The state preferred by millionaires and home to Silicon Valley and Hollywood is pushing its poor and working-class residents out. This reality will soon become a problem, not just because of the state’s economy but also because California is the favorite destination of unskilled immigrants.
But as thousands flee because of the high cost of living, thousands of others arrive from other countries, balancing the number of residents and bringing it to 40 million. What doesn’t remain balanced, however, is the state’s budget, as the need for more welfare spending grows while working and tax-paying residents leave.
This exodus, which became particularly strong following the Great Recession of the late 2000s and early 2010s, has already pushed 7 million born and raised Californians to neighboring states. The majority of those who leave, the IRS reports, are under the age of 35 and make less than $50,000 a year.
So who’s left behind? The millionaires and the poor. And while the rich stay because they can afford to avoid all the problems the working class has to face, the poor can’t afford to live in the Golden State on their means alone. This puts an additional strain on social services and welfare systems.
In the long run, this could mean two things. First, the state will no longer be able to afford the loss of tax-paying workers, and second, it will have to ask the federal government for more help.
For a state that prides itself on being a sanctuary for people of all backgrounds, this has dire consequences. Especially as state regulators continue to implement rules that raise more artificial barriers across all industries. In the end, everything from housing to groceries becomes more expensive than in neighboring states.
So what is California to do if it wants to be welcoming to all again?
Sound economics says that it must put an end to policies that hurt the poor, especially the unskilled.
Removing barriers such as minimum wage policies and licensing requirements for professionals could be a great first step. But will California’s legislators take this type of action before it’s too late?
With a law that raises the minimum wage to $15 an hour by 2023 in effect, it’s hard to see legislators pushing for a change. Needless to say, this will continue to hurt unskilled workers who see their chances of obtaining work experience obliterated by the artificial barrier raised by the state.
As economists have predicted, things will surely worsen for California before the state’s political class learns its lesson.