The “California Miracle” Economy Is a Fantasy

EconomyDemocrats and their MSM allies have been touting California’s “miracle comeback” from the recession. They love to reference 2015 statistics – the SINGLE year when CA did quite well compared to the other states. But as we’ll see below, three things are apparent:

1. 2015 was an aberration.

2. Since 2105, CA has slipped back into its moribund economic performance that has become the norm in the Golden State.

3. By just about any metric, CA is doing less well than the majority of the other states. Too often a LOT less well.

California’s unemployment rate (September, 2018) has improved significantly this year. Yet we are now tied for 32nd – with a 4.1% unemployment rate. The national unemployment rate is 3.7%.  The CA unemployment rate is 12.5% higher than the average of the other 49 states.

It gets worse. Using the lagging yet arguably more accurate U-6 measure of unemployment (includes involuntary part-time workers), CA is the 5th worst – 9.2% vs. the national rate of 8.1%. The national U-6 not including CA is 8.0%, making CA’s U-6 15.7% higher than other states. Remember: The federal standard used to count a worker as “employed” is working ONE hour per week. CA is indeed the “gig economy.”

Another factor to consider: This past year the number of Californians in the work force (employed and unemployed) remained stagnant – essentially a zero net increase in our Golden State pool of workers. Meanwhile the national work pool grew 0.5%. With no increase in workers, our CA unemployment improvement appears better than it really is. If our work pool had grown at the national rate, we’d have a considerably higher unemployment rate.

Yes, the number of California jobs has grown these past 12 months.  But the average job growth in the other 49 states is more than TRIPLE the rate of California’s jobs growth.

But wait – California has the 5th largest economy in the world! Aren’t we doing great compared to the other states? Short answer: no.

Longer answer: CA is a huge state with a HUGE population — over 38%% more people than the second most populous state of Texas. And CA has an uber-HIGH cost of living. Based just on GDP, CA does indeed rank as the 5th largest economy in the world. But adjusted for population (per capita) and cost of living (using the “Missouri” COL index in the URL below), CA ranks lower than all but 13 U.S. states.

Stated differently, if one took the GDP of an aggregation of randomly selected states whose total population roughly equaled California’s 40,000,00 people, and adjusted for those states’ cost of living, then they would likely have the 5th largest economy in the world — if not higher!

Liberals love to denigrate Texas, a “backwater state” which supposedly can’t keep up with the California juggernaut. Sadly for progressives, facts prove them wrong.

In the report below, there’s a comparison of job growth by state from September 2017 to September 2018. California jobs grew 81,100. But TEXAS jobs grew 251,500. Soooo, even though CA has a population that’s 38.6% larger than Texas, the Lone Star State created over TRIPLE the number of jobs that CA produced. As a percent of population, CA ranks a dismal 37th in the percent of job growth compared to the other states. And BTW, the population of Texas is growing over TWICE as fast as CA – and has been for years.

Another disheartening fact: Since the start of the recession (September 2007), the predominant CA job growth above pre-recession levels has been in low paying occupations. The top three dominating occupations – with the job growth in excess of 2007 levels, and the average salary:

  • Food Service *** 350,000 *** $22,000
  • Health Care *** 340,000 *** $66,300
  • Social Assistance *** 305,000 *** $19,100

Moreover, four occupations have failed to gain back all the jobs lost since 2007. All four are in high paying industries:

  • Logging and mining: $116,300
  • Construction: $67,700
  • Finance and Insurance: $123,100
  • Manufacturing (worst hit): $92,900

 

Of course, no discussion of California’s economy is complete without considering California’s sky-high cost of living – and the resulting hardship on the poor – the folks that the Democrats supposedly care so passionately about. California’s real (“supplemental”) 2017 poverty rate (the new Census Bureau standard, adjusted for the COL) is still easily the worst in the nation at 19.0%. We are 43.9% higher than the average for the other 49 states. Texas is 14.7%. The CA poverty rate is 34.6% higher than Texas.

Here’s a thought: The median Texas household income is 13.5% less than CA. But adjusted for COL, Texas’ 2015 median household income is 29.3% more than CA.

If the progressives still feel compelled to tout California, perhaps they should boast about the Golden State’s homeless rate – easily tops on the nation. Maybe they DO love the poor – and that’s why they produce so many of ’em in our “Workers’ Paradise”!

To see a more periodically updated, annotated set of facts comparing CA with the other states – using 35 criteria – check out my dreary online fact sheet.