For many years, Californians have heard "experts" (read: folks who figure to profit by touting the theory) claim their state suffers from a lousy business climate and is steadily losing middle class population and jobs to other states, especially arch-rival Texas.
The current national secretary of Energy, Rick Perry, even made radio and television commercials while governor of Texas touting the advantages of moving there. And there have been moves: a major one is the ongoing shift of Toyota’s U.S. headquarters from Torrance to Plano, Tex., outside Dallas.
Through all the rhetoric, some of it orchestrated by corporate move specialists plainly out to fatten their own wallets, California continues growing, with population now above 39 million, more than the entire country of Canada and 12 million more than fast-growing Texas.
Yes, plenty of youthful, educated Californians feel compelled to move away by the high prices of real estate in the state’s largest urban areas. And some corporations try to accommodate those moves by establishing satellite facilities in places like Boise and Tucson, where homes can be bought for less than one-third the price of comparable real estate in coastal California counties.
But there’s a reason California keeps growing despite it all: the state’s economy is fundamentally healthy. A new, comprehensive study from the business-oriented personal finance WalletHub website (https://wallethub.com/edu/states-with-the-best-economies/21697/) finds this state’s economy is not only strong, but is the second-strongest in America, trailing only Washington state.
WalletHub ranks California in the top five among states in startup activity, percentage of jobs in high-tech industries and patents granted to individuals. Texas, meanwhile, ranks 20th overall and is not among the top five states in any significant category.
This comes despite the fact that Texas and other states not in the top five overall often offer businesses discounted land, plus years of tax benefits, in exchange for moving.
What gives California its top-flight rating? The state is 7th in the U.S. in growth of gross domestic production, 15th in exports per capita despite its humongous population, tenth in median household income despite its host of low-income undocumented immigrants, eighth in upswing of nonfarm payrolls and last year had the seventh-largest state budget surplus per capita.
None of this shuts up the critics. And no one can seem to stop Texans from trying to denigrate California. While he’s no Rick Perry in the department of foot-in-mouth rhetoric, current Texas Gov. Greg Abbott recently disparaged his own state capital of Austin by saying “I will not allow Austin, Texas, to California-ize the Lone Star State.” Of course, Austin has been trying to do that to itself for years, creating a mini version of Silicon Valley, but with lower real estate prices.
The oil and natural gas price bust, fueled in part by a fracking-induced surplus and also by California’s pioneering and widely-emulated emphasis on renewable energy, has had plenty of deleterious effects on Texas.
For example, average wages in California – higher than those in Texas for decades – grew much faster the last two years here than there. The California economy overall outgrew Texas’ last year by 2.9 percent to 0.4 percent, reported the Houston Chronicle.
This doesn’t make California perfect. For example, the state’s real poverty rate (based on average income compared to basic expenses) is the nation’s highest, chiefly because of high rents and home prices. But that statistic also is flawed: When four-bedroom coastal homes routinely sell for $2 million and up, they tend to skew the average real estate price that’s part of the “real poverty” calculation. The same for rents when three-bedroom houses in coastal cities often go for $6,000 per month or more.
The upshot is that the folks Gov. Jerry Brown likes to call “declinists” have been exaggerating California’s impending demise for many years. Reality is the same as it’s been for most of the last century and a half: California outstrips the rest of America in almost every economic area.