Exodus from California could aid state’s recession recovery 

The last big recession to hit California was in the early 1990s and largely centered in Southern California, as the aerospace industry was clobbered by the end of the Cold War.

Los Angeles County alone lost 437,000 jobs between 1990 and 1994, at least half of them directly tied to military spending. The result was a massive exodus out of the state.

Economists believe that at least 1.5 million Californians left the state, with defense workers and their families in the lead. As UCLA economist Jerry Nickelsburg put it: “As their economic opportunities diminished in Los Angeles, they packed up and moved to Texas, Massachusetts, Georgia or wherever their skills were in demand.” The exodus made recovery from the recession much easier, simply because it reduced the ranks of the unemployed by several hundred thousand.

By the late 1990s, California had largely rebounded from the recession — only to see two other booms and busts in rapid succession, culminating in the current, even-deeper recession.

Oddly, even though our economic malaise is worse than the one two decades ago and appears to have more staying power, we have not seen the mass movement out of the state that we experienced then. Why?

One reason, certainly, is that California’s recession is part of a national, and even international, economic downturn. Were some of California’s 2 million-plus jobless workers to seek jobs elsewhere, there are fewer locales in need of workers.

Nevertheless, the overall job picture is healthier almost anywhere else in this country, and some states have very low unemployment levels. So why are Californians staying put? There’s no research on this question, so we are left with educated guesses.

Extensions of unemployment insurance is probably one reason. About half of California’s unemployed workers are receiving these benefits now, the majority of them getting the 73 weeks of federal extended benefits beyond the basic 26 weeks paid by the state.

The housing meltdown may be another reason. Unemployed homeowners with upside-down mortgages may be unwilling to go through foreclosure or a short sale, hoping they can come out ahead if they hold on.

The two-breadwinner families that are now the norm may be another reason. Unemployment insurance benefits and a spouse’s job may be enough to get by, at least until the benefit money runs out, as it already has for a half-million-plus of the state’s jobless.

Finally, there are personal factors, such as a reluctance to leave families and friends behind.

Whatever the reasons, the lack of movement to greener pastures — ironically, the reason so many people first came to California — will make recovery infinitely more difficult and prolonged than what happened in the 1990s.

Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.

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Dan Walters

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