Not Very Golden: California’s Mass Exodus

Andrew Ballan

  • March 17, 2021

Since the Gold Rush of 1848, California has been considered the jewel state that many have called home for its ease of access and abundance to sandy beaches, great mountains, variety of agriculture, luscious forests, and diversity of cultures and activities. However, many have a premium to pay to call this excellent state their home. 135,000 Americans have left the Golden State and over 13,000 companies (and that is only throughout the coronavirus pandemic). Why?

Photo obtained from Stanford review

As any Californian knows, the benefit of living there is expensive. California has the highest base tax rate of any other state, which is currently at 7.25%. Similarly, California has the highest marginal income tax rate in the US, which is at 13.3%. What about housing? Since the 1970s, an affordable housing shortage has been going on, with 3 to 4 million individuals affected. In correlation to this crisis, per 10,000 Californians, 38.3 are homeless, making it the third-largest homeless population in the US. Furthermore, according to the New York Times, the average house price is a whopping $700,000. Compare that to the average house price of the US alone, which is an outstanding $250,000. This explains why approximately 45% of Californians rent their living spaces.

Photo obtained from orange county register 

The graph shows the departures and arrivals to illustrate California migration

While the general public of the Golden State is struggling, so are big and small businesses. California is the primary importer of East Asian and Pacific Island countries’ products and goods and is infamously a tech hub. Companies such as Tesla, Oracle, and Hewlett-Packard (HP) all had their headquarters in the Golden State. Notice the word “had.” Since all 3 of these large companies (among over 13,000 ) have moved their headquarters out of California. This is logical for big companies who pay their workers the minimum wage of $13 an hour

(third highest in the country) and “business regulations, tax policies, cost of doing business and workforce quality. to not stay in California. Consider all of these factors together, and the Golden State does not seem very golden.

Who or what state can California learn from? Based on data, out of all 50 states, it is from Texas. A significant factor many businesses are drawn to the tax benefits for doing business. According to a Tax Foundation study, California is ranked #49 in the US for tax benefits, only one-upping New Jersey. This is probably why companies such as Toyota, Jamba Juice, Nestle, and, yes, Tesla, Oracle, and Hewlett-Packard, as mentioned above, are moving all or in part to Texas.

 

In short, the Golden State’s glimmer appears to be set upon itself. Californians seem to need to take action to hoist a new dawn over their vibrant horizon and shine that beautiful California sunshine brightly onto their currently not very golden state.

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