Question: Is it true there is a widespread dissemination of California’s population to other U.S. states?
Answer: This question rises from the false belief that the weight of California taxes is driving everyone out of the state. Rich and middle-class alike are jumping ship and fleeing to tax-shelters like Arizona and Nevada. California’s tax-base is fleeing in increasing numbers, leaving behind a state with an increasing percentage of low-income and no-income residents. California continues to increase taxes in an effort to keep up with spending, resulting in more and more of the tax base leaving for neighboring states.
Out-migration is a reality . . . but not an issue
While the dramatic deflating of California’s population is wildly untrue, it is not a lie that California is currently faced with out-migration. Data shows a net migration loss in California since the ‘90s. And it is true that the majority of those leaving California go to states with lower taxes like Arizona and Nevada, or most anywhere in the nation.
Editor’s note — Arizona and Nevada are currently beleaguered by overspending and large budget deficits, which will not leave their taxes low for long. [See Forbes Magazine article “Spendthrift Sunbelt States“]
But as the Public Policy Institute of California explains, those who leave California for other states are more likely to be unemployed, living in poverty and under-educated. They are not likely to be rich, or even middle-class.
But the out-migration argument is moot. Out-migration is not the problem it appears to be at first glance. The Pew Research Center reports California’s out-migration between 2005 and 2007 as a deficit of 681,000 people. While this number might seem dramatic, the Department of Finance reported that the number of births in California between 2005 and 2007 was 1,676,994. Out-migration in California might be high when compared with other states, but it is easily counteracted by California’s birthrate alone. This does not take into account the vast number of people who immigrate to California from all parts of the world.
Population retention and attraction: Golden
Contrary to the myth of the California exodus, the Pew Research Center designated California as a “sticky state.” A sticky state retains a high number of residents born in the state. California is the 4th highest in the nation with a 69% retention rate.
This retention is not swelled by low-income residents who cannot afford to rent a truck and leave the state. A TNS Market Research report lists the top ten counties with the highest number of millionaire residents in the nation. Four California counties monopolized the list, pointing to California’s ability to retain high income residents. Los Angeles County, Orange County, San Diego County and Santa Clara County all made the list with Los Angeles County (containing roughly 3.2% of the nation’s population) topping the list with 3% of the entire nation’s millionaire population.
And not only does California retain, but it attracts ever more individuals. The Federal Reserve Bank of St. Louis created a list of the top five metropolitan areas with the most business amenities and a list of the top five metropolitan areas with the most consumer amenities. Four out of the top five metropolitan areas in both lists were from California. San Jose, San Francisco–Vallejo, Oakland and Santa Cruz top the list as regions with the most business amenities while Santa Cruz, San Francisco–Vallejo, Salinas–Sea Side–Monterey and Santa Barbara–Santa Maria–Lompoc topped the list as regions with the most consumer amenities. [See first tuesday article, “Closed for business? The anti-business mythology of the golden state“]
California’s deflating population is a myth
Due to immigration, migration, births and retention, California’s population has steadily increased since the ‘90s. Population estimates from the US Census Bureau from 1990 to 2008 show the percent change in population for California. While population continued to increase throughout this period, the rate of increase fluctuated and cumulatively slowed, but did not decrease (California saw a 379,132 net increase in population from 2007 – 2008). Although population fluctuations in California were dramatic, the cumulative slowing in California’s population growth was reserved – better than the slowing seen for the overall population of the nation. (See first tuesday Market Chart: “Rate Of Population Growth: CA v. US“)
While a relative few might be crossing state lines in a vain attempt to discover the low-tax, high-service Promised Land, don’t be fooled by their stories and lore. The vast majority of us are not going anywhere, and plenty of people are coming to join us. The shimmer of the Golden State is well known.