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CITY JOURNAL - Elon Musk has just announced that he will move the headquarters of both SpaceX and X from California to Texas, citing Governor Gavin Newsom’s signing of a new law banning parental notification by school districts of children’s gender identification changes. “The governor of California just signed a bill causing massive destruction of parental rights and putting children at risk for permanent damage,” Musk wrote on X. “If you’re a normal family living in California, get out before it’s too late,” wrote one commenter. Many state residents seem to be coming to a similar conclusion.
Californians are concerned for many reasons beyond their governor’s latest concession to the far Left. The state faces a deep budget deficit, tepid job growth, and massive net outmigration. Far from being the egalitarian paradise celebrated by Governor Newsom, it has the nation’s highest unemployment and poverty rates while being home to the most billionaires. It recently ranked last among the 50 states in terms of taxpayers’ return on investment.
Residents have lost confidence. Only 40 percent approve of the activities of state legislators. Some 62 percent told pollsters the state was headed in the wrong direction, up from 37 percent in 2020. Four in ten are considering an exit.
Governor Newsom finds himself increasingly unpopular with state voters. But are Californians ready for radical change? Are they even ready for reform?
So far, what should have been a political firestorm has been more like a series of isolated campfires. True, Republicans have rallied modestly from their 2018 nadir, picking up five House seats in the last two rounds of federal elections. But the GOP’s 12-representative total is a paltry fraction of the available 52. The next governor and future legislatures are likely to remain progressive, as three-fifths of Californians plan to vote for Democrats for Congress, and a hefty majority back President Biden’s reelection. As former GOP State Senate leader Jim Brulte once told me, “things have to get a lot worse before they can get better.”
Right now, “there’s some movement politically but not much,” says Shawn Steel, GOP national committeeman for California and husband of Representative Michelle Steel (R-CA). “People are stuck on an ideology and it’s hard to move them.”
One critical factor in California’s progressive dominance, notes Steel, has been changes in migration patterns. In the past, those who flocked to the Golden State brought diverse political views. This led the state to oscillate between progressive and conservative governance. In recent decades, however, population movement has created ideal conditions for one-party rule. Between 2000 and 2023, per census data, California has lost about 3.8 million residents in net domestic migration—a loss roughly the population of Los Angeles. Many of those leaving, according to an analysis of IRS data that I coauthored, are middle-income people in their childbearing years, a Republican-leaning cohort. And as another study showed, conservatives are three times more likely to consider leaving the state than are liberals. “Texas is taking away my voters,” laments the GOP’s Steele.
Today, California ranks toward the bottom in attracting newcomers. It is even losing middle-class educated professionals, whose exodus increased sharply between 2019 and 2021 (before a modest rebound). The state’s Department of Finance predicts almost no population growth statewide by 2060. Young people are fleeing; Los Angeles County, for example, lost nearly 750,000 residents under 25 between 2001 and 2021.
California voters routinely state that housing is their biggest concern. Those who leave often cite housing prices as the reason why.
This wound is largely self-inflicted. According to a new study presented by the Center for Demographics and Policy at Chapman University, of which I am director, California’s income-adjusted housing costs in the 1970s were in line with those of the rest of the country. But policies designed to limit growth in the state’s less expensive periphery helped push prices skyward. Demographia’s 2023 rankings show that California is home to seven of the nation’s ten least-affordable housing markets. Not surprisingly, the state’s home sales have fallen to record-low levels.
The resulting exodus of those who cannot afford to live in California, and declining fertility among those who stay behind, has created an electorate dominated by non-families. That cohort, particularly single women, tends to vote progressive. As Wendell Cox and I wrote in a 2021 article for City Journal, “Los Angeles and San Francisco rank last and second-to-last in birthrates among the 53 U.S. major metropolitan areas,” and “only exurban Riverside/San Bernardino exceeds the national average in women aged between 15 and 50 with births.” California’s total fertility rate now ranks ninth-worst nationally.
Lack of economic opportunity also drives migration, and California policymakers have smothered many of the state’s job-creating industries. Sacramento has systematically crushed blue-collar jobs, a traditional source of upward mobility, by imposing draconian climate regulations. Lawmakers have slated oil and gas, once a major industry in the state, for extinction. As a result of these and other policies, California lost some 796,000 manufacturing jobs between 1990 and 2021.
Other industries have seen similar declines. Even before Musk’s bombshell announcement, California had already lost the headquarters of virtually all its traditional aerospace companies, and though employment has risen in recent years, growth has lagged that of places like Texas and Florida. The state has also failed to capitalize on the current defense boom. Its total defense spending now ranks third, behind Texas and Virginia, and its share of such spending nationally is less than its share of the U.S. population. Employment in Southern California’s famed aerospace industry is less than half its 1990 level, according to a 2016 report. Entertainment, one of the state’s high-end industries, has also lost jobs, due to technological changes and incentives offered by other states and countries.
California is becoming what former Governor Jerry Brown called a “one note” economy—built around tech-generated capital gains. But this sector, too, shows signs of weakness. A Chapman University study found that since 2005, California has seen its share of jobs stagnate in 50 technology-driven industries, largely because companies are relocating to more affordable states. Silicon Valley tech-job salaries have also fallen by 15 percent, even as they rise in places like Atlanta, Austin, and Houston.
Overall, California’s income and job growth since 1990 has come in below the national average and been dwarfed by those of key competitor states like Texas and Florida. Some believe artificial intelligence, led by firms like Nvidia, could turn this around. But AI companies don’t employ people like previous semiconductor, computer, or Internet-based firms. Nvidia, for example, makes its chips overseas and has no need for any but the most skilled technologists. Other leading AI firms are laying off workers. Meantime, the rise of such technologies has caused a decline in freelance software work, further eroding the state’s tech industry.
