California Is Doing Fine, Thank You Very Much

Whenever I see an op-ed insisting that California is a total, um, shithole of a state, I always check the credit line at the bottom. Four times out of five it comes from City Journal, often by professional California scold Kerry Jackson. Sure enough, that’s where today’s piece in the LA Times is from:

Guess which state has the highest poverty rate in the country? Not Mississippi, New Mexico, or West Virginia, but California, where nearly one out of five residents is poor. That’s according to the Census Bureau’s Supplemental Poverty Measure, which factors in the cost of housing, food, utilities and clothing, and which includes noncash government assistance as a form of income.

Ah. The SPM. There’s an obvious reason that California performs poorly on the SPM, but Jackson instead blames it on his usual tired litany of bugaboos: generous welfare policies, lack of pro-work welfare reform, self-interested bureaucracies that want to keep the welfare rolls high,¹ restrictive land-use regulations, out-of-control environmental rules, high minimum wage, and high-speed rail.

I’m not sure why the LA Times bothers printing this dreck, but let’s take a look at some basic measures of how California is doing. Jackson is careful not to use the standard poverty rate, and it’s pretty obvious why that is:

California ranks 21st. Nothing out of the ordinary there. But what about our lack of welfare reform? Does that mean we have lots of people idling away on the public dime? Not really. We do have an unemployment rate a smidge worse than it should be, but our labor force participation rate is dead average:

California ranks 20th. West Virginia, Mississippi, and New Mexico are way behind us. How about our massive state bureacracy?

California is the fifth lowest. So if absolute poverty is average; labor force participation is average; and the state bureaucracy is under control; then whatever could put California at the top of the SPM poverty ranking?

Oh, right: housing. California has the fourth-highest housing prices in the nation, and the SPM incorporates housing prices in its estimates. Are California’s high housing prices due to restrictive land-use regulation? Sure, that’s some of it. But I don’t know of any evidence that California is wildly out of the ordinary on this measure, and at this point I’m too tired to look for it. If you want to argue that California should have looser land-use regulations, go for it.² I won’t argue.

There’s a whole cottage industry on the right dedicated to the proposition that California is a hellhole. Why? Because California is the most liberal state in the nation, and the existence of a high-tax, high-service state that nonetheless has a great economy is an affront to their principles. And yet, California’s economy is doing fine:

We rank 8th in GDP per capita—and that’s without an oil boom but with a high level of illegal immigration. What’s more, California’s GDP per capita has grown faster than national GDP over the past two decades:

In 1997, California’s GDP per capita was only 3 percent higher than the country as a whole. Today, it’s 13 percent higher. This is not the sign of a sputtering economy that’s choked by bureaucracy and environmental regulations.

God knows California has its problems, and obviously our location and weather allow us to attract high-value workers despite those problems. Nonetheless, the plain fact is that California has high taxes, good services, vigorous environmental regulations, and still has a strong economy. All the cherry picking in the world won’t change that.

But yes, we also have very high housing prices, and that hurts the poor. I don’t think anyone disputes that.

¹I’m not making this up. Here’s what Jackson says: “With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.”

²Just don’t embarrass yourself looking for egregious state regulations. Most of the relevant land-use rules are at the city and county level.

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