California: Decline of the Golden State

Reno Gazette Journal January 17, 2021

Just before Christmas, the U.S Census Bureau released the July 1, 2020 estimates of total and voting age population. For the first time since 1900, California will see an annual population decline, as the state’s population will drop by an estimated 70,000 people. Based on this estimate, for the first time in history, California is expected to lose a Congressional seat to reapportionment. Reapportionment will take place in 2021 and will be used in elections for the next decade.

Simultaneous to the population decline and the potential loss of a Congressional seat, several corporations and tech titans have announced their moves out of California and into other states. Last year Charles Schwab announced it is relocating its corporate headquarters to the Dallas region from San Francisco. Apple is building a new campus in Austin. Facebook this fall bought REI’s headquarters outside of Seattle. Oracle and Hewlett Packard Enterprise recently announced relocations to Texas. Elon Musk, the CEO of Tesla and a handful of other companies, and who was recently crowned the richest man in the world pulling ahead of Amazon’s Jeff Bezos, has moved his residence from California to Texas.

The declines reported thus far barely scratch the surface. As we are all aware, disruptions by COVID will likely result in some fundamental and permanent changes. For instance, remote work, which used to be minimally deployed by global corporations like Microsoft and Apple out of necessity, has now gone mainstream with much smaller companies, allowing workers to work from home on a permanent basis mostly by dialing into meetings using Zoom, Slack and Teams. This will further exacerbate California’s population decline as more knowledge workers currently based in California can now work from other states.

A decline in population coupled with exodus by corporations, wealthy individuals, and knowledge workers (who are typically high earners) may seem trivial until one starts digging deeper. God graced California with beautiful weather, sun drenched white sand beaches and gorgeous redwood forests. This natural beauty and welcoming temperatures year-round brought fresh immigrants and transplants from other states alike to California. Icons of innovation like Hewlett Packard (which was started by their namesakes in a rented garage) and Palo Alto Research Center (PARC) in decades past laid the foundation upon which more recent corporations like Apple, Oracle, Facebook and Google built their empires. While natural beauty brought in the initial tech rush to California, the massive ecosystem made it the world capital of innovation. This ecosystem meant that if you work for Google, you can easily jump ship to Apple (if you like working in a large corporation), or at a startup if you so desire, without having to uproot your family and move to another part of the country. Now, fissures are forming in this ecosystem as more companies, great entrepreneurs and knowledge workers migrate to other states.

One final point: California has long been the envy of the world. Not too long ago, this state had the best roads, bridges and dams. God’s gift of nature to California was only enhanced by man’s work. If you are a marathon runner, you want to be in Kenya competing with the best long-distance runners. If you a tech geek, you wanted to be in the Silicon Valley. This massive advantage that California built over time which attracted and retained the best in technology workers is slowly dwindling. As this trend continues, it will likely exacerbate the other issues which are currently beneath the surface. More to come on this topic in the near future.