Over the past few years, migration out of California has received plenty of media attention. From large tech companies relocating to Texas to ordinary people moving to other states, California seems to be facing a possible population issue ahead—but not for the reasons many may think.
In a poll conducted by the University of California, Berkeley, voters from various political backgrounds were asked whether they have considered moving out of California, and if so, why?
“High taxes” and the “state’s political culture” were some common responses amongst conservative voters. This should come as no surprise as Republicans and other conservative organizations conveniently blame California’s liberal policies as the sole reason people have been abandoning the Golden State.
However, many conservative attacks against California’s policies are largely baseless. Although California does hold the top marginal tax rate that targets its wealthiest residents, poorer and middle-class Californians pay less on average than Texans do. In fact, the non-partisan Institute on Taxation and Economy found that California ranks as the best state for middle-class taxpayers while Texas ranks second to last.
Despite the misleading attacks conservatives have waged against California’s most progressive policies, the most common reason voters have considered leaving was not higher taxes or a toxic political culture, but the high cost of living. Contrary to other criticisms, California’s expensive cost of living is well-recorded and can be directly linked to California’s housing costs, which have been skyrocketing for years.
But what is causing California’s notorious housing crisis?
To put it simply, decades of rapid job growth from all sectors of the economy has created an incredibly high demand for housing that has not been met with an adequate supply of housing. Although the fundamental economic principle of supply and demand is often deceptively and improperly applied in policy discussions, empirical economic research has determined it can be legitimately applied in the instance of California’s housing crisis.
The toll California’s housing crisis has taken on its population and economy is impossible to illustrate with words. The lack of affordable housing remains the leading cause for homelessness and higher housing costs often have to be compensated by employers, which can make the business even harder to conduct in an already expensive state.
The reasons for California’s inadequate supply of housing can be linked to various government and market failures, but there are a few main culprits. California’s infamous Proposition 13 amendment, which was passed over four decades ago, created a generous loophole in the state’s property tax system, while harsh zoning laws implemented under the pressure of politically powerful household residents effectively prohibit new housing projects. Restrictive zoning laws are especially a problem in the San Francisco Bay Area, where the same UC Berkeley poll found the highest concentration of those who responded with “high cost of living” as their primary reason for considering to leave.
Does that mean that California’s liberal government is to blame for all of this? Not necessary. Increasing housing costs can occur in any state that experiences high growth that is not accompanied by an adequate supply of housing. In fact, this is already happening in historically red states such as Idaho, where Californians, who have recently been moving in en masse, have already managed to raise home prices by 20 percent in 2020.
So, what can be done to solve the housing crisis?
Both the private and public sectors of our economy can work together to increase the extremely low supply of housing. Harsh real estate regulations should be eased to encourage private investment, while ambitious public investments can be put forward towards affordable housing. Many state lawmakers, such as newly-elected 25-year-old Assemblymember Alex Lee, have already placed California’s housing crisis at the forefront of their agenda by promising to invest in public housing while providing immediate relief to those who have suffered most from the crisis.
While the solution seems simple enough, its implementation will present an incredible challenge our lawmakers and bureaucracy would have to battle with for years to come. However, California’s housing crisis remains the single greatest threat to its social and economic future, and the cost of inaction may be an irreparable dent on the great, Golden State.
Title Image: Jim Wilson / The New York Times