What does the Shifting Economics of California mean?
California’s economy is the largest of any U.S. state and is surpassed only by a handful of industrialized countries. Financiers in California have been imaginative in seeking and employing capital, and many of the country’s largest banks and corporations are based in the state.
With the development of Silicon Valley in the late 1970s, California became a world leader in the manufacture of computers and electronics. By the end of the 20th century, the state’s economy was attracting highly educated workers from all over the world. The growth of the Agriculture sector in the economy is visible from the fact that California produces more than half of the country’s vegetables and fruits. About one-tenth of California’s workforce is employed in agriculture. The power sector is flourishing as California produces about four-fifths of its energy in the state. The manufacturing sector also employs a lot of people. Film making industry has grown manifolds. Due to its demographics, the presence of abundant sunlight and open areas was what encouraged the industry to grow initially. Now is the time when almost all movies have been shot in LA, giving the place the much-needed economic boom.
If counted as a sovereign nation, it would be the 5th largest in terms of GDP, even ahead of India. With a Gross State Product of 3.2 Trillion dollars, the country has developed in almost all the sectors, be it agriculture, technology, or film making for instance.
The economy of California has been booming since time immemorial due to the flourishing of the aforementioned sectors. On average, citizens in California have been doing very well for themselves by sustaining themselves and by living a dignified life.
Though this didn’t stay as it is for long. The advent of the COVID pandemic changed it all. This change in the entire economic framework of the state is what has been referred to as the “Shifting economics of California.” The cost of living in California is way too high. When young graduate software developers in Silicon Valley earn 6 figured salaries, it makes it way too difficult for others to cope up. The cost of living in California is touching the skies. It is due to this that people often start to live in shared apartments and often find other means of survival, thus returning lesser to the economy by spending less.
This high cost of living makes it difficult for people to live for long. San Francisco, for instance, has the highest internal migration rate. People tend to come to places like these, gain truckloads of experience while working with top companies, and then travel back to their hometowns and get similarly paid jobs with the added benefits of lesser taxes and less or even no rents paid. Taxes in California are highest in the entire U.S.
The Pandemic came as a blow to the entire world, especially the US, which tops the table for the maximum number of deaths. California is in far worse shape economically than the great majority of other states also struggling through the pandemic. Due to the spread of the virus, the tourism industry and the filmmaking industry which provided the maximum revenue to the country have suffered a major setback. There are no people who are willing to watch movies, no one is willing to travel and enjoy the leisure of beaches and no director is shooting any new films which might bring some income for the state.
In September, California’s unemployment rate was 11%, well above the national average of 7.9%, and better only than two other states in the nation. Since the March lockdown, California, with 12% of the nation’s population, accounts for 16.4% of all U.S. unemployment. Apart from unemployment, which has been a major blow to the economy, the fact that Work-from-Home culture has been established is something that has caused a whooping fall in the economic state of California.
People have shifted to their hometowns and to lesser expensive places from where they can work from home and can earn the same amount of wages as before. Tech companies have not suffered a loss. The software developers and other tech workers have found it more convenient to work from home and earn wages. What has added to their disposable income is the fact that they do not have to pay the high house rents and the high taxes on living and consumption which were levied from them in their earlier place of work. All this has, on one hand, benefitted the individuals by increasing their standard of living, but on the other hand, has been a serious impediment for the Government as their incomes have fallen severely.
For the past three decades, California’s leaders have assumed that the state’s great advantages — superb universities, a large, diverse labor force, international connections — would help us weather economic storms. The pandemic has shown how wrong that is and how much needs to be done to meet this steadily growing economic crisis. The coronavirus pandemic has brought about great suffering for Californians in nearly every aspect of life. It’s time state government leaders focused on developing more economically diverse approaches — not only for recovery but also to restore real opportunity to most of its residents like lowering the cost of living, providing newer and innovative opportunities, and working towards the development of the sunshine state.
Written By- Sahib Katyal