INTRO: Eversince the Gold Rush started in 1848,
California has been the land of dreams. Whether you were an immigrant looking for a better life
or an aspiring entrepreneur that wanted to hit it big, your best shot was in California. Over time,
this led to California housing some of the biggest companies in the world from Wells Fargo and Disney
to Apple and Google. And consequently, we also saw the wealthiest people in the world
reside in fancy mansions across California. Eventually, California’s economy became
so large that it started dwarfing countries. Right now, California’s GDP stands at $3.356
trillion. This makes California the 5th largest economy in the world. But, despite this title,
it hasn’t been nearly that great for most Californian citizens for quite some time.
In fact, most Californians are struggling to make ends meet due to the rapidly growing wealth
inequality in the state. Things have gotten so bad that California actually become the state with the
highest poverty level in the US. This isn’t to say that Californians aren’t making money per se,
but rather that the cost of living in the state is so high that even decent income earners fall
below the poverty line. According to the US Census Bureau, a whopping 15.4% of Californians
are living in poverty. And I’m sure there’s loads of people that are just above the poverty line
that don’t have it much better. So, what happened to the Golden State?
OWN NOTHING & BE HAPPY:
With sky high inflation and rapidly rising prices across the country, we’ve started to hear this
phrase more and more: You will own nothing and be happy. While this may sound a bit cynical and
pessimistic, this is exactly what’s been happening in California for many decades. Californians have
slowly been priced out of one thing after the other which has forced them to rent or give up
the given item. Likely the best example of this is housing. Much of the US has seen a
significant rise in housing prices eversince the pandemic started. This has led many to hope for a
housing market crash so that they can finally buy for a reasonable price. But, even if there was a
housing crash, it wouldn’t be much easier for Californians to buy a house. Here’s the thing,
the median sale price across the entire state is a whopping $843,000. Even if the housing market were
to crash 30%, the median sale price would stand at $600,000 which is still higher than median
sale price before the pandemic started. The median household income in California currently stands at
$78,000. This means that the average house costs over 10 times the average family’s annual income.
Even with a 30% crash, the average house would cost about 7.5 times the average income.
This has made home ownership completely unattainable for the average Californian family,
and if you’re a single person, you probably wouldn’t even consider a house. To make things
worse, it’s not like things are much better for renters. For families, renting a 3 bedroom house
will on average cost them $3,000 per month or $36,000 per year. That’s literally higher than
the median personal income in the US in 2020. It’s not just housing that’s crazy expensive either.
Basically every facet of daily life is significantly more expensive. Take gym memberships
for example. The national average for a gym membership is $58. Meanwhile, the average gym
membership in LA is $70. Similarly, the average haircut for women is $69 and the average haircut
for men is $45 in California. The national average is $44 for women and $28 for men. These insane
Californian prices carry over to clothing as well. The average pair of jeans cost $60 in California
while the national average is nearly half of that at $34. And I don’t even think we need to discuss
gas prices which currently stand at over $6 per gallon. Aside from getting screwed over from a
cost of living perspective, many Californians also get screwed over from a tax perspective as well.
It’s no secret that California has some hefty state income taxes which range from 1% to 12.3%.
By the time the average Californian pays their taxes and daily living expenses,
they’re left with virtually no money. This is why living paycheck to paycheck is extremely common
in California. In fact, the only state in which it’s even more common is Hawaii. Considering this,
its basically impossible for the average Californian to build any sort of wealth.
So, it’s quite ironic that most people are only now complaining that they are forced
to own nothing and be happy. Californians have already been experiencing this for a decade.
FLEEING WEALTH:
Aside from barely making ends meet right now, California is also posed to run into
an opportunity crisis within the coming decades. Here’s the thing, droves of wealthy companies and
individuals are ditching California. Tesla and Oracle, for example, have outright moved their
headquarters from California to Texas. Meanwhile, other companies haven’t quite moved their
headquarters, but they’re investing significant amounts of money outside California. Apple,
for instance, recently built a $1 billion campus in Austin. Historically, this was something that
companies were extremely reluctant to do because California simply had the best talent and the most
motivated people in the country. But, this is no longer true. For starters, the rest of the
country has caught up significantly thanks to the opportunities created by technology. And secondly,
many of the talented engineers and white collars workers in California have been fleeing the
state themselves. So, companies are no longer limited to recruiting primarily from California.
Aside from being able to recruit more diverse talent, companies are also able to significantly
reduce their payroll by moving to lower cost states. You see, given the insane living
expenses in California, companies also have to pay insane salaries to hire the best talent.
