As the so-called exodus from California continues, the state is now losing both higher-income and middle-income households, according to a study published in March by the nonpartisan research group Public Policy Institute of California.
During the height of the COVID-19 pandemic, there was a decline in higher-earning families relocating to California, the report found. According to the study, there was a significant rise in the number of wealthy households leaving the state to nearly 220,000 by 2021 from about 150,000 in 2019.
The report also states that California is losing the demographic historically known for in-migration to California: college graduates.
The change in all three demographics is likely due to the ability to work remotely, according to the study. Out of the recent wealthy Californians who left the state, more than half were working from home.
The report cites recent data from surveys conducted by the Census Bureau—which measured how the COVID-19 pandemic has impacted households across the United States socially and economically.
It found that approximately two-thirds of the nearly 3 million Californians who do full-time remote work for five or more days per week hold a bachelor’s degree or higher.
“If people aren’t tied to an office, when they can work from anywhere, many are going to choose to live where their dollars go further than they do in California,” Kerry Jackson, a research fellow at the Pacific Research Institute’s Center for California Reform—a think tank for free-market policies—told The Epoch Times.
According to Jackson, California has become simply too expensive for just about everyone.
“The cost of living here is a burden, even for many who are considered wealthy,” he said. “It starts with housing. California’s punitive taxes also make moving out appealing. Remote work is an escape hatch.”
California has one of the highest costs of living in the country, leading the nation with the highest income tax of 13.3 percent. The state also has an 8.84 percent tax rate for businesses, according to the California Franchise Tax Board.
Hundreds of businesses since 2020 have already left the state for more business-friendly locations, such as Texas, Tennessee, North Carolina, Arizona, and Florida. Some of these businesses include top names, such as Uber, Airbnb, Oracle, Yelp, and Tesla.
If the trend of businesses leaving continues, Jackson said that it will “severely hurt both the economy and state tax revenue” in the years to come.
“The upper and middle classes invest and create jobs, and the state’s income tax system relies heavily on them. They can still do both in California from outside the state, but why would they?” he said.
Terry Gilliam, founder of the Facebook group “Leaving California,” which has almost 100,000 members, told The Epoch Times that the policy institute’s findings are reflective of what he hears from members in his group who have fled the state.
“The vast majority of our members are between 35 and 54 years of age, which for most people, is their prime earning years,” Gilliam said. “Many businesses leaving the state are taking their highly paid executives and workers with them.”
High housing costs are a significant concern for 34 percent of Californians, according to another report by the policy institute published recently.
Conservatives are also more likely to consider leaving California than liberals, per another report by the policy institute from October 2022.
Housing in California is double the national average, with a typical single-family home priced at $718,687, according to the real estate website Zillow.
About half of the people who leave California purchase a new home in their new state, while only one-third of those who move to California buy a new home, the policy institute stated in its March report.
“California just isn’t investable anymore for families or businesses, and the numbers are really showing it,” Sheridan Swanson, a researcher studying the state’s out-migration trends at the California Policy Center, a public policy nonprofit group based in Tustin, California.
“When we see an increase of out-migration, it’s probably not that people all of a sudden were spurred to it,” she said. “It’s that they had been thinking about it for a little while and said, ‘All right, this is the time, we have to pull the trigger.’”
Nearly 700,000 Californians left the state between April 2020 and July 2022, according to U.S. Census data.