Is all this bad enough to drive political change? The stage is set. California’s Legislative Analyst’s Office predicts operating deficits through 2028, a predictable consequence of the state’s inflation-adjusted per capita spending tripling over the last 50 years. The Golden State’s deficit ballooned as its general-fund budget expanded from $96.3 billion in 2013 to roughly $226 billionby 2023. Competitor states like Texas and Florida, by contrast, have grown their budgets while preserving large surpluses.
Faced with the consequences of their actions, Newsom and the Democrats now must struggle over how to pay for progressive priorities like free health care for illegal immigrants or an unthinkably fast statewide transition to electric vehicles. The legislature also passed a motion to pay reparations to black residents. While the plan is unlikely to come to fruition, if advocates get their way, it could end up costing the state upward of $800 billion.
Some signs of pushback are evident. Besides the GOP congressional gains, Democrats also rejected two far-left, anti-Israel candidates for Senate. Spurred by the highest violent-crime rate in a decade, nearly two out of three Californians surveyed expressed concern with violence and street crime in their local communities.
Voters’ concerns with rising lawlessness drove the recall of George Soros-backed San Francisco district attorney Chesa Boudin and of several far-left school-board members. The growing backlash also caused Mayor London Breed, once a proponent of slashing police funding, to seek more resources for law enforcement, even amid a deep deficit. In Los Angeles and Oakland, donors are reportedly pondering backing recall efforts against lenient prosecutors. And support for rolling back Proposition 47 (which reduced many previously felonious offenses to misdemeanors) has grown among at least a few Democrats, including the mayors of deep-blue San Francisco and San Jose.
The potential for some kind of realignment certainly exists. Over 60 percent of California voters identify as moderate or conservative, while only 38 percent call themselves liberal. According to Democratic consultant David Gershwin, however, the progressives and their public-union allies have a better ground game. They have perfected California’s ultra-permissive vote-harvesting infrastructure. Progressives have also shown that they can shut down the state Democratic Party at their whim, as pro-Hamas demonstrators did at the last convention.
Ultimately, California will see no sustained political change unless moderates and Republicans can reach minorities, particularly Asians and Latinos. These two groups already constitute a majority of state residents and roughly 40 percent of likely voters.
This was one lesson from Rick Caruso’s unsuccessful race for Los Angeles mayor last year. Caruso, previously a Republican who switched parties ahead of the race, lost to progressive Democrat Karen Bass, despite spending some $100 million. The real-estate mogul cruised in the state’s predominantly white, heavily Jewish areas but lost badly in both hipster enclaves like Venice and the predominantly minority south side. Failing to appeal to minority voters, particularly Hispanics, helps explain why the more moderate Caruso lost, despite a major homelessness problem, a weak economy, and deteriorating public infrastructure.
In time, the state’s Asian population could move Republicans’ way. Generally well-educated and affluent, Asians nationally were veering left in the Obama years, but today they have emerged as a moderating force. This change could reflect the group’s mixed views on affirmative action and their rising concerns about crime; two-thirds of San Francisco’s Asian voters supported the Boudin recall.
A shift in Asians’ voting habits could be augured by their elevation to elected office. In 2020, for example, Southern California saw the election of two conservative Korean American women, Michelle Steel and Young Kim, both expected to win their third terms this year. They are joined by Vince Fong, who represents Kevin McCarthy’s old Central Valley seat.
The Latino vote could also become more contested, particularly as this cohort appears to be shifting rightward nationally. The biggest concerns of California’s Latino voters, according to one survey, are housing, inflation, and lack of jobs that pay enough to cover the bills. In contrast, relatively few identified “racial justice” or climate change—anchors of the Democratic Party platform—as priority issues.
The state’s draconian climate policies disproportionately burden Latinos and other predominantly working-class constituencies. In 2022, the California Air Resources Board, the primary executor of California’s climate policies, projected that these measures will result in income declines for individuals earning less than $100,000 annually, while boosting incomes for those above that threshold.
For political reasons, Newsom, the consummate opportunist, has been forced to oppose progressives on key issues. He has kept the state’s last nuclear plant running, cut welfare funding, and made clear his opposition to a proposed wealth tax that could further accelerate the already devastating exodus of affluent people out of state. The wealthiest 10 percent of California families, after all, payan estimated 80 percent of the state’s income taxes.
Yet these are basically tactical retreats. Newsom is still a progressive, evident in his successful attempt to block an anti-tax ballot measure. He also has signed several union-backed bills, which California’s Chamber of Commerce deemed “job killers.” While the deficit may slow the welfare state’s expansion, Newsom will need to keep the tax spigot spewing to meet the voracious demands of the state’s most powerful lobby—public-employee unions. The governor also has backed ideas for new state bonds to finance his climate program while proposing cuts on state support for public safety.
Given progressives’ inherent advantages and robust ground game, the next governor could well be further left than Newsom. One leading candidate, Attorney General Rob Bonta, backs a wealth tax and is a devotee of the progressive vanguard’s version of “criminal justice reform.” It’s hard to imagine a Democratic nominee for California governor who is anything other than a party-line progressive.
Things may not yet be bad enough for Brulte’s turnaround scenario. But continued progressive mismanagement is already nudging some California voters, including minorities, toward centrism. Political change in the Golden State takes time, but the prospects are better now than at any time in decades.
(Joel Kotkin is a presidential fellow in urban futures at Chapman University and author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. This article was first featured in city-journal.org.)
