Networking-Keynote Luncheon-Impact of the Population Shift -on California

Transcription:

Alma (00:05):

Evan is the founding Executive Director of the California Policy Lab. He co-founded the California Policy Lab because he believes that government can and should be the strongest force for good in society. His career in public service has been dedicated to synthesizing complex information to solve hard policy problems. He publishes research on poverty, migration, discrimination, and household economics.

(00:43)

Prior to joining the Policy lab, Evan served as a senior advisor for Richard Cordray, the first director of the Consumer Finance Protection Bureau. During his tenure at CFPB, Evan led initiatives on abroad portfolio of issues ranging from FinTech and consumer lending to debt collection and financial empowerment. Before that, Evan fought against race and disability discrimination during the foreclosure crisis as a director of Fair Housing for Northern California's largest fair housing nonprofit. Edmond was trained as a lawyer at UC, Berkeley, and he also holds a master's in public policy from Berkeley. During graduate school, he clerked for the California Supreme Court, the Department of Justice, civil Rights Division, and the White House Office of Management and Budget. Let me welcome Evan White, please give it a round applause.

Evan White (01:52):

Hey everybody, please continue to enjoy your lunch. Sorry to be the one to interrupting it. I'm excited to join you guys here today. Alma, where's my clicker? Ah,

(02:14)

There we go. Great. So the California Policy Lab is a research institute based at the University of California, and we work with government agencies across the state, at the local level and the state level using the data that they're collecting already to try and improve policies and programs within the state. Our specialty is in working with really sensitive administrative data sets, so data sets that are usually at the person level that are collected around programs that people are enrolled in or services or utilization of things like criminal justice education, social services programs and things like that. And we do research across a broad array of social policy areas. So encourage you to keep an eye out for the work that we're doing today. I'm going to talk about migration in California and to motivate that a little bit, I don't think I need to, but just to emphasize that population matters in several different ways, be it from effects on the economy, aggregate demand from consumers political representation. California lost a representative in the House of Representatives for the first time in 2001.

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It matters because the tax base, particularly if people who are leaving the state are of high net worth and the people who are coming to the state don't sort of match that net worth, it could matter in terms of housing costs. If a population goes down, we might have less demand for housing and could reduce housing costs, which is a big problem in the state. And then it matters for things like environmental sustainability as well. But the last bullet here I wanted to focus on because I think what I've learned in doing this work on migration is that a lot of people's focus on this stems from the fact that they want to know what their neighbors are doing and their perceptions of their own choice of where to live. So some folks don't want to be left in a place that they deemed to be uncool.

(04:26)

Other people want to go against the zeitgeist, but that perception of what's happening in your state, in your city and your county seems to drive a lot of interest in this work. And there is quite a bit of interest in this work. Put up a couple of headlines here, but it gets a lot of coverage in major newspapers, news programs on the television, and there's a lot of folks who are, this narrative has begun that there's an exodus happening from California, that there's a lot of people who are streaming out of the state, and some of it is appears to be, I would say, motivated to try and get people to leave the state, but some of it definitely reflects realities on the ground. There's also a lot of news stories going in the opposite direction just because people seem quite focused on this topic generally to try and get people to stay in the state or suggest that this exodus is not really an exodus.

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So California Policy Lab has tried to put some facts to this debate and oh, and there's also a lot of disagreement about why people are leaving. So I've excerpted here some of the news articles about this topic. There seems to be maybe perhaps a consensus that high housing costs are one of the driving factors, but there are a number of other reasons that people posit for people leaving the high income taxes, too much homelessness, too much crime, strict covid lockdowns, and other aspects of what I would call the culture wars. Things like school curriculum and things like that. And then people talk about wildfires and smoke pushing people out of the state as well. In my mind, some of this is not very evidence driven, but people tend to graph the narrative that they want to put onto this new set of facts. So in this presentation, I'm going to go over some of the reasons, some of the circumstantial evidence out there about maybe why people are leaving the state.

