The much-discussed ‘California exodus’ isn’t real, study finds

The idea of a “California exodus” that has seen waves of residents abandon the state has been steadily gaining steam. But new research has revealed it appears to be more myth than reality.

Researchers from a consortium of universities – including the Berkeley, UCLA, Cornell and Stanford – teamed up in the fall of 2020 to study California’s population. Their finding, released this week, determined there was “no evidence of an abnormal increase in residents planning to move out of the state”.

The consortium assessed information from various sources to review whether there was an exodus. Data included public opinion and US census figures, home ownership rates, consumer credit histories and venture capital investments.

“Sliced and diced by geography, race, income and other demographic factors, our efforts have produced a clearer picture of who perceives California as the Golden state versus a failed state,” said John A Pérez, the University of California regent, in a statement on the research. “The empirical data will be, at once, disappointing to those who want to write California’s obituary, as well as a call to action for policymakers to address the challenges that have caused some to lose faith in the California dream.”

Discussion of the flight from California has often focused on the state’s high tax rate, its expensive housing and high cost of living, and quality-of-life concerns such as homelessness, particularly in more conservative circles. Elon Musk decamped to Texas in 2020, saying California was taking its status “for granted”.

But more than 3,000 Californians surveyed said at a nearly 2-to-1 margin that they thought the state was a great place to reside and raise a family. “The majority of Californians still believe in the ‘California dream’,” researchers said.

They did find that belief in the California dream was varied with demographics, economic status, and political affiliations. According to the researchers, Spanish speakers, Latinos, African Americans, Asian Americans and younger California residents were more “optimistic”. On the other hand, middle-class residents, white respondents, older Californians and Republicans were more “pessimistic”.

Researchers also found that the percentage of California residents who planned to leave had been “static” in the past two years. Twenty-three per cent of California voters said that they were seriously considering leaving the state, a slight dip from the 24% reporting this view in 2019.

The research did find that net departures from California’s Bay Area increased during the pandemic, especially in San Francisco. There, exits in the second through fourth quarters of 2020 were 31% higher compared with the same period of 2019, while new arrivals were 21% lower.

Researchers pointed out that people who left San Francisco typically had not moved far, with many favoring Sierra-area counties and most staying in California. There had also been a “pronounced decrease” in new moves to the state’s urban centers.

“In short, to date the pandemic has not so much propelled people out of California as it has shifted them around within it,” researchers said. “The absence of a pronounced exodus from the state should come as a relief to people concerned about effects on state tax revenues.”

It also doesn’t seem like moneyed Californians are decamping en masse, nor are big investors. “There is no evidence of ‘millionaire flight’ from California,” researchers said, pointing out that “California’s economy attracts as much venture capital as all other states combined”.

The analysis showed that California’s portion of venture capital money was 48%, down a bit but in keeping with typical year-to-year changes, but the state continued to eclipse its oft-discussed competitors.

From 1995 to 2005, New York and Texas each got approximately 6% of all US venture capital funding. New York’s share doubled to 12% by 2020, while Texas’s portion dropped to 3%.

During the first quarter of 2021, New York had 15% of US venture capital money, Texas had 2%, and Florida landed 2%.