California Exodus Has Far-Ranging Implications

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These days, there’s no recession. California’s economy is growing at roughly the same pace as the nation’s. The statewide unemployment rate is at historic lows. There is no major wave of factories being shut down.

But once again, more Californians are moving out than are coming in from other states. This time they’re not looking for jobs. They just want a cheaper place to live.

“As places like San Diego are getting less affordable, people are going outside our borders to access cheaper housing,” said Marney Cox, economist for the San Diego Association of Governments.

Hans Johnson, a demographer with the Public Policy Institute of California in San Francisco, says the exodus runs counter to long-standing trends.

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The U.S. Census Bureau, which bases its calculations on Internal Revenue Service data, estimated that between July 1, 2000, and July 1, 2006, 950,592 more people left California for other states than moved in from other states. Last year alone, 287,684 more people moved out than moved in.

The same report said that 77,536 more people left San Diego than came here from other regions in the United States between 2000 and 2005. (County-by-county statistics for 2006 are not yet available.)

The California Department of Finance, which bases its calculations on address changes on driver’s licenses, gives much smaller figures.

The finance department estimates that during the past two fiscal years, the state had a net domestic outflow of 122,897, and San Diego County had a net loss of 33,199 domestic migrants, including 14,272 last year.

The main problem is not that more people are leaving California, although that’s certainly happening. A bigger phenomenon is that fewer out-of-staters are coming in to take their place.

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John Boyd, head of The Boyd Co., a relocation consulting firm in New Jersey, says the cost of housing is keeping companies from moving into the state, since they can’t pay enough money to persuade executives to leave their homes in less expensive states and move to one of California’s high-priced markets.

“It used to be that companies felt they had to be in California because of the size of the market,” he said. “But that’s changing now. A growing number of East Coast companies feel they can serve the California market more cheaply from bases in Las Vegas, Tucson, Phoenix or Salt Lake City.”

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It’s not like California’s population is shrinking. Our birth rate is higher than our death rate. And there are plenty of foreign immigrants entering the state. As a result, the population continues to rise.

But the people who are leaving the state tend to be more experienced and have higher incomes than those who are left behind, said demographer Johnson. Their contributions to the state’s tax base won’t be quickly replaced by the low-paid immigrants crossing the border or the new crop of babies in California’s maternity wards.

The domestic inflow of workers coming from other states used to supply a healthy middle-class buffer between rich and poor.

But Johnson fears that if the current trend continues, it could result in the “Manhattanization of the California coast,” with coastal cities like San Diego stratified with an upper-tier of people rich enough to afford million-dollar homes and a lower-tier of workers too poor to consider moving somewhere else.

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