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So just looking broadly at California's population over time, this chart, the red line here, gives you an annual look at how many people are leaving or coming to the state. I'm sorry, how many weather population is increasing or decreasing. So that red line was above zero for the last 20 years, and for the first time it got below zero during the pandemic. There are a number of driving factors here. The long-term trends of that births are down in the state by about a hundred thousand over the last 20 years. And international immigration to the state is also down by about a hundred thousand over the last 20 years. International immigration tanked down to zero during the pandemic because there were pretty strict policies about who could come into the state. I expect that line to bounce back up when the data is out for 2023 here.

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The other thing to note is that the green dotted line at the bottom, which is going to be what I focus on today, has been negative for some time, which is to say that more people have been leaving the state than have been coming to the state for about 20 years. So that's been true for a long time, but we've made up for it by having more births than deaths and having some amount of international in migration. Okay. What changed during the pandemic? Well, deaths went up. I think that's obvious, and bursts also went down during the pandemic and international migration went down. And then you'll see the green line also tanked down at the bottom there. So that's what I'm going to focus on in this presentation is the portion of population change that's due to people coming and leaving the state.

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What we add to this debate, I think is simply better data. So a lot of the work that's done on this uses the census data, which really only gives you accurate numbers every 10 years. The California Department of Finance puts out annual figures on California's population change, and then some people like to use the postal service data, which the change of address data, but it turns out not many people file change of address notices when they move. So it doesn't give you a very close look at about what's happening. And I think the data that we have gives more frequent updates. It also gives more granularity in terms of who's moving, why they're moving and where they're moving from and to. It also gives us some insights into why people are moving because we see individual level characteristics about the people who are leaving the state and the people who are coming to the state.

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So a bit about the data that we're using, we created a dataset called the UC Consumer Credit Panel. It's anonymized data from one of the three nationwide credit bureaus, and we have a hundred percent sample of folks who are in California or have been in California since 2004. And we have a 2% national sample of this data. So not everybody has a credit record, right? There are about 10% of adults who don't have credit either because they're too young and they haven't had their first credit card or their first student loan, or sometimes because they're too old because they haven't taken out credit in seven years. And so their credit report just goes to nothing. So there's also some portion that are very low income and don't have access to credit, but on the whole 90% is pretty good. And when we benchmark everything that we do against census figures, we find that they match closely.

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What's nice about this data is we get it quarterly. So our most recent data is from 20 days ago. The data I'm going to show you today is from last quarter, so it's not going to be up to date to 20 days, but we get this data very frequently. There might be a little bit of a lag because you can imagine that when people are updating their addresses with their lenders, that takes a little bit of time for that to get to the credit bureaus. So you might think about these as sort of lagged by a quarter or so, but there are substantial benefits. So if you think about what you see on your credit report when you go get your free credit report, we see roughly the same thing. We don't see any individual identifiers, we don't see any lender identifiers, but we do see loan level information.

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So we're able to see balances, we're able to see payment history. We also get a lot of geographical granularity, so we get zip code, your census tracked, so we can see the information. I'm going to show you later though I mostly focus on statewide and county level trends. We can see that at zip codes at certain cities and things like that. And then we also get some individual level demographics about you, how many people live in your household and marriage and age and things like that. We're also going to get an estimate of race and ethnicity, although we don't have that yet. So that's not included in the presentation today. So in summary, I think this is the best data set that's out there that can track domestic migration across the United States. And so I'll show you what we found. So in terms of the statewide trends, what you'll see here is that, like I said, so the blue line here is folks exiting the state.

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The gold line here is folks who are entering the state and the dotted lines are probably easier to look at because there's a lot of seasonality. People tend to move during the summer, and so the actual moves jump around quite a bit, but the dotted lines are the moving averages. So even before the pandemic, which is represented in gray here, exits were outpacing entrances. That's been true for about 20 years. But when the pandemic started, you can see the exits jumped up quite a bit and the gap between exits and entrances widened quite a bit. That's changed somewhat since about, as you'll see for most of my presentation, most of these trends in late 2020 and 2021 trended upwards and then returned to roughly pre pandemic levels by the time we get quarter 2, 2023, which is what the last data point here is. So you can see those last two quarters and exits are about where they were before the pandemic began. Entrances also ticked downwards by about five to 10% and haven't recovered since the start of the pandemic. So that's sort of the statewide picture I'm going to jump into, oh, one more takeaway from this. Even still in this last data point, the amount of people who are coming into the state versus the amount of people leaving the state, that gap is still somewhere upwards of 50,000 folks. So California, if they wanted to stay the same population, we need to make up for that in those other categories I mentioned before.

