Californians Continue to Flee as Public Pensions Eat Up 20 Percent of City Budgets
California has, for a long period in American history, been the go-to place for entrepreneurs and seekers of fortune and fame. But as the regulatory burden grows, making it difficult for business owners to stay, they simply pack and move somewhere where the cost of doing business won’t be as overwhelming.
According to CoreLogic’s recent analysis, for every home buyer coming into the Golden State, there are three Californians selling their property and flocking elsewhere.
What the study concluded, deputy chief economist at CoreLogic Sam Khater told reporters, is that the the current state of the California housing market shows that there’s a clear connection “between migration patterns and home prices.”
Since property costs in California have risen 71 percent since 2011, members of the middle and lower classes simply cannot afford to stay so they flee, taking their taxes with them. With local government’s worker pensions growing at a staggering rate — even after reforms were implemented — it isn’t farfetched to believe that, as young, hard-working people leave the state, local governments begin to face tough times, much like what happened in places like Detroit, Michigan.
In a state where the median home price is at $480,000 statewide due to the local and state government’s heavy-handed intervention in the real estate market, incomes aren’t keeping up with the home price increases, making it hard for young families to keep up with their expenses. Instead of opting for paying bills and taxes instead of spending on themselves, people are choosing to leave.
In cities like Los Angeles, taxpayers foot billionaire pension bills, which eventually added up to $1.04 billion in 2015, a sum that represents 20 percent of the city’s general fund. And despite the changes to the laws, city officials will continue to use up to 20 percent of the Los Angeles city budget just to cover pensions and retiree healthcare in the future.
But what about the tech industry? You might ask. Isn’t it making Californians rich?
While the tech industry in is, indeed, thriving, the wealth it creates helps to play into the hands of crony capitalism.
As wealthier tech giants become even more prosperous, they also become more influential among California and Washington politicians. But that’s not all. They also raise the overall cost of living for those around them.
With local governments eating into locals’ paychecks, only those who are powerful enough to influence policy will remain in California. And as history teaches us, this is bound to have a very bad ending.