California has long been known as a place where people flock to seek better opportunities and lifestyles. However, in recent years there has been talk of a “mass exodus” from the state due to factors like high taxes, cost of living, politics, natural disasters, crime, and more. But is this really happening? Let’s take a detailed look at the data and evidence around Californians leaving the state.
Population Changes
First, let’s examine the data on California’s population changes. According to the U.S. Census Bureau, California’s population grew by 6.5% from 2010 to 2020. This is a decent growth rate, but lower than previous decades. California remains the most populous state with around 39.5 million residents.
It’s true that California saw a net domestic outmigration in recent years, meaning more people moved out of state than moved in from other states. However, this was offset by international immigration and natural growth (births over deaths). Here are some key figures according to the California Policy Lab:
- California lost over 353,000 residents to domestic outmigration from 2020 to 2021.
- But the state gained over 118,000 residents from international immigration.
- There was also natural population growth of more than 150,000.
- Therefore, California’s total population decline was small – around 0.5% in 2021.
Additionally, California remains the #1 destination for international migrants out of any state. So while domestic outmigration is occurring, the state remains attractive to those abroad.
Where are people moving?
When looking at where people are leaving California for, top destinations include Texas, Arizona, Washington, Nevada, and Oregon according to Census data. Many leave for affordable housing markets with lower costs of living. Here is a table of top states people moved to from California:
| State | # of movers from CA |
|---|---|
| Texas | 68,516 |
| Arizona | 63,161 |
| Washington | 55,467 |
| Nevada | 50,707 |
| Oregon | 43,058 |
Texas remains the top destination by a large margin, absorbing nearly 70,000 California migrants in 2021 alone. Real estate markets like Austin and Houston are attracting relocators with lower home prices and taxes.
Who is leaving?
According to Census data, those leaving California tend to be more lower and middle income rather than higher income brackets. Some key trends:
- People making less than $50k per year are most likely to be moving out of state from California.
- Higher income brackets over $150k per year have the lowest rates of exodus.
- Many young adults and families are leaving to buy affordable homes elsewhere.
- Retirees on fixed incomes are motivated to leave for tax reasons.
So while California loses some lower and middle class residents, it retains higher income groups. Large employers also remain attracted to California’s skilled workforce and industries.
Impacts on Housing Market
What effects could a population decline have on California’s housing market? Here are a few potential impacts:
- Slowing home price growth – Less competition for housing may ease bidding wars.
- Increasing rental vacancies – Apartment vacancy rates could rise as demand decreases.
- Falling rents – Landlords may lower rents to attract tenants as supply increases.
- Lower housing construction – Developers could scale back new housing projects.
- However, California remains in a housing shortage. Demand still far outpaces supply, especially in coastal cities. Therefore, major home price declines are unlikely in the near future.
Overall, the housing markets most affected will likely be inland regions and rural areas seeing the greatest population losses. The San Francisco, Los Angeles, and San Diego metro areas will remain some of the tightest housing markets in the U.S.
Economic and Revenue Impacts
What are the potential economic impacts of changes in California’s population?
- Declining tax revenues – Less income tax and sales tax as higher earners leave.
- Damage to industries reliant on middle class – For example construction, real estate, healthcare.
- However, tech and professional services will likely be unaffected. These high-wage industries cluster in coastal cities.
- Potential brain drain of human capital – Although California remains a skilled workforce and educational hub.
- Rural towns could see economic decline without replacement migrants.
Overall, the state is unlikely to feel major economic impacts given its $3 trillion economy. Highly-skilled workers remain attracted to cities like San Francisco and Los Angeles. Rural areas will feel more pain from population loss.
Political Changes
California remains a solidly Democratic state. However, the loss of working class and lower income voters could gradually shift California politics in a more progressive direction. Here are some potential political changes:
- Higher income voters tend to be more socially liberal and fiscally moderate.
- Therefore, fiscal priorities may shift towards issues impacting higher earners, i.e. tax policies, environmental issues.
- Support could decrease for affordable housing measures, social services, and other programs aiding working class residents.
- Progressive policies popular in urban cores may expand statewide. For example – expanding rent control, universal healthcare at the state level, criminal justice reforms.
Overall, the impacts on state politics will be gradual. But the composition of the California electorate appears to be changing, potentially nudging policies in a progressive direction.
Reasons for Leaving
What are the primary factors causing people to leave California?
Cost of Housing
California has some of the most unaffordable housing markets in the country. Coastal cities like San Francisco and Los Angeles have median home prices over $800,000. High costs are pushing out younger adults and families hoping to buy homes.
Taxes
California has one of the highest state income tax burdens, especially on higher earners. Combined with property taxes, this results in significant tax liability.
Politics
Some conservatives chafe under California’s overwhelmingly progressive politics. As the state grows more Democratic, right-leaning voters are motivated to leave.
Quality of Life
Concerns like traffic, pollution, homelessness, and crime rates cause some to seek out other states. However, these issues are concentrated in major metros.
Job-based Relocations
Major companies leaving California – like tech giants moving to Texas – results in job-forced relocations. However, startups and big tech firms largely remain.
Retirement
California taxes and costs drive some retirees to relocate. Proximity to family out of state also plays a role.
Are more people really leaving California?
The data shows California is experiencing normal levels of outmigration – not abnormally high rates:
- California’s population held steady at around 0.5% growth in 2021.
- Domestic outmigration was largely offset by international immigration and births.
- California remains the #1 destination for international migrants.
- Major metros like San Francisco and Los Angeles remain highly desirable locations with strong job markets.
- Housing undersupply continues to drive extreme costs, indicating high demand.
Therefore, the data does not point to a dangerous “mass exodus.” But California faces challenges retaining middle and working class residents who are priced out. Addressing housing costs, taxes, and quality of life concerns may help the state avoid a brain drain.
Conclusion
While outmigration from California makes headlines, the data shows it is not experiencing a disproportionate population decline compared to historical trends. The state remains a top destination for international migrants and retains higher income residents. However, challenges around housing affordability, taxes, and quality of life issues are causing an exodus of some middle and working class residents. This poses risks of reduced tax revenue and economic activity. To avoid a potential brain drain, policy makers may need to address housing supply, cost of living, taxes, and infrastructure concerns. But California remains a diverse economic powerhouse with strong appeal globally and is unlikely to see a drastic population plunge.