At Facebook, for example, software engineers at Facebook earn a minimum of $184,000
and this goes up to $1.61 million. This is the same case with Google and every other mega cap
company as well. By moving to states like Idaho and Texas, however, these same companies can
get away with paying 20 to 30% less for the same jobs. At first glance, it might sound like these
companies are taking advantage of tech workers from these states by paying them less, but this
isn’t the case either. You see, these discounted salaries stretch further in these low cost states
than the full salaries do in California, so it’s a win win scenario. Employees earn relatively more
while companies pay less. On top of this, many of these states are offering these companies
loads of incentives to move to Texas. For example, Texas offered Tesla up to an 80%
property tax rebate for 10 years if they expanded to Texas. So, it makes more sense than ever for
these companies to leave California. And as more of them make the decision to move, we’re slowly
gonna see opportunity leaving the state which will just make it even harder for Californians.
EASY TO BE HOMELESS:
On top of high living expenses and fleeing wealth, something else that has been heavily weighing down
on California is the ease of being homeless. Now, I’m not trying to say that being homeless is easy
because it’s obviously not. But, with that being said, California has the least severe consequences
for being homeless. They have loads of generous homeless programs and they even hand out money
to homeless people. This man in San Francisco, for example, is earning $620 per month by just living
on the streets. Of course, this is not enough money to live a royal life or anything, but
it’s also more than enough money to buy food and basic necessities. Now, many people would describe
this as a benefit, and it somewhat is. While many Californians aren’t exactly swimming in wealth,
they never have to worry about starving either. Worst case scenario, they can live on the streets
on checks from the government. But, at the same time, this is also kind of a negative
as well. If you’re able to carry on basic life by doing nothing, a good amount of people will
choose to do nothing. For example, take a listen to want this homeless man thinks.
And he’s not the only one who thinks like this. California’s homeless programs are so generous
that homeless people from other states immigrate to California to be homeless there instead.
Somehow, California has transitioned from being the dream destination for entrepreneurs to being
the dream destination for the homeless. Not only does this strain the resources of California,
but it also makes everyday life for Californians way harder. Due to the large number of homeless
people, it’s common to find human feces and drug needles across their cities. In fact, this issue
has become so prevalent that San Franciso pays people $184,000 per year to clean their sidewalks.
When you have to do this, you clearly have a problem. And I don’t know about you,
but I wouldn’t want to go to work or have my kids to go school in such a area. Leaving the
state would be one of the top priorities for anyone with any sort of financial stability.
And as these middle class, upper middle class, and high income families leave the state,
the state is simply driven further into the depths of poverty.
STATE OF CALIFORNIA:
Given the circumstances in California, I don’t think you’d be surprised to hear that their
population is on the decline, but it’s not as drastic as you might think. And this brings up
the question: Why do people choose to stay in California despite all these drawback? Well,
there’s a few reasons for this starting with wealth bubbles. Most of the celebrities and
billionaires who live in California live in an extremely niche portion of the state that is
filled with other wealthy individuals. So, they’re essentially able to avoid all of the poverty and
despair that average Californians face on a daily basis. But, what about the average Californian,
why do they choose to stay. Well, usually, the top answer is some sort of emotional connection
to the state. Maybe they were born and raised in California and their entire family lives there. Or
maybe, the person is heavily involved with outdoor activities and good weather along with beautiful
nature are top priorities. Aside from some sort of emotional connection with the state, many
people choose to stay in California or even move to California in order to minimize discrimination.
California is by far the most accepting place in the entire world whether we’re talking about
people of color or LGBT. So, people that are part of these communities are reluctant to leave for
obvious reasons. It should also be mentioned that California is a sanctuary state which means that
they have some of the loosest rules when it comes to illegal immigrants. In fact, California is home
to over 2 million unauthorized immigrants, and I don’t think these guys have any plans of moving
out anytime soon. Also, something else to note is that, there’s like loads of Californians who do
want to leave but their circumstances prevent it. For example, they might have a unique job that’s
only available in California or maybe they don’t have enough money to take the risk of completely
uprooting their lives and moving to another state. But, even with all these driving factors,
California’s population is still declining. So clearly, the motivation to leave is quite strong
for many. At the end of the day, California is by no means perfect. They have an extremely high cost
of living, high taxes, a massive homeless problem, and companies are fleeing as fast
as possible. All of these factors have led to California becoming the poorest state in America.
And from an objective perspective, it makes little sense to stay. But, for many, this is
not the only consideration. For them, California is their home and though it may not be perfect,
they would rather stick with California and try to fix the state than flee and watch the
state rot from affar. Would you guys stay in California? Comment that down below. Also,
drop a like if you hope that California can make a recovery for the sake of its people.
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