California Exodus: The Great Migration 3.0
As many remember, the relocation of many black persons after the Civil War from the South to the North was called “The Great Migration.” The relocation efforts of recently freed slaves happened for many reasons. The most obvious would be the intrinsic racism localized in the South at that time, social inequality being the primary driving factor. Integration did not happen immediately, it would be many years until African-Americans had the same rights as whites, after segregation was officially uprooted out of American society. There have been several great migrations throughout America’s short history. There are many reasons for these mass relocation efforts, whether it be social circumstances or economic ones.
During the Great Depression of the 1930s, many fled the Dust Bowl or the Midwest of the United States when severe drought hit. They traveled to places like California looking for a new place to call home. Some 2.5 Million people had relocated from plains states to western states.[1] The sharp decline in the stock market, incomes and job opportunities had an immediate effect on where and how people live. In many of these circumstances, people were forced to leave–it was not a choice.
Today, the problems we face are much different than the mass migration efforts of the past. Instead of institutionalized oppression in the form of slavery or Jim Crow laws, American citizens are confronted with consistent economic threats that have negative outcomes. Undoubtedly, other forms of racism and oppression exist in government and the private sector, whether it be hiring practices or access to participate in the market. Overall, they are much less prominent. In today’s society, economic warfare has no prejudice: recessions and depressions affect all citizens. This is especially true if you live modestly within the middle and lower classes.
The Great Recession of 2008 is no different in this regard. With a housing crisis being the main force behind the economic recession, mass relocation was an expected and necessary consequence. During the decade the recession hit, cities like Detroit had population decreases of 25% or more.[2]
The nation had an official unemployment rate of 11% at the height of the recession. Detroit, Chicago, and Baltimore were all hit the hardest and still have not recovered. After the recession, the U.S. Treasury announced its bailout of the housing and auto industries and the FED’s quantitative easing programs that would follow. Much like the recovery after the Great Depression of 1929, the 2008 recovery is a tale of two cities. On one hand, the economy is booming for those who were in position to make the most gains. Investors bought the dip. On the other, the labor participation rate remains largely unchanged, and incomes have yet to rise significantly in order to match the rising cost of living.[3] The legacy of Donald Trump’s economy cannot be determined yet. By official standards, unemployment has dropped to historic lows. Yet, the key metric that supports the notion of a healthy economy, wage growth, has not matched the strength of purported recovery.
The exponential growth in value of companies like Amazon, Apple, Google, and Facebook has sparked debate about whether tech companies have become a modern version of a monopoly. In reality, these companies are the true benefactors of the 2008 economic recovery. The middle class has yet to claim their dividends. For example, one study in California showed that tech workers make a service workers salary in 3 months.[4] As technology continues to drive down wages for those who do not have skin in the game, income inequality continues to grow as well. Ultimately, this economic data remains consistent throughout the national and world economy.
Historic Rise: Amazon’s value has seen a dramatic rise since 2008.
Why is this important? The consolidation of technology and its alliance with big government has allowed its CEOs and workers to benefit while the rest of us pick up the scraps. Simultaneously, the consolidation has mirrored itself in the housing and labor markets nationwide and is forcing mass migration throughout the country. There is no better example of this than in California. Home of Silicon Valley and progressive politics, the cost of living has skyrocketed. Whether it’s the liberal politics of the state or the large population, California has grown tiresome for many. In fact, California lost 138,000 people to other states in 2017, an increase from previous years.[5] The people who are relocating have benefited from the housing boom and the consequential rise in the cost of living, a result of the FED’s policies and a continual population influx of migrant workers from the south. California’s recent decision to mandate solar panels on all new houses surely won’t alleviate the rise in housing costs either. Regardless of your politics, it is undeniable that the cost of living in California is much higher than the rest of the country. For these reasons, there is a large exodus from California. If you live in Oregon, Washington, Idaho, Colorado, or Texas, you surely have seen your cost of living increase due to more California license plates on the road.
Overall, many natives in surrounding states abhor the sight of the California license plate. For them, it represents multiple things: the collapse of California, the rise in the cost of living, and a change in culture. It is almost as if every state the California refugees move to the politics begin to mirror that of California. Furthermore, whether they realize it or not, the exodus personifies the consolidation in the market at the hands of companies like Amazon. No matter the state you live in, you will find that those living in new homes in the nicer neighborhoods often either work for a tech company, or the government.
Yet, can you blame them for relocating? The state’s progressive political structure has massive amounts of regulation. This regulation inevitably increases the cost of doing business, which is why many businesses are leaving California in droves. The large population has increased housing costs, so if you lived there early, you are the beneficiary of a large increase in equity. Sell your home, move to another state and pay with cash. With Donald Trump’s new tax plan, federal kickbacks for state taxes will no longer exist. In other words, the Federal government is no longer subsidizing state governments. For high-tax states like California, this means a huge increase in taxes.
Overall, these are the main reasons we are seeing a California exodus. For residents in surrounding states, you better get used to it. Or, you can move to another less populous state that slightly resembles your home state. No matter the reaction, one must admit the natural causes for America’s most recent mass migration. Hopefully, those who are relocating will realize why they were forced to make a change, so the situation does not repeat itself in other states. Clearly, it is a complex situation, one that is the result of the economic recession in 2008, and the consolidation of the market by tech companies that followed after. When you throw in the effects of the heavy hand of government in California, the situation can only get worse.
[1] “Dust Bowl Migration – Rural Migration News | Migration Dialogue.” Rural Migration News, Accessed May 14, 2018. https://migration.ucdavis.edu/rmn/more.php?id=1355.
[2] Linebaugh, Kate. “Detroit’s Population Crashes.” The Wall Street Journal, March 23, 2011, Accessed May 14, 2018. https://www.wsj.com/articles/SB10001424052748704461304576216850733151470.
[3] Nunn, Jay ShambaughRyan. “Why Wages Aren’t Growing in America.” Harvard Business Review. October 24, 2017. Accessed May 14, 2018. https://hbr.org/2017/10/why-wages-arent-growing-in-america.
[4] Allen, Samantha. “Silicon Valley Interns Make a Service Worker’s Yearly Salary In Three Months.” The Daily Beast, November 25, 2014, Accessed May 14, 2018, https://www.thedailybeast.com/silicon-valley-interns-make-a-service-workers-yearly-salary-in-three-months.
[5] Daniels, Jeff. “Californians Fed up with Housing Costs and Taxes Are Fleeing State in Big Numbers.” CNBC. March 20, 2018. Accessed May 14, 2018. https://www.cnbc.com/2018/03/19/californians-fed-up-with-housing-costs-and-taxes-are-fleeing-state.html.
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