feels like a state in decline. High taxes, heavy regulations, business flight, crumbling infrastructure, a housing crisis and seemingly insurmountable problems with our vast homeless population are the issues that confront us every day in the headlines.
Those who point out what is wrong with California are criticized by our political leaders as being “declinists” who are invested in California’s failure. But that’s not true. Most would like nothing more than to see this state succeed and to have our elected representatives pursue policies that would lead to that success.
Much of the discussion about what is good or bad about California is anecdotal. For example, we all know friends or family members who have moved out of California to escape its high cost of living. And every day we hear about another company, either large or small, which has pulled up stakes because it can no longer tolerate California’s anti-business environment.
John Adams famously said that “facts are stubborn things.” So, when it comes to assessing California as either a shining example for the rest of the world to follow or as a potentially failed state, it helps to look at hard numbers.
The exodus from California by citizens and businesses is both undeniable and measurable. Earlier this month, a consulting firm that tracks business locations, Spectrum Location Solutions, issued new research estimating that about 660 California companies moved 765 facilities out of state in 2018 and thus far into 2019. This represents a significant acceleration of business flight that began two decades ago.
The stories we hear about citizens moving to Texas, Florida, Nevada and Arizona are not just anecdotal. According to U.S. Census figures, net domestic outmigration has exceeded over one million people in less than a decade.
Progressive elected officials, including Gov. Gavin Newsom, like to crow about the state’s low unemployment numbers and attribute them to the success of their political agenda. But again, let’s look at some hard numbers.
It is absolutely true that unemployment in California is near a historic low at 3.9 percent. The Employment Development Department reported preliminary, seasonally adjusted numbers for October showing total employment was up 50,000 from September, while the number of unemployed was down 9,200. But, as noted by the California Business Roundtable’s Center for Jobs and the Economy (CCJE), “California slipped slightly to the 17th highest unemployment rate among the states.”
Judging California in terms relative to other states, quite frankly, we don’t look so good. An unemployment rate that even at 3.9 percent is higher than the national average strongly suggests that the policy choices at the national level are lifting California, not the other way around.
More bad news is reflected in our labor participation rate. Again, as reported by CCJE, “the state continues to experience lower than average participation rates in spite of having a relatively younger population than the rest of the U.S. For the 12 months ending October 2019, the seasonally adjusted data shows the California labor force shrank by 57,400 workers (-0.3% growth) compared to the rest of the U.S. gain of 1.7 million (1.2%).”
And the real kicker is in job creation where California ranks dead last among 50 states. As stated by CCJE, “In another sign of the economy’s slowing, the total number of persons employed (seasonally adjusted) over the 12 months ending in October again shrank, by 24,000. California dropped back to the 50th highest rank, with Texas leading with an additional 220,500 persons employed over this period, and Florida in second place with a gain of 190,100.”
Those of us who look at these hard numbers with alarm are not gleeful at all. We would simply prefer our elected representative to start adopting a more pro-taxpayer, pro-business agenda. And if not that, at least stop inflicting damage with even more foolish laws and regulations.
Jon Coupal is president of the Howard Jarvis Taxpayers Association (hjta.org).