California economy needs DEI strategy connecting California


For California to thrive, diversity, equity, and inclusion must be built into the state’s economy. AP Photo/Jeff Chiu, File

California is rapidly losing its diversity. So why don’t we hear more about it from our diversity-obsessed media and politicians?

Because the diversity we are losing is not in our demographics but in our economy.

A new report, “Restoring the California Dream,” by Joel Kotkin and Marshall Toplansky of Chapman University, describes a confluence of economic threats facing California and raises questions about our collective lack of commitment to diversity, as well than equity and inclusion, when it comes to the jobs and businesses that make California work.

California has become so drunk on the wealth and tax revenues of a handful of big tech companies that it ignores its loss of market share in many sectors. We have seen declines in the apparel, aerospace, manufacturing and housing sectors, all former pillars of our once diverse economy. Our manufacturing and industrial weakness represents a missed opportunity now: with the breakdown of global supply chains, industrial jobs are returning to the United States, but other states are reaping the benefits.

This decline in economic diversity has produced a decline in economic opportunity; the variety of jobs that California enjoyed as recently as 2010, including in manufacturing, is much more limited. More worryingly, jobs are disappearing in the best-paying sectors of the economy. Many jobs in professional services – lawyers, accountants, consultants – have disappeared. Even our technology and innovation economies are collapsing, with far greater growth in Washington and Utah than in California, the report says.

And these changes reflect not only a decline in diversity, but also a loss in equity. It is equity in the sense of ownership.

Iconic California companies including Tesla, Oracle and Hewlett-Packard have moved their headquarters out of the state, and the rate at which these relocations are happening has accelerated. Other California tech companies are locating more new projects and investments elsewhere. Intel is investing over $20 billion in Ohio. We don’t follow other major states when it comes to capital investment.

Many California watchers, including your columnist, have previously dismissed business departures from California, pointing to the state’s unprecedented ability to create new businesses. But there are signs that our entrepreneurial energy is waning. The proportion of venture capital in the Bay Area, this very Californian mode of investment, is down compared to the rest of the United States. California’s higher education systems, which inspire much of our innovation, are growing more slowly than their competitors elsewhere and have been consistently failing to produce enough graduates to meet the state’s needs, the report notes.

The diversity we are losing is not in our demographics but in our economy.

If you’re looking for the equity that comes with owning your own home, California is a very hard place to find. In every age category, home ownership in California is below the national average. You would need to earn well over $200,000 to afford the median house in San Jose.

This lack of equity represents a failure of inclusion: middle-class and working-class people struggle to gain and maintain a foothold in California’s economy. According to the report, four California regions — Ventura, Los Angeles, San Jose and San Diego — rank among the bottom 10 regions in the country for high-paying blue-collar jobs.

Too much has been said about people leaving California. The percentage of people leaving the state remains low, and departures are overwhelmingly from Los Angeles, which accounts for more than half of all net inland emigration from the state. Departure controversies obscure the larger issue: very few people come here.

By some measures, California is the least attractive state for new residents. Domestic and international migration to California follows that of other states. The federal government has even warned refugees against settling in expensive California cities.

When you adjust the parameters to compare California to other states, our high costs translate into the worst poverty in the country. The Chapman Report says that in 2019, cost-adjusted incomes for Latinos and African Americans were lower in California than nationally. And in perhaps the report’s most devastating statistic, the real incomes of African Americans in California are now lower than those of African Americans in Mississippi.

It has long been accepted that poor or less educated people leave California and newcomers are wealthier and better educated. But that can change. The Chapman report, which analyzes Internal Revenue Service figures, finds that over the past five years, outbound and inbound migrants from California have had roughly equal incomes. The largest proportion of out-migrants was in households with income between $100,000 and $200,000.

When people leave California, they cannot find a place with our climate and natural beauty, because such a place does not exist in this solar system. But the study notes that in Salt Lake City, Denver, Columbus, Austin, Nashville, and other U.S. cities, people find much of the same cultural diversity that California offers, along with diverse job opportunities. , inclusive and innovative economies, and more. opportunity to build capital through home ownership and business. Schools in these cities are often better too.

In the face of such trends, California must take its economic policy seriously and develop a real strategy to convince more people to live and do business in our state. For this to happen, DEI cannot simply be a slogan for businesses, schools and governments. This must be a daily economic reality.

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