Recent news and published research on California are calling attention to important housing, economic, worker, and demographic shifts that credit union leaders can study as they continue serving local members going into the second half of 2022 and beyond:

California Exodus Continues, with L.A. and San Francisco Leading the Way: ‘Why Are We Here?’ (Los Angeles Times) — “Some Californians, however, aren’t as sold on the Golden State. There was a mass exodus from coastal California that ramped up during the early days of the pandemic, and a new report shows that it only got worse as COVID restrictions were dialed back. California ranks second in the country for outbound moves, with 352,000 residents leaving between April 2020 and January 2022.”

U.S. Migration Patterns Before and After the Start of the Covid-19 Pandemic (Federal Reserve Bank of Chicago) — “When looking at the data on state-to-state moves provided by United Van Lines, we notice some interesting trends. Figure 1 shows that the top seven national moving patterns before and after the start of the pandemic are the same, but the rankings differ by period. Six of the top seven moving patterns involve California (with four being California-to-Texas, California-to-Washington, California-to-Florida, and California-to-Virginia). Eighteen of the top 20 moving patterns involve California or Florida, which is reflective of those states’ large populations.”

California’s Population
Public Policy Institute of California:

• One in eight U.S. residents currently lives in California, with the state’s population growth slowing dramatically in recent decades.
• Since the onset of the COVID-19 pandemic, California’s population has declined (although remained very diverse).
• While more than 10 million Californians are immigrants, California is aging. However, it is young compared to the rest of the nation.
• Los Angeles County and rural areas have lost population and political representation.
  
  

The Big Shortage: California's Worker Scarcity and Economic Growth (UC Riverside School of Business’s Center for Economic Forecasting and Development) — “It is worker scarcity — driven by the lack of basic long-term population growth — that is the true underlying cause (of meeting business demand) and a critical future challenge for the economies of the United States and California. For several decades there has been a substantial slowdown in the growth of Americans in their prime working years. As bad as the labor shortage is nationally, it is worse in California, especially Southern California. The state’s lack of housing acts as a functional cap on population and labor force growth, degrading affordability and driving workers and businesses to other locations. Moreover, the state’s demographic forecasts do not paint an optimistic outlook for future trends.”

The Cost to Build New Housing in California Keeps Rising (UC Berkeley's Terner Center for Housing Innovation) — "A family that could afford a home for $900,000 before recent interest rate increases can now only afford a home price of $650,000, resulting in over 25 percent less purchasing power as of May 2022 and this trend will likely continue to worsen. Instability in the buyers’ market directly impacts the building industry, with fewer homes being built since developers do not want to risk not selling newly constructed properties. At the same time, the cost of building materials continues to rise, leaving less financial capital to build new homes."

The Understated ‘Housing Shortage’ in the United States (IZA Institute of Labor