High Housing Costs Push Hundreds of Thousands of Low, Middle-Income Workers out of California

AP Photo/Nick Ut
AP Photo/Nick Ut
Los Angeles, CA

High housing costs across the Golden State are causing hundreds of thousands of low and middle-income workers to pack up and leave for other states.

According to U.S. Census data examined by the Los Angeles Times, roughly 75 percent of those who have left California for other states since 2007 earn less than $50,000 a year. By contrast, about 35 percent of working-age people moving to California have annual incomes above $50,000.

“It’s getting harder and harder for the middle-class Californian to buy a home,” Beacon Economics director of economic research Jordan Levine explained to the Times. “People just keep looking for ways to maximize that residential dollar. That attracts people to inland areas of the state and to other states.”

U.S. Census data reveals that people have been leaving the state for other parts of the country since the 1990s. However, people with lower annual incomes have been most adversely affected by high housing prices. According to the data, just 15,403 California residents making between $40,000 and $49,999 moved to other states since 2007. For those making between $30,000 and $39,999, that number jumps to 22,754 people. The number of people moving out more than doubles, to 46,318, for those making between $20,000 and $29,999.

“Rents are going up very rapidly, as well as housing prices,” Public Policy Institute of California senior fellow and migration expert Hans Johnson told the Times. “The economy is booming, but how do you supply housing for the workers who aren’t commanding high incomes yet are still in demand?”

More than half of the country’s top 50 most expensive real estate markets are in California, as well as nine in the top 10, notes the paper, referring to Coldwell Banker’s Home Listing Report. While the influx of workers with high incomes helps contribute to the state’s tax base, California’s economy will need to find a way to attract middle-class workers to fill critical jobs, like those in healthcare.

“For the people who can afford to go there, get the jobs and do well, the cost of living is not as much a problem,” Brookings Institute senior fellow William Frey told the Times. “It’s just difficult to live there in the middle.”

Frey explained that the trend of lower and middle-class workers leaving California can be traced back at least as far as the 1980s. Most of those leaving have settled in Western states like Texas, Nevada, Arizona, Washington, and Oregon.

“For a while now, the new frontier has not been, ‘Go west, young man,'” Frey told the paper. “It’s ‘Go east,’ if you’re in California.”