California has almost achieved zero population growth. According to the California Department of Finance (DOF), California’s population has stagnated at sub-one-percent rates for an unprecedented seven consecutive years. The slow growth was a result of negative domestic migration, declining international migration, and declining births. Unless we fix our education system and create opportunities for everyone, California is entering a death spiral.
Negative domestic migration results when more people move from California to other states than move to California from other states. Like the dying canary in the coal mine, it’s the first sign of trouble, and it’s a clear indication of limited opportunity in California. It’s not a new phenomenon. The U.S. Census shows that California has seen negative domestic migration in each of the past 20 years, while the DOF shows negative domestic migration in 18 of the past 20 years.
Declining international migration is also a sign of economic decline. International migration to California over the past three years has been lower in absolute numbers than at any time over the past 20 years, years that included the catastrophic-for-California 1990’s recession.
Weak international migration and negative domestic migration resulted in negative total California migration for the past seven years. That’s a change. We have data going back to 1905, and the only previous episode of negative migration was four consecutive years in the 1990s.
The birth data are discouraging too. California had fewer births per thousand population last year than in any year since the mid 1930s. The declining birth rate reflects an aging population, the result of young families leaving the state.
Zero population growth is fashionable, but no one considers the risks or the costs of zero population growth.
The big risk is that population declines instead of stabilizing, setting up a vicious cycle of economic decline. Countries in this cycle, such as Russia, are desperate to halt the decline. Russia pays its citizens to have children.
There might be a prosperous zero-population-growth equilibrium, but the transition to zero population growth imposes a burden on the transition generation. This is because an aging population is unavoidable in the transition.
As the population ages, increasing numbers of retirees are supported by fewer workers. The transition generation has lower consumption than the preceding generation and the following generation.
The families leaving California are the heart of the community and the workforce – upwardly mobile young families. As the middle disappears, the population becomes bi-model. There is an older, wealthier population and a younger, poorer population.
The process becomes self-reinforcing. Employers leave. The tax base deteriorates. School quality deteriorates. The pressure for upwardly mobile families to move away increases.
Economic decline doesn’t manifest itself in the same way everywhere. Coastal California, for example, is different than in the rust belt. There is no reason to live in the rust belt if you don’t have a job in the rust belt. Home prices and rents decline.
Coastal California, by contrast, is a great place to live if you don’t have a job, or if you telecommute to a remote job. Consequently, Coastal California’s housing markets are national, perhaps global. Here, home prices don’t decline with a declining economy. Without affordable housing, poor people crowd into existing single family homes, creating all the problems associated with high-density populations. You don’t see this poverty.
Two populations, one wealthy and one poor, living side-by-side with limited upward mobility for the poorer population is a prescription for problems, especially if there is a racial component. Opportunity along with quality education for everyone creates upward mobility and solves those problems. California can provide that opportunity and education, but those are topics for another day.
This previously appeared in the Orange County Register