California’s Population Loss: Is There An Historic “California Exodus” Taking Place?

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In 2020, California experienced something it had never recorded since the state’s formation in 1850 – a loss of population. Is this just a temporary bump due to the COVID-19 pandemic, or the beginning of a historic “escape” where the state’s climate challenges, taxes and failure to provide affordable housing have finally caught on?

First, numbers. California Department of Finance Makes annual estimates of the state’s population, and they concluded that the Golden State lost 182,083 people in 2020. That’s only 1/2 of one percent of the state’s more than 39 million people, not a huge number.

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But the 2020 decline is part of a longer-term trend in the 2000s. Population changes come from three factors: natural increase or decrease (birth versus death), net internal movement from other states within the United States (the balance between incoming and outgoing people), and foreign immigration.

Conservative analysts Joel Kotkin and Wendell Cox examine these three trends in a provocative article titled, “Flying California.” They emphasize negative net internal migration, noting that “in every year of the twenty-first century the state has faced net migration.” This negative trend was offset by foreign immigration and new births, many of them for immigrant families that tend to be smaller and have higher fertility rates.

Kotkin and Cox blame California’s taxes, economic regulation and high housing prices for the population loss. And they are not alone. You can find some conservatives almost gleefully arguing that “California Escape” happening, “driven by tax increases” resulting in “many high net worth individuals … eyeing the exit door.”

Of course, the poster boy of the “escape” argument is billionaire Elon Musk. Musk is the second richest person in the world according to the 2021 Businesshala World Billionaires list, and in 2020 he said he is relocating from California to Texas.

Musk said At the time “if a team has been winning for too long, they get a little complacent” and “California has been winning for too long.” In Texas, that would be close to several Teslas
TSLA
Facilities with a major SpaceX base. Not coincidentally, by moving his residence to Texas, it is estimated that Musk could save several billions in taxes.

There is no doubt that California has more taxes and more regulations than Texas. But Musk is also quick to note that “Tesla and Space X clearly have large-scale operations in California,” and others note that the combination of Silicon Valley venture capital and innovative talent continues to profit and grow.

In fact, some experts are questioning the validity of the entire “Exodus” story. a 2021 survey Scholars from the University of California at San Diego found “no evidence of an unusual increase in residents planning to move out of state.”

survey is part of a “Large, Multi-Institution Research Project” Led by the University of California who refutes the “Exodus” story. Those scholars have found that “residents are moving out of state, but not at unusual rates”; “There is no evidence of ‘millionaire flight’ from California”; And “California’s economy attracts as much venture capital as all other states.”

Other analysts say California has suffered a decline in international immigration. Donald Trump’s crackdown on immigration affected not only low-income and undocumented workers, but also highly skilled tech workers.

Actually, Musk’s Tesla joined Google
GOOG
, Apple
AAPL
, and to Amazon Criticize Trump’s 2020 visa suspension For many high-tech workers. These visas are being misused, which needs improvement, including their . also includes Negative impact on women and people of color in STEM professions. But Trump’s full suspension was widely seen as an election year game to use immigration as a divisive issue.

California’s population loss stems from all three factors – declining birth rates and an aging population, net negative internal migration, and restricted international immigration. In our next blog, we’ll look at who’s going out, and why, and also what the state might be able to do about it. Sneak Preview: It’s not the wealthy who are driving the migration numbers, but low- and middle-income residents, and it’s linked to a lack of affordable housing. stay tuned.

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