California, the Poverty-Stricken State

California has the highest poverty rate in the nation, after factoring in the cost of living. And just like the 19th century pioneers trailblazed west in search of a better life, dispossessed Californians are migrating east to, uh, do the same. Manifest Destiny!

For the last decade, California’s low-income residents have been leaving mostly for Texas, but also to neighbor states like Oregon, Nevada, and Arizona. At the same time, wealthier people move in from the east. From the Sacramento Bee:

The jobs with the biggest net loss to other states from 2005 through 2015 were cashiers, cooks, truck drivers, material movers, retail sales reps and customer service reps. Those jobs alone accounted for a net loss of 200,000 California workers.

The professions with the highest net gain from other states? Software developers and physicians.

Ordinarily, when salaries rise for jobs that see increased labor productivity, the salaries for surrounding jobs rise as well. Service and transportation-sector employers have to provide competitive wages, or all their workers will quit and go work at Google (see also: Baumol effect).

But wages outside of tech jobs aren’t keeping up. There’s such huge income disparity between the San Francisco Bay Area and the Central Valley that people in poorer parts of the state will commute for hours to take advantage of slightly better opportunities in the city. Then we end up with sad stories of Uber drivers who sleep in parking lots during the week, and return to their hometown 3 hours away on the weekends. Same with shuttle bus drivers for tech companies.

Central Valley: Farmland and poor people.

I wonder if we’ll eventually reach some sort of equilibrium where the low-wage laborers have all left for Texas, and the only people left in California are rich people and robots. Silicon Valley would love that.

One thought on “California, the Poverty-Stricken State

Leave a Reply