During the Great Depression, some 1.3 million Americans—epitomized by the Joad family in John Steinbeck's "The Grapes of Wrath"—flocked to California from the heartland. To keep out the so-called Okies, the state enacted a law barring indigent migrants (the law was later declared unconstitutional). Los Angeles even set up a border patrol on the city limits. Soon the state may need to build a fence to keep latter-day Joads from leaving.
Over the past two decades, a net 3.4 million people have moved out of California for other states. But contrary to conservative lore, there has been no millionaires' march to Texas or other states with no income tax. In fact, since 2005 California has experienced a net in-migration of households earning more than $200,000, according to the U.S. Census's American Community Survey.
As it happens, most of California's outward-bound migrants are low- to middle-income, with relatively little education: those typically employed in agriculture, construction, manufacturing, hospitality and to some extent natural-resource extraction. Their median household income is about $40,000—two-thirds of the statewide median—and about 95% earn less than $80,000. Only one in 10 has a college degree, compared with 30% of California's population. Roughly 40% of the people leaving are Hispanic.
Even while California's Hispanic population has grown by more than 1.5 million since 2005, thanks to high birth rates and foreign immigration, two Hispanics have moved out for every one that has moved in from another state. By contrast, four Hispanics from other states have settled in Texas and Arizona for every three that have left.
It's not unusual for immigrants or their descendants to move in pursuit of a better life. That's the history of America. But it is ironic that many of the intended beneficiaries of California's liberal government are running for the state line—and that progressive policies appear to be what's driving them away.
For starters, zoning laws, which liberals favor to control "suburban sprawl," have constrained California's housing supply and ratcheted up prices. As Harvard public-policy professor Daniel Shoag documents in a working paper, land restrictions became common in high-income enclaves during the 1970s—coinciding with the burgeoning of California's real-estate bubble—and have increased income-based segregation and inequality.
Housing in California is on average 2.7 times more expensive than in Texas. The median house costs $459 per square foot in San Francisco and $323 in San Jose, but just $84 in Houston, according to chief economist Jed Kolko of the San-Francisco based real-estate firm Trulia. Housing in California is cheaper inland than on the coast, but good luck finding a job. The median home in Fresno costs $95 per square foot, but the unemployment rate is nearly 15%, compared with 6% in Houston.
California's staggering labor and energy costs—it has the nation's most stringent fuel and renewable standards—have helped kill hundreds of thousands of manufacturing jobs in California's interior. Note: Those are jobs that traditionally served as entry points to the middle class. The Golden State has shed a third of its manufacturing base over the past decade. And while the U.S. has added nearly 500,000 manufacturing jobs over the past two years, California's heavy industry continues to erode.
Campbell Soup announced in September that it was closing its 65-year-old plant in Sacramento, which employed 700 workers, and shifting production to North Carolina, Ohio and Texas. Chevron CVX -0.07% is moving 800 technical positions—in other words, jobs that aren't physically stationed on California rigs—to Houston.
Non-manufacturing businesses are also moving or expanding operations where labor, land, energy and capital are cheaper. Comcast announced in the fall that it is moving 1,000 call-center jobs out of California because of the "high cost of doing business." Facebook, eBay and LegalZoom have opened up Texas offices in the past few years, while PayPal, Yelp and Maxwell Technologies MXWL +0.40% have pushed into Phoenix.
Meanwhile, small businesses that can't leave California so easily have been slow to invest because they are financially squeezed. Rents are prohibitive, and Sacramento takes 9.3% of every dollar over $49,000—and 13.3% over $1 million—that an individual or small business owner earns.
By contrast, small businesses in Texas have been sprouting like bluebonnets in the spring to meet the demands of an expanding population. More people mean more mouths to feed, bodies to clothe and homes to build. All told, Texas has added twice as many jobs as California has since 1990. California's rate of job growth since the recession ended in June 2009 has trailed Texas's by two-thirds.
In a sharp reversal of the 1930s, Texas and the Sun Belt have supplanted the Golden State as a magnet for jobs and people, while California has become America's leading labor exporter. Democrats, however, don't seem to mind so long as the state maintains its high-tech hegemony.
In his State of the State address this year, Gov. Jerry Brown boasted: "We have the inventors, the dreamers, the entrepreneurs, the venture capitalists. . . . When I first came to Sacramento, Steve Jobs and Steve Wozniak had not yet invented their personal computer. There was no wind-generated electricity, and we didn't have the nation's most advanced building and appliance efficiency standards as we later adopted."
Recall, however, that the Okies—poor as they may have been—provided a gigantic pool of labor that fueled California's postwar boom and helped transform the Golden State into the world's eighth-largest economy. The Democrats who have had firm control of the state during its years of decline would do well to remember that a society's most valuable asset is always its people, regardless of their wealth or clout.