Poverty, Wealth and California’s Migration Flows

By Brian Brennan

The primary takeaway from the immigration data in the 2017 Silicon Valley Competitiveness & Innovation Report – released last week at Microsoft in Mountain View – is that people keep coming to the Valley.  Despite demoralizing commutes and onerous housing prices, there is a steady stream of newcomers from abroad – nearly 2,800 a month in 2015.

The domestic migration dynamics between Silicon Valley and the rest of the United States are more complicated.  Net domestic migration to the Valley is negative (-832 in 2015), but that number itself masks a larger narrative that is revealed in a report earlier this week from the Sacramento Bee about California’s migration patterns – two narratives, in fact.

The first is about geography:  Domestic migration to California between 2000 and 2015 was driven by movement from states east of the Mississippi – primarily the Mid-Atlantic states and New England, as well as Michigan, Florida, Illinois and Alabama.  Those moving away from California over that same period tended to stay in the west, heading in largest numbers to Texas (155,343), with Oregon, Nevada and Arizona not far behind.

The second narrative involves income. The Bee’s data reveal that the poor are leaving California while those with means are drawn to the state:

All told, California lost about 260,000 economically disadvantaged residents to the 10 states with the lowest cost of living (from 2000 to 2015), compared to a net gain of about 40,000 from the 10 states (other than California) with the highest cost of living.

These dynamics have consequences.  They mean a more socioeconomically segregated region.  They mean a hollowing-out of a middle and working classes that are essential to any community.  And they mean additional pressure on even successful companies to consider growing outside of California.

They are also not inevitable.  They are driven by many things, not least policy constraints on housing supply.  Our policymakers are facing many pressing challenges, but when Silicon Valley’s employment rises nearly 25% and population rises 6.4%, as it did between 2010 and 2015, while housing stock increases by only 2.6%, the outcomes are predictable:  an elite, segregated region with an unbalanced economy that drives too many away.

 

Dr. Brian Brennan is Senior Vice President at the Silicon Valley Leadership Group.