California Failing On A Winters Day
Several recent state-by-state studies paint a bleak picture of California. These surveys on “best and worst run states,” economic freedom, state services and benefits, income inequality, and interstate migration reveal California is the worst-run state in the nation and is ranked 24th for economic freedom. Although California has some of the highest levels of services and benefits amongst the states, it also has some of the highest levels of income inequality. Given these rankings, it is perhaps not surprising that Californians are fleeing California faster than the residents of any other state.
A review of financial health, standard of living, and government service data was conducted to determine how well each state is managed by 24/7 Wall St., LLC, a Delaware financial news and opinion company. According to their analysis, Wyoming is the best-run state in the nation, and California is the worst. California scored below average in every category except median household income—scoring last (tie with Texas) in high school graduation rates—and next to last in unemployment and foreclosure rate. California also has the worst credit rating, being the only state in the country to be rated A-, the lowest rating ever given to a state by S&P.
In their 2011 Economic Freedom of North America report, the Frasier Institute – an independent non-partisan research and educational organization based in Canada – compiled comprehensive economic freedom ratings for US states and Canadian provinces. The Frasier institute develops an index of economic freedom that measures the extent to which rightly acquired property is protected and individuals engage in voluntary transactions. Their annual report consistently finds economic freedom to be a powerful driver of growth and prosperity, which is confirmed in the 2011 report. California came in 24th amongst the US states at the “all government” level but falls to 43rd at the subnational level. The overall scores are based upon rankings of size of government, takings and discriminatory taxation, and labor market freedom.
In another survey by 24/7 Wall St., government spending was examined to identify how much states spend on their residents. Naturally, those states that provide the most money and benefits to their residence have higher tax burdens. The analysis also finds that these states have particularly high costs of living. California is ranked 10th in providing money and benefits and ranks in the top ten for average pension benefits (8th), temporary assistance for needy families (TANF) per month (2nd), and number of months of TANF received (7th). Interestingly, the study finds that these states also have high levels of income inequality, despite the fact that the poor and the dispossessed receive the most from government services. According to this study, California has the 7th highest level of income inequality. This result is supported by a study conducted by the Center on Budget and Policy Priorities and the Economic Policy Institute, which finds the gap between California’s richest and poorest families to be the 8th largest in the nation, and the gap between the richest families and middle-class families to be the 3rd largest in the nation. This study finds the growth in income inequality in California since the late 1980s between the richest and poorest families to be the 18th largest, and 5th largest between the richest and middle-class families.
Altogether, Californians may be becoming increasingly dissatisfied by the poor performance of their state and are now “voting with their feet”. In their recent Geographical Mobility: 2011 Report, the US Census Bureau reveals that Californians are leaving California at a faster rate than residents leaving any other state. In fact, four out of the top ten most common state-to-state relocations from 2009 to 2010 were from California. These include California to Nevada (35,472 movers), Washington (39,468), Arizona (47,164), and the most common state move in the nation, California to Texas (68,959).
Brian is a gradute student in the Physics Department.
For further details on these studies (And where the information for the graph was gathered) see: