Patterico's Pontifications

7/19/2016

Your Non-Convention News (If Anyone Cares): Bearish on California

Filed under: General — JVW @ 9:03 pm



[guest post by JVW]

[UPDATE: Ah, hang on: I see now that Elias is claiming that there was a net increase of workers making $50,000 per year into California. That is an interesting assertion. Since he’s a newspaper columnist, his format doesn’t require him to provide links to supporting data, so I would be interested in hearing exactly where he found that number. He claims it is in the Beacon Economics report that he references, but I don’t have access to the full report so I would have to take his word for it, which I’m not really willing to do.

But my other point made in the post below stands: according to the Governor’s own numbers, the middle-class workers who come either either remain childless or when they have children they mostly leave the state for more affordable locations. This is not good for the long-term health of the California economy. – JVW]

I guess he’s never been discussed ’round these parts, but we have a columnist in the local Southern California paper The Daily Breeze (part of the Los Angeles News Group) named Tom Elias who has all of the requisite trendy lefty opinions as befits this region. One of his main recurring themes is that things in California are really quite splendid for businesses, proving that a highly-regulated progressive state can succeed and thrive. He was at it again today in a column that attempted to argue that despite what those nasty conservatives say, the wealthy are not leaving California in droves for other states:

For more than a generation, opportunistic California politicians have barraged voters with woeful tales about how the most productive, inventive, wealthy and enterprising Californians are leaving this state in droves to avoid high taxes and excessive government regulation.

These stories, used successfully by the likes of Pete Wilson and Arnold Schwarzenegger while running for governor, and unsuccessfully by failed candidates from Bill Simon to Meg Whitman and Neel Kashkari, tell of rich Californians seeking greener pastures in more laissez faire states like Texas and Idaho.

There’s only one problem with those stories: They don’t match the facts, even though they are often purveyed by folks with a financial stake in the fables, some of them business relocation experts.

As per his wont, Elias is employing an easily-wrecked strawman. In point of fact, California Republicans, especially wealthy ones like Schwarzenegger, Simon, Whitman, and Kashkari, have never claimed that the wealthy are leaving the state. The wealthy are the ones who can withstand the brutal tax and regulation policies demanded by the state’s left-wing hallelujah chorus, and wealthy progressives whose personal fortunes are already secure are largely the ones driving this demented agenda. What Schwarzenegger et al. have correctly pointed out is that California’s dreadful business environment and high cost of living inhibits job creation, especially jobs for the middle class. More on that in a moment.

Elias is such an awful thinker that he very quickly invokes Josef Goebbels to try to discredit any pushback to his puerile arguments:

It’s not just that California has outpaced the rest of America economically for most of the last 20 years. It’s not merely that innovative businesses and venture capital investments here are the largest and most successful in the world.

It’s not only that coastal California real estate, property in the state’s most populous areas, brings more cash than comparable real estate anywhere else in America except Manhattan, but also that there are plenty of buyers around with the cash to pay seemingly outrageous prices.

It’s also that truth matters little anymore, with one of the principles peddled by master Nazi propagandist Josef Goebbels in the 1930s and ’40s proving at least somewhat correct: The more often you repeat and broadcast an untruth, the more people will come to believe it.

Yep, it’s true: the layers and layers of editors that the LA News Group no doubt employs somehow failed to redline Mr. Elias’s obnoxious Nazi reference, thereby setting a new record for fulfilling Godwin’s Law.

And here’s where Elias either tries to get cute, or exposes himself as a numerical illiterate. In arguing that California still attracts plenty of well-educated people seeking jobs, he cites these figures (bolded emphasis is mine):

That especially holds when some numbers appear to back up the untruth. In terms of people leaving California, there is such a number: California had a net population outflow to other states of 625,000 residents between 2007 and 2014. Newborn children and immigrants more than made up for that loss, so don’t expect the state to lose congressional or Electoral College clout after the next Census in 2020.

[. . . ]

[O]f those who left during the latest years for which statistics exist, the vast majority earned less than $30,000 per year. A net total of 469,000 of those leaving possessed no college degree. Given the prevailing levels of rents and home prices in California, it’s easy to see their financial motive in leaving for far lower-priced states like Texas, Nevada, Oregon and Arizona.

But as lower-income residents left there was a net increase of 52,700 residents from other states making more than $50,000 per year who do have at least a bachelor’s degree. The figures come from a Beacon Economics study released this spring.

Let’s put aside the stupid notion that as long as California’s population stays stable we won’t lose any Congressional seats. (Mr. Elias, as the population of the country grows, if the number of residents in California remains flat our Congressional districts will be reassigned to other states which are rapidly growing. It’s unconscionable that you don’t know this.) Let me instead introduce some high-level mathematics to this discussion. Forgive me for getting lost in the weeds, and I completely understand if you can’t follow these complex calculations, but here is what we are looking at, per Elias:

Elias math

Yep, he seriously thinks it’s no big deal that nearly three times (message me if you want to see my advanced calculations there) as many college-educated people left the state than relocated here over that period. [Note, see my updated correction at the top of the post.]

The rest of the column is blather about how there are really good middle-class high-tech jobs in California, with only a token acknowledgement that what is considered middle-class pay no longer supports a family trying to reside in San Francisco, San Jose, Los Angeles, San Diego, or most of the areas where jobs are being created. Entrepreneurs backed by millions in venture capital are providing some jobs in programming and marketing to those working in start-ups, but hardly paying enough to allow these workers to live comfortably in places like Silicon Valley or the Venice/Marina del Rey tech hub. I fired off a letter to the editor pointing out that Elias also ignores the demographic data from Governor Brown’s 2015-16 state budget which clearly shows that California’s population is skewing heavily towards retired senior citizens and that the number of school-aged kids (ages 4 to 17) is expected to grow at an anemic .3% (yes, that’s three-tenths of one percent) between 2014-2019 while the number of college-aged Californians (ages 18 to 24) is expected to decline by 4.5%. California’s major cities are becoming overwhelming elderly, single, and childless, and that is going to cause a loss of middle-class jobs in education, hospitality, recreation, and other key parts of the economy, just as the cities and state find themselves on the hook for greater and greater healthcare and pension costs borne by the already-overextended taxpayer. This is not going to be pretty, and shame on hacks like Elias for trying to convince us otherwise.

– JVW

25 Responses to “Your Non-Convention News (If Anyone Cares): Bearish on California”

  1. So if 625,000 people left the state, and even if “the vast majority of them” only made about $30,000 per year, is it entirely unreasonable to think that at least 52,700 of them made $50,000 or more, especially given the fact that 156,000 of the departures were people with college degrees? I’m sure the net influx of workers making at least $50,000 per year to California was at the very best a wash, and I’ll bet that we ended up losing more of them than we gained.

    JVW (eabb2a)

  2. UPDATE: Ah, hang on: I see now that Elias is claiming that there was a net increase of workers making $50,000 per year into California. That is an interesting assertion. Since he’s a newspaper columnist, his format doesn’t require him to provide links to supporting data, so I would be interested in hearing exactly where he found that number. He claims it is in the Beacon Economics report that he references, but I don’t have access to the full report so I would have to take his word for it, which I’m not really willing to do.

    But my other point made in the post below stands: according to the Governor’s own numbers, the middle-class workers who come either either remain childless or when they have children they mostly leave the state for more affordable locations. This is not good for the long-term health of the California economy.

    JVW (eabb2a)

  3. And it’s totally my bad for having misread the argument yet going off on the rant, though it was pleasantly cathartic.

    JVW (eabb2a)

  4. R.I.P. Garry Marshall, creator of Happy Days, Laverne & Shirley, Mork & Mindy, et al

    Icy (416737)

  5. R.I.P. Garry Marshall, creator of Happy Days, Laverne & Shirley, Mork & Mindy, et al

    He wrote and directed The Flamingo Kid which is a movie that I always liked. Richard Crenna’s character is running for President this year.

    JVW (eabb2a)

  6. The rest of the country is going to end up having to pay for California’s receivership.

    Beldar (fa637a)

  7. that was the subtext of the puerto ricoo ballout, then katie bar the door,

    narciso (732bc0)

  8. The rest of the country is going to end up having to pay for California’s receivership.

    I think that is the one scenario in which I would abandon Constitutional Conservatism and advocate seizing the holdings of California millionaires, starting with the following: Dianne Feinstein, Barbara Boxer, Nancy Pelosi, Jerry Brown, Tom Streyer, Arianna Huffington, Steven Spielberg, Danny Glover, Sarah Silverman, Ed Asner, Ron Burkle, Warren Buffet, and so on and so on.

    JVW (eabb2a)

  9. I am a BA emigre from SoCal.

    I’d love to see what his numbers looked like if one did not factor reconquista millions who mask the flight of Americans from California.

    I’d also be quite interested in data measuring those who live along the coast, against those who do not. I guarantee the differences in population movement in this comparison are staggering.

    Ed from SFV (3400a5)

  10. Tom Elias is acting stupidly.

    Cruz Supporter (102c9a)

  11. Losing productive tax paying citizens to be replaced by low wage or non wage leeches doesn’ t help a state’s economy, no matter how you parse statistics.

    Jim (a9b7c7)

  12. JVW: You missed the word “net”

    625,000 more residents left than came.

    A net total 469,000 of those leaving had no college degree.

    A net total of 52,700 had a Bachelor’s degree or more.

    So 625,000
    – 469,000
    ————-
    156,000
    + 52,700
    ————
    208,700 left California who both had a college degree and did not have] a Bachelor’s degree.

    (not actual people, but net. All figures are net.)

    How is this explained?

    They had Associate’s [2-year] college degrees!

    Sammy Finkelman (372aad)

  13. @JVW, Sammy Finkelman: The columnist’s argument was deliberately made confusing.

    625,000 more residents left than entered.

    469,000 more people without college degrees left than entered.

    -52,700 more people with bachelor’s degrees and making over $50K left than entered.

    Sammy’s figure of 208,700 refers to more people with bachelor’s degrees and making less than $50K leaving than entering.

    Furthermore, the 469,000 includes people who are making more than $50K but don’t have bachelor’s degrees, and we don’t know how many they are, or if the net outflow is positive or negative.

    Someone who cites numbers that don’t add up to a total, because whole categories are left out, is generally not telling the whole story. He says the vast majority of those who left, not the net outflow this time (even though all the cited numbers were net outflow) makes less than $30K but does not say how many or what percentage.

    But 208,700 more people who have college educations and can’t afford to live in California, than can, paints a less rosy picture of the situation.

    Some quotes from the source material, worth your checking out:

    “Migration trends also show that the middle class is being priced out of the state. Net
    migration of those earning between $30,000 and $49,999 accounted for 43,100
    residents leaving California.Meanwhile, low income earners from other countries
    are replacing low income earners leaving California for other states.

    This is how you get President Trump.

    How this is being done:

    “Our research suggests that a litany of fees, CEQA, NIMBYism, and the fact that Proposition 13 forces municipalities to look to permit and development related fees for revenue, all
    contribute to California’s affordability issue. So, to solve the out migration issue, the
    focus should be put on these roadblocks, rather than the state’s personal income tax
    rate.”

    The REAL numbers from the report are these:

    Under $30,000: 458,900 net outflow
    $30K – $50K: 43,100 net outflow
    $50K – $100K: -36,200 net outflow
    $100K – $150K: -13,400 net outflow
    $150K and over: -600 net outflow
    Total: 451,800 net outflow

    As for “international immigrants”, the net inflow is 835,000. Of those, over 80% are making less than $30K per year.

    So California is pushing out its residents who make less than $30K and replacing them with “international immigrants” who make less than $30K. The state is creating jobs for the upper-middle class and entrepreneurs, as well as foreign-born helots, while driving out working and middle class residents.

    Again, this is how you get President Trump.

    Gabriel Hanna (64d4e1)

  14. 13. Gabriel Hanna (64d4e1) — 7/20/2016 @ 8:08 am

    @JVW, Sammy Finkelman: The columnist’s argument was deliberately made confusing.

    I agree. He was comparings things that didn’t add up to 100%.

    -52,700 more people with bachelor’s degrees and making over $50K left than entered.

    I missed the part in bold, except that’s the number who entered rather than left (except that some people had salary increases, too, and even low inflation pushes people’s salaries and incomes up.)

    208,700 left California who had a college degree of some kind, but did not have BOTH a Bachelor’s degree AND an annual income of over $50,000.

    I think a lot more retirees are moving out of California to other states than before, so there are now fewer holders of Bachelor’s degrees or more with an annual income below $50,000 living in California than before, besides the fact that later generations of retirees have higher annual incomes.

    So California is pushing out its residents who make less than $30K and replacing them with “international immigrants” who make less than $30K

    No, not quite reolacing them, aince there’s a net reduction of 458,000 in the number of people people making less than $30,000 a year even when you factor in 835,000 x 80% = 668,000 immigrants coming in who are making less than 430,000 a year in California.

    Total number of fewer non-immigrants [not sure of the definition of immigrant – how recent?] making less than $30K in California in 2014 than were present in 2007: 668,000 + 458,000 = 1,127,000. This reduction in the population of those making less $30,000 is reduced from 1,127,000 to 459,999 by immigration.

    I don’t know how they count children under 18 or 15 or whatever. Are we talking about people over 18? Or do children get included with the household? If so, there can be fewer people with low incomws if people with low incomes are having fewer children. Do minor U.S. born children of immigrants count as “international” or U.S?

    Sammy Finkelman (643dcd)

  15. Anyone can spin a story to be positive or negative by selectively using numbers.

    Look, the fact is that when the Supplemental Measure of Poverty is used, California has the highest percentage of people in poverty of any state in the US.

    Don’t take my word for it. Take the US Census Bureau’s. http://www.huffingtonpost.com/news/california-poverty-rate/

    The premise that California’s economy is OK is preposterous.

    Some of the highest taxes, highest regulations, least-restrictive immigration policies (sanctuary policies), most lavish social welfare spending, and strictest gun control in America should have resulted in the liberal utopian paradise we keep hearing about from the left.

    Instead, you have a state with the worst poverty, some of the highest levels of wealth and income inequity, the 49th public school system (better only than Mississippi), and not so good crime rates.

    Some Dude (53806b)

  16. @Sammy: that’s the number who entered rather than left

    No, all the numbers I am citing are NET OUTFLOW. It’s not the people who entered, and not the people who left. It is the difference between the number who left and the number who entered.

    No, not quite reolacing them, aince there’s a net reduction of 458,000 in the number of people people making less than $30,000 a year even when you factor in 835,000 x 80% = 668,000 immigrants coming in who are making less than 430,000 a year in California.

    Because all numbers cited are net, you have too many unknowns. You cannot make this statement. All you know is that more immigrants under $30K are entering than leaving, and more total people under $30K are leaving than entering. It follows therefore that the population under $30K is becoming more and more composed of immigrants, but we cannot say how much more without the absolute numbers instead of the net numbers.

    An analogy: I have a barrel with an unknown quantity of wine mixed with water in an unknown proportion. I know that I am pouring in more wine than I pour out. I know that I am pouring out more water than I pour in. I know that the total level in the barrel is dropping. I do not know the wine/water ratio in the amount I pour out or pour in: but the concentration of wine is necessarily increasing, though I have no way to know by how much.

    Which was the whole point of citing only net numbers in the first place–to obfuscate that.

    Total number of fewer non-immigrants [not sure of the definition of immigrant – how recent?]

    You don’t have this information. You only have net. You don;t know what the baselines were.

    This reduction in the population of those making less $30,000 is reduced from 1,127,000 to 459,999 by immigration.

    Same error. You don’t have enough information here.

    This reduction in the population of those making less $30,000 is reduced from 1,127,000 to 459,999 by immigration.

    Same error. See the problem? Very easy for the source report to have included absolute numbers. Very revealing they chose not to.

    Gabriel Hanna (64d4e1)

  17. An important bellweather consideration in the future of CA is the overall slowing and decline in K-12 public school enrollment (this aside from educational quality itself). Speaking from Orange County where I live, most districts (though not all) are closing schools and consolidating campuses as many good paying jobs are moving out of state. Many of the remaining younger families I know (who tend to be Christian/evangelistic) are opting to home school their children out of concern over the teaching and general culture presented by CA public schools. This will have many long ranging effects as these trends continue unabated.

    Scott (513e4d)

  18. I have a nephew in California. He’s come out to visit us a couple of times. On his last visit, I was showing him how easily he could afford a house out here. He has no chance of being able to buy a house in my hometown at any time now or in the future given his actual employment – current or prospective. But could buy the same size house that I grew up in, at literally 1/6th the price, here.

    SPQR (a3a747)

  19. Gabriel Hanna (64d4e1) — 7/20/2016 @ 8:08 am

    Thanks for providing the context Gabriel. Are you a registered member on the Beacon Economics site? When I tried to get deeper into the report I was blocked by a registration page asking me to pay to join. I’m glad you could flesh out those numbers.

    JVW (34f70e)

  20. The state is creating jobs for the upper-middle class and entrepreneurs, as well as foreign-born helots, while driving out working and middle class residents.

    And the major point I was trying to make is that it is creating jobs for only a certain segment of the “middle class,” namely those who don’t desire to own a home or start a family. In fact, being “middle class” in San Francisco, at least as we have always understood middle class in this country, probably requires an income much closer to $100,000 per year than $50,000. So the family where mom and dad (or, this being San Francisco, ze and zur) have a combined income of $250,000 can probably get by with the the one child that they conceive in their late 30s, but that traditional family of 4.5 where mom is a schoolteacher and dad is a cop is a thing of the past.

    JVW (34f70e)

  21. Are you a registered member on the Beacon Economics site?

    No.

    When I tried to get deeper into the report I was blocked by a registration page asking me to pay to join.

    I wasn’t.

    There wasn’t much more there, though: more words to say more about it is all.

    Gabriel Hanna (64d4e1)

  22. JVW, I did wonder, if the report blames housing for driving out poor residents, why does it not try to explain how the poor immigrants who replace them are finding a place to live?

    It’s because they can’t say why: the living standard of the poor immigrants is much lower than that of the poor residents for the same money.

    Which is why immigrants are the ones being drawn: residents compare California with elsewhere and decide they can do better, but immigrants think California is way better than where they lived.

    Gabriel Hanna (64d4e1)

  23. 22. Gabriel Hanna (64d4e1) — 7/20/2016 @ 2:49 pm

    JVW, I did wonder, if the report blames housing for driving out poor residents, why does it not try to explain how the poor immigrants who replace them are finding a place to live?

    They may not explain it, but I think the statistics quoted seem to say more poor people are moving out, than moving in, even when you factor in immigrants.

    It’s because they can’t say why: the living standard of the poor immigrants is much lower than that of the poor residents for the same money.

    That’s also possible. They have less disposable income after housing than the previous tenants, or homeowners, did. Homeowners also, of course, because taxes are paid on the buying price. And people are probably living further and further from their work.

    And yes.

    residents compare California with elsewhere and decide they can do better, but immigrants think California is way better than where they lived.

    And the jobs, or at least the jobs they can get, are still in California. The people moving out are, in many cases, retirees.

    Sammy Finkelman (372aad)

  24. @Sammy Finkelman: They may not explain it, but I think the statistics quoted seem to say more poor people are moving out, than moving in, even when you factor in immigrants.

    They ALSO say that the poor people are becoming more and more immigrant rather than resident. if the residents are leaving because of the housing and whatnot, why are the immigrants staying, when both are poor? And of course they don’t compare how poor one is relative to the other.

    The people moving out are, in many cases, retirees.

    According to the source, the vast majority of the outflow are under 65. 65 and over is only 22,600 net outflow.

    Gabriel Hanna (64d4e1)

  25. They also breakdown by occupation. Occupations with net inflow: computers, health, arts, science, architecture, legal. Occupations with net outflow: everything else.

    Gabriel Hanna (64d4e1)


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