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California’s Population is Barely Budging, But Why?

Why is the Golden State’s population growth flattening?

April 17, 2020 Rachel B. Levin

California’s famously sunny climate and laidback lifestyle have drawn people to the state for generations. With plentiful jobs in diverse industries from tech to entertainment, it’s no surprise that people from all over the world hope to live out the California dream.

“California has always been a magnet for transplants,” says Dowell Myers, a professor at the USC Price School of Public Policy and director of the Population Dynamics Research Group. Myers has studied the demographics of the Golden State for decades. “Since the days of the Gold Rush, everybody came from somewhere else.”

But that may be changing. California remains the most populous state in the nation with nearly 40 million residents, but the population explosion that it experienced in the 20th century has slowed to a crawl. Data released last May by the California Department of Finance revealed that, in 2018, California’s population growth rate fell to 0.47% — the slowest growth recorded since data collection began in 1900.

While immigration from Asian countries has increased, the influx from Latin America has decreased. “The numbers crossing the [Mexican] border are net zero,” he says. “We’re not getting domestic migrants [from other states] either.”

Why the loss in popularity? “It’s evidence of the housing shortage,” Myers says. Or simply put, it’s too expensive to live here.

California’s Population Growth Stalls

California’s anemic housing supply has driven up rents and home prices sharply since the Great Recession. While highly educated, affluent individuals can still enter the housing market, soaring costs are “choking off the workers that [we] need to support the whole economy.” He estimates that California must add 2.8 million new housing units by 2025 to keep its workforce robust. But the state isn’t on track to meet that goal. “We need to build 350,000 units a year by my calculations,” he says. Right now, that number hovers closer to 110,000.

Another reason for decelerating population growth is that 18,000 fewer California babies were born in 2018 than in 2017. The declining birth rate will ultimately translate into fewer homegrown workers. And since California can’t rely on newcomers to close the gap, the state’s supply of workers may fall short. With fewer children in California, they become an increasingly precious commodity.

“The big policy implication is you have to double your investment so that every kid has twice the capacity to learn and contribute to the economy,” he says. The state simply can’t afford to have children fall behind, especially in underserved school districts. “It’s time to finally get serious about social equity,” Myers says, and education is one key to safeguard California’s future workforce.

Despite the challenges ahead, Myers sees a silver lining in the state’s sluggish population growth. Back in 2007, the Department of Finance projected the populace would swell to 50 million by 2032, but more recent projections place that benchmark in 2055.

That gives California lots of time to digest its previous growth, he says, and to prepare for the future.