Manhattanization of California Advances

An aerial image shows vehicles driving across the 6th Street Viaduct toward the downtown Los Angeles skyline in Los Angeles on Feb. 8, 2023. Patrick T. Fallon/AFP via Getty Images

Commentary

A concept I’ve written about for years is what I call the Manhattanization of California. No one moves to Manhattan expecting it to be cheap and quiet, with balmy weather all year round. People go for the excitement, Wall Street, Broadway, the museums, and the restaurants. They put up with the other things, which even add to the city’s vibe. As Frank Sinatra sang in “New York, New York,” “If you can make it there, you can make it anywhere.”

The city self-sorts, with the wealthy living in exclusive apartments and condos and everybody else squeaking by as best they can. It’s obvious the taxes are high and the services spotty. In the past decade, the crime problem even has returned. But people go there anyway. I’ve known a couple of multimillionaires in California who kept condos in Manhattan so they could fly there every few months and enjoy the city.

California used to be different. Obviously, the weather is much better in the coastal areas, which is where most people live. But until about 2013, it still was a place where the middle class could “make it.” It was more expensive than most areas of the country, but the beautiful environment was worth it. The higher expense still was tolerable, especially as wages also were 15 percent above the national average. Heat and air conditioning costs were low because of the weather.

But the past decade has pushed expenses, especially for housing and taxes, into prohibitive levels for most people who didn’t buy a home before the 2013 cutoff. Crime and homelessness have become worse. School academic standards have decayed along with the buildings.

Of course, like the Big Apple, the Golden State still saps rich people who have stayed. Many have left. Now we have the subset, “millionaires who still want to live here despite the cost.” Some have to stay because of their jobs. Silicon Valley remains the center of world technology, despite many defections to Austin, Texas, Taiwan, South Korea, communist China (TikTok), and other areas. Hollywood produces many movies in Georgia, Canada, and other cheaper places. But most studio headquarters remain here.

There also are California-specific businesses, such as surfboard shops. Tennessee’s lack of a state income tax isn’t of much use when your customers can’t hang ten. Disneyland, Knotts Berry Farm, and other tourist destinations always will be around, providing some jobs.

Thousands of people gather for the opening day of the U.S. Open of Surfing in Huntington Beach, Calif., on July 30, 2022. John Fredricks/The Epoch Times

Poor people with Section 8 housing and food stamps also benefit from staying here. Often, moving to another state means the loss of those benefits. But the lines here are so long that it takes about seven years to get Section 8 after applying. And the window to apply also is narrow. Orange County didn’t even allow new applicants for more than 10 years until September 2023.

Let’s do some comparisons. Los Angeles County and New York City are roughly equivalent. We can use all of New York City, not just Manhattan, because even such once working-class areas as Queens and the Bronx have become really expensive—Manhattanized. As a control, we can use Wayne County, Michigan, where I grew up. Although Detroit isn’t in great shape, the suburbs still are nice. (For rentals, there was no data on Wayne County. So I just used Detroit.)

Population 2023

• Los Angeles County: 9.5 million
• New York City: 8.5 million
• Wayne County: 1.8 million

Average home prices on Zillow.com

• Los Angeles County: $839,409
• New York City: $734,336
• Wayne County: $156,439

Median monthly rental prices on Zillow.com

• Los Angeles: $2,795
• New York City: $3,385
• Detroit: $1,200

Top income tax rates

• Los Angeles County: 14.4 percent
• New York City: 14.77 percent (10.9 percent state plus 3.867 percent city)
• Wayne County: 4.25 percent (Detroit adds 2.4 percent; total there: 6.65 percent)

Sales tax rates

• Los Angeles County: 10.25 percent (most cities)
• New York City: 8.875 percent
• Wayne County: 6 percent

Average low temperature in January

• Los Angeles County: 49
• New York City: 27
• Detroit: 21

Price for a gallon of gasoline from the Auto Club

• Los Angeles County: $4.65
• New York City: $3.33
• Wayne County: $2.95

The above numbers show how Los Angeles County and New York City are now close together on all data points except the weather and gasoline. Taxes and housing are about three times the cost in Wayne County. Los Angeles County, and much of the rest of California, have been Manhattanized.

Conclusion: No Going Back

The Manhattanization of California is part of the general gentrification going on all over the country. Those with money always have congregated. But because of the internet, more people than ever can live where they want to, working from home. Factories once meant the owners, executives, engineers, and workers had to live nearby, albeit often in separate areas. But the modern economy lets those who are well off live far from where their productive capital might be invested.

California still enjoys the world’s best climate and numerous amenities. So people who demand that, and are willing to pay the price, will keep coming here—just as they still go to Manhattan.

But for the middle class, especially those with kids, the state is just too expensive. Sociologists call it “sorting.” There’s no chance California’s home prices and taxes will become more reasonable. The teachers’ unions will continue being the main influence on schools, putting a brake on innovation to improve quality. The middle-class paradise of surf and sun is long gone. California has been Manhattanized.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.