California Is Booming. Why Are So Many Californians Unhappy?

on Dec30
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SAN FRANCISCO — Christine Johnson, a public-finance consultant with an engineering degree, was running for a seat on the San Francisco Board of Supervisors.

She crisscrossed her downtown district talking about her plans to stimulate housing construction, improve public transit and deal with the litter of “needles and poop” that have become a common sight on the city’s sidewalks.

Today, a year after losing the race, Ms. Johnson, who had been in the Bay Area since 2004, lives in Denver with her husband and 4-year-old son. In a recent interview, she spoke for millions of Californians past and present when she described the cloud that high rent and child-care costs had cast over her family’s savings and future.

“I fully intended San Francisco to be my home and wanted to make the neighborhoods better,” she said. “But after the election we started tallying up what life could look like elsewhere, and we didn’t see friends in other parts of the country experiencing challenges the same way.”

But today it has a new problem. For all its forward-thinking companies and liberal social and environmental policies, the state has mostly put higher-value jobs and industries in expensive coastal enclaves, while pushing lower-paid workers and lower-cost housing to inland areas like the Central Valley.

This has made California the most expensive state — with a median home value of $550,000, about double that of the nation — and created a growing supply of three-hour “super commuters.” And while it has some of the highest wages in the country, it also has the highest poverty rate based on its cost of living, an average of 18.1 percent from 2016 to 2018.

That helps explain why the state has lost more than a million residents to other states since 2006, and why the population growth rate for the year that ended July 1 was the lowest since 1900.

“What’s happening in California right now is a warning shot to the rest of the country,” said Jim Newton, a journalist, historian and lecturer on public policy at the University of California, Los Angeles. “It’s a warning about income inequality and suburban sprawl, and how those intersect with quality of life and climate change.”

You can see this in California economic forecasts for 2020, which play down the threat of a global trade war and play up the challenge of continuing to add jobs without affordable places for middle- and lower-income workers to live. You can see it in the Legislature, which has raised the minimum wage, and next year is poised to debate a bill that could reshape the state by essentially forcing cities to allow multistory buildings near transit stops. You also can see it in the stories of people like Ms. Johnson and other highly educated workers who have gone elsewhere.

People have short memories, of course, and as soon as there is another recession, the focus of Californians and their leaders is bound to turn from the strains of growth to creating jobs. From 2009 to 2011, in the aftermath of the last recession, the poverty rate reached 23.5 percent.

“A decade ago they were cutting school funding and social services,” said Stephen Levy, director of the Center for Continuing Study of the California Economy. “There are people injured by prosperity, but obviously a recession is more damaging to most people.”

This is precisely the sort of middle-income job needed in the Bay Area, which like many urban areas is bifurcating into an economy of high-wage knowledge jobs and low-wage service jobs.

The problem is he can’t find enough workers. The unemployment rate in San Jose is around 2 percent, and many of Vander-Bend’s employees already commute two or more hours to work. To compensate, Mr. Biggs has bought several van-size robot arms that pull metal panels from a pile then stamp them flush, bend their edges and assemble them into racks. He has opened a second location 75 miles away in Stockton, where labor and housing costs are a lot lower.

This is in most ways a success story. Vander-Bend is raising wages and training workers. The machines aren’t replacing jobs but instead make them more efficient, and the company is bringing higher-wage positions to a region that needs more of them. But for workers, even substantial income gains are being offset by rising costs.

A decade ago Manuel Curiel made $22 an hour as a production worker at Vander-Bend. Today he is 37 and, after several promotions, makes a six-figure salary. Almost anywhere else, that would be a shining example of how the longest economic expansion on record is reaching more workers, including those, like Mr. Curiel, who dropped out of high school.

But this good-news story comes with a catch. In the decade that Mr. Curiel’s salary tripled, the rent on his family’s small two-bedroom apartment in Santa Clara more than tripled, from a little over $600 to more than $2,200, including a 35 percent increase one year. He has since joined Vander-Bend in moving about 80 miles east to Manteca, near the factory in Stockton, where he lives in a house offering more space for about the same rent.

Ben Casselman contributed reporting from New York.

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