California’s top-ranked economy is also among the most unequal in the US

from Dan WaltersCalMatters

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California’s next governor — most likely former Attorney General Xavier Becerra — will inherit a tangled mess of unresolved issues.

Some, such as the high percentage of unemployment and a lot high cost of livingpredate current governor Gavin Newsom. Others, such as chronic multi-billion dollar budget deficit and the persistently high unemployment rate, has recently arisen.

A perennial question about such problems is whether they are unique or more pronounced in California than in other states. Comparisons are difficult because definitions vary and comparable data are difficult to track.

Coincidentally, however, two recent academic studies shed light on how California stacks up against the rest of the nation’s 49 states.

One is called “State of the States“, an offshoot of the State of the Nation research project sponsored by Tulane University’s Murphy Institute, which aims to cut through the partisan chatter and define the nation’s most serious problems.

The study found that “California ranked higher on average in Economy (1), Trust (3), Mental Health (3), and Children and Families (3), but lower in Jobs and Workforce (48), Inequality (49), and Environment (50). California also outperformed its western neighbors in 3 of the 14 topics and improved over time on 9 of 31 measures.”

Although California political figures, most notably Newsom, like to portray the state as a leader in socioeconomic justice and environmental protection, it ranks at or near the bottom on both issues. It also ranks near the bottom in educational attainment, volunteerism and freedom of the press.

Texas, one of the states often compared to California, generally fares better on issues where California lags, such as freedom of the press. However, it also has some obvious drawbacks, such as environment and voter participation.

One of the biggest differences is residents’ satisfaction with their current lives. Texas ranks near the top, while California is well below the median in this category.

The second study comes from Berkeley Initiative on Economy and Society, project at UC Berkeley supported by the Hewlett Foundation. Issued two in a series of reports on the high cost of living in California.

The first report stated that “California is less affordable and poorer than the strength of our economy should suggest” and “systematically more expensive” than other places with similar median incomes.

“Inaffordability does not simply create and exacerbate poverty,” it notes. “People are voting against California’s high costs with their feet. Throughout its history, California has been a magnet for out-of-state migrants seeking opportunity. Not anymore.

“Since the 2008 recession, California has experienced sustained inward migration. The trend has accelerated in recent years. Between 2020 and 2024, California had the second-lowest net migration to/from other states as a percentage of the population, trailing only New York. We present evidence showing that inaccessibility is the primary cause of California’s migration inversion.”

The project’s second report examines the causes of unaffordability, stating, “In our analysis, the primary driver of high costs in California is a political regime that makes it difficult to build the physical infrastructure we need to provide housing, energy, water and other essentials.

“Growth restrictions lead to unaffordability primarily by reducing housing supply and increasing housing costs. They also contribute to high energy and transportation costs by raising the price of critical public infrastructure – creating downstream costs for consumers.”

The report also lists a series of steps California can take to attack unaffordability, including covering factory-built housing and innovative financing models to drive the affordable housing the state needs.

This is just a brief overview of what the two research projects have to say about California’s problems compared to other states. If the next governor and lawmakers are serious about improving the state, they need to dive into the details.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.