California exodus

The California exodus is the ongoing mass emigration of residents and businesses from California to other U.S. states or countries. The term was used as early as 2016 and saw a resurgence during the COVID-19 pandemic. Common reasons for residents leaving California include the high cost of living, crime, politics and traffic, as well as comparatively high tax levels and a complex regulatory environment for businesses. Texas is the leading destination of California's former residents, followed by Arizona.

Demographics
California joined the United States after the Mexican–American War. Like much of the land ceded from Mexico in the war, California had only a small non-Native population. However, the California Gold Rush led to a population boom, during which California gained statehood in 1850. Between the 1850 and 1860 censuses, its population more than quadrupled. It saw a second period of growth after World War II thanks to the aerospace and defense industries, and a third during the 1980s and early 1990s because of the Silicon Valley tech industry. Population growth slowed in the mid-1990s as the federal government cut aerospace spending after the end of the Cold War, and again after the Great Recession.

The state has had a net loss of domestic migrants every year since about 1989. According to Census Bureau estimates, 6.2 million people left the state in the 2010s decade, while 4.9 million moved in: a net loss of 1.3 million residents. In 1955–1960, the ten largest state-to-state migration flows involving California all had the state as a recipient of people, while in 1995–2000, nine of the ten largest flows involving the state had California as a net loser, with only New York sending more people to California than it received in return.

According to the California Department of Finance, the state had 135,600 more people move out than moved in from July 2019 to July 2020, marking the third straight year of net migration losses. After peaking just shy of 40 million Californians, by 2020 into 2022 onward this slowing had crossed the zero population growth mark into outright negative population growth for the first time in over a century.

The exodus worsened in 2021, when more than 360,000 people moved out of California, especially going to states like Texas, Arizona, Washington, Idaho, and Utah. Some are also moving to Mexico to avoid the 2021–2023 inflation surge, as Mexico's cost of living is lower. Between April 2020 and July 2022, the state's population dropped by more than 500,000 people.

In July 2023, California Department of Finance reviewed its population forecast for 2060 and concluded that the state's population would stay constant at about 40 million people, instead of reaching 53 million as estimated in 2013. In October 2023, the Stanford Institute for Economic Policy Research found that California was "hemorrhaging residents to neighboring states like Texas, Arizona, and Nevada" at "higher levels than ever before", across all income levels, and especially among college graduates.

California's population grew in 2023 for the first time since 2020, driven by lower mortality and higher legal foreign immigration. However, net domestic migration was still negative (91,189 people left for other states) and the population growth was low (+0.17%).

For individuals
The primary cause of the exodus is the high cost of living (and especially the cost of housing), followed by issues such as crime, politics, pollution, and traffic. Kenneth P. Miller said in 2022 that taxes, as well as rising costs on housing, food, and other needs and wants, are the biggest reason for Californians leaving the state. The rise of remote work also made it easier for people to leave California.

Housing and infrastructure
California has repeatedly been ranked as one of the country’s most expensive states to live in. The median asking price for a house was $797,470 in California in 2022, which only a quarter of households in the state can afford.

Economists have cited restrictive zoning policies and lack of investment in transportation infrastructure that has resulted in sprawl, constrained housing supply, high housing prices, and severe congestion. They also cited over-reliance on sales tax, fees, and disproportionate property taxes on new residents caused by 1978 California Proposition 13.

In a December 2020 column for the Los Angeles Times, journalist Michael Hiltzik argued that California's slowing population growth was a cause for concern but not a full-blown crisis. Hiltzik quoted demographer Hank Johnson from the Public Policy Institute of California as saying that recent data "is just an incremental change from what we've been seeing over a couple of decades." According to Johnson, California's population trends don't compare to the "hollowing-out" of Rust Belt cities such as Cleveland, Detroit, and St. Louis, which have lost more than half their populations in the last 50 years. Hiltzik instead says that a lack of affordable housing is California's main problem, as it has pushed young people out of the state, and that concerns about over-regulation are being exaggerated.

Environmental policies and mandates
According to the Stanford Institute for Economic Policy Research, the climate change policy of California could increase exodus to more lenient states like Arizona and Texas.

For businesses
Several businesses, particularly Silicon Valley companies, have moved their headquarters out of California in recent years. Some of the largest businesses that have announced moving their headquarters include Charles Schwab, Oracle, Palantir, and Hewlett Packard Enterprise. Though they have moved to a variety of other states, Texas has received many of the new headquarters, including those of Hewlett Packard Enterprise and Oracle. Businessman Elon Musk moved from California to Texas in late 2020, though his company SpaceX remained in California. Frustrated by California's Covid-19 lockdown policies, Tesla relocated its headquarters to Austin, Texas in 2020 next to the company's gigafactory. However, in 2023 it announced opening its engineering headquarters back up in Palo Alto.

According to shopping mall operator Westfield, "A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area". Nordstrom, Whole Foods said they were abandoning San Francisco because of changing economic conditions or employee safety.

Consequences
In the 2020 redistricting cycle based on the 2020 census, California lost a seat in the House of Representatives for the first time in its history, going from 53 to 52 seats. In the aftermath of the COVID-19 pandemic, the continued negative growth of the state saw predictions of up to 4-5 seat losses for California in the House of Representatives for the upcoming 2030 redistricting cycle, which would shrink its delegation from 52 to 47 seats. This would be the largest decline recorded by any state in one cycle.

According to data from the Internal Revenue Service, migration of the taxpayers out of California resulted in California being the biggest income loser ($24 billion) in 2022.

San Francisco
San Francisco is suffering from the opioid crisis, with the second highest rate of drug deaths of any large city in the country. Like many other large cities in California, San Francisco also has a large homeless population. Following the COVID-19 pandemic, many tech workers have embraced remote work, causing about a third of the commercial real estate in downtown San Francisco to be empty. For example, between 2020 and 2023, nearly 40 retail stores have closed in Union Square’s zip code. Among the retailers that have closed or planning to close their stores are the Northface, Zara, Macy’s (which announced the closure of 150 stores).

Some observers have theorized that San Francisco could enter a "doom loop", with the downtown portion of the city having only 32% of the cell phone activity as pre-pandemic levels. Others argue that doom loop claims are exaggerated and that the crisis is isolated to downtown San Francisco rather than citywide and that San Francisco has always been a "boom and bust" city.

According to US Census estimates, San Francisco's population declined by more than 60 000 people, or more than 7%, from 2020 to 2022. In 2023, the city's population increased, with the AI boom cited as a contributing factor.