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So taking a deeper dive into the regional level, sorry, this is a little small. We looked at the nine economic regions in California, and I'm going to ignore Northern Sacramento Valley for right now because there's some funky stuff happening in that portion of the data. But in eight out of the nine regions, excuse me, exits ticked up anywhere from five to 20% during that peak of the pandemic and then have since declined back to roughly pre pandemic levels. That's been true across most of the regions of California. Now there's been varying levels for sure, but the same general trend is true across most regions in California. On the entrances side, a bit of a more diverse picture, but roughly speaking, most regions did see a decline in entrances when the pandemic began. And these are all, I should say, normalized to right at the beginning of the pandemic. So the changes you're seeing are percent changes from the beginning of the pandemic and that red circle there, you can see a lot of counties saw declines in entrances. The dark blue line is the Bay Area region, which saw very steep declines. The Central Sierra region is the one that goes down even further. That's the smallest region in the state.

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So there's some variability across regions in what's happening, but we see the same general trend in most regions across the state in terms of more people exiting and fewer people entering. So you might ask yourself, well, is this because more people are moving overall and so we see more exits? Or is this because a greater percentage of the people who are moving are moving out of state? And it turns out it's the second one. So move rates over are going down. They have been going down before the pandemic, but during the pandemic, the slope changed and they started going down even quicker from about 4% to 3% of Californians move every year. And as you can see on the right, that gold line, the percentage of those who move, the percentage that leave California has gone up. So in 2016, about 16% of movers left the state, and in 2023, now about 21% of movers are leaving the state. So fewer people moving, but more of the movers are leaving the state.

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Another way to look at this is what we call survival rates, which is just if you take a point in time and think about all the people who live in California at that point in time, what percentage of them are there a few years later, 3, 5, 10 years later? So this is just one sort of example statistic, but what you can see is that as time has gone on, fewer and fewer people are staying in California who lived in California at a certain point in time. I apologize when we put out this report, we'll have something visual here, but these may seem like small changes, one percentage point declines, but it's actually quite a bit when you think about how big the state is.

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So I'm not going to spend too much time with the county level trends, but I'll show you a few of the biggest counties in the state. And the same general trend you'll see is common to them. And this is something that we saw throughout the United States during the pandemic, which is that large urban areas saw a lot of folks exiting from them, mid-size, urban metros, saw more entrances and rural areas, saw more entrances. But you saw a lot of people just moving out of big cities. So looking at California, the biggest county, you see a big bump in exits there, and also a decline in entrances. San Diego, something similar, although the gap between the two is roughly well is less than in LA's case, pretty similar in Orange County, although sort of a more steep decline in entrances there. Alameda County, something similar. And then I'll spend a bit of time just focusing on San Francisco because I think there's a pretty marked change in the pattern here.

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Exits from San Francisco County at the beginning of the pandemic, jumped to twice their normal rates. This is mostly in the ending quarters of 2020 and beginning of 2021, and it's circumstantial evidence. So I can't tell you exactly what the cause was, but this was around the time that a lot of tech companies based in San Francisco announced permanent remote work policies. So there's some reason to believe that that has something to do with this spike. Many of the other things that people point to may be reasons why people want to leave San Francisco, but they didn't change so dramatically in that time period.

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So anyway, San Francisco, something different seems to be going on in San Francisco, but even in San Francisco you can see the exits are now down to pre pandemic levels or even a little bit below. However, entrances haven't recovered to San Francisco County. So what's driving all of this, I'm going to provide you with some circumstantial evidence for what's happening, but I'm not going to have all of the answers here. I think it's hard to know what's in the minds of families that leave the state without directly surveying them, but we have some clues. So the first clue might be looking at where people are leaving from. So similar to the last slide, I sort of put the tech hubs up here. Silicon Valley in general, you saw more elevated rates of exit of the state than you did in other counties in the state, and particularly in San Francisco. So there might be something going on there. Maybe it's remote work policies, maybe it's high cost of living.

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You might also look at where people are leaving too. So this slide shows the top 12 destinations states of people who leave California. It's a little busy. I'm sorry about that. But what you can see is that, well, in general, the biggest states as well as nearby states are the biggest recipients of Exeter from California. And they're also the biggest sources of people who come to California. So most of these relationships are reciprocal, right? We send a lot of people to Texas. Texas sends a lot of people to us, that happens every year. But the changes from before the pandemic are pretty market, Texas and Idaho up something like 30 or 40% during the pandemic, Florida, Georgia, Colorado, up something like 20% from before the pandemic. These have all declined somewhat, but not necessarily two pre pandemic levels. So this'll be an interesting place to track.

(21:47)

I think you can take from this what you will. I think that the states that people go to are as they're diverse in their own ways. So are people moving? People are moving to Texas. Are they moving to Austin or are they moving to Marfa? Right? People are moving to Georgia. Are they moving to rural Georgia? Are they moving to a big city? So I think you might take away different things from these moves if you knew more of that information. Is this about income tax rates and being different in those states? That's true in some of them it's not true in others of them. Is this about housing costs? Is this about politics? Could be some combination of those things.

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PPIC did a survey that came out in February that gives us another clue here, which is that a third of Californians have seriously considered or are seriously considering moving out of the state because of high housing costs. That was the way that the question was phrased, which I found to be a very high number. But turns out they've asked this question several years in a row, and it's always been something like, or since they've been asking it, it's been this high. There is a gap between Republicans and Democrats in answers to this question. So a higher proportion of Republicans answered yes here than Democrats, but that offers us some clue as to whether housing costs are a driver. And then we did an analysis because we have this data at the individual level, we did an analysis that looked at folks', individual characteristics as well as the characteristics of the zip code that they lived in.

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And we're going to be putting out something more comprehensive about this, but I figured I'd share some preliminary results here. In fact, everything that I've shown you today is preliminary. So if you're taking pictures, they might look different when we put out report. But what we found was that leaving California was more closely associated with renters than homeowners. It was more common among folks who had a higher student loan debt balance, being younger and unmarried was more commonly associated with leaving California and then being in a zip code that had a higher average credit score that had higher rents and higher home values, that had more debt per household and had a larger share of non-Hispanic white residents.

(24:25)

So there's some clues there as well. There's definitely some evidence there that housing costs are one of the factors leading people to leave the state. And maybe that sort young folks with a lot of student loans can't seem to figure out a way to make ends meet in large urban areas in the state. But I would caution some of these associations or most of these associations are not particularly strong, which is to say that sort of idiosyncratic reasons for moving are still a big factor here. Things that we can't observe about. Folks could be driving a lot of their reasons for leaving the state, and particularly we can't see where they work, what kind of work they do.

(25:15)

And I think that that has a lot to do with why folks choose to move. Okay. In summary, the recent population dip is due to a confluence of factors, not just domestic migration, but domestic out migration has gone up and it is a big factor. California has been a net sender to other states for years, but that has increased during the pandemic like we saw in most of those grass with a big hump. And then sort of returning to pre pandemic norms, it seems to be that trends are reversing back to where they were before the pandemic, but we'll have to see if that continues. Large cities saw big changes, a lot of people leaving and not many folks coming. And in particular, that entrances piece I think is something to watch, whether people start coming back to large cities. And then there's some evidence that high housing costs debt loads and perhaps the proportion of jobs that are e motorable were factors during the pandemic.

(26:31)

In terms of going forward, here are a few trends that I think are worth watching, do deaths rebound and to what extent do they rebound is one thing to watch a little morbid, but something to watch. And then the international migration line is another one to watch. Obviously it's being covered a lot in the news these days, so I would expect for international migration to tick up over at least the next year. Our exits actually returning to pre pandemic levels. And in particular, I would say I entrances coming back to where we saw them before. And I think one sort of subpopulation to watch is our younger people choosing to stay in the state.

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And then in terms of entrances, I think it's worth looking at where is able to attract new entrants into the state. What are the characteristics of metros that are able to get folks to move into the state? So we're going to be putting out several, well, we have put out a few reports on this, and there's several more to come that you guys got a sneak preview of today. So follow us for more. Here's our website and our social, and if there's anything that you'd like to see us do with these data, feel free to email me directly. My email's on the website. So thanks so much for your time and have a good rest of the conference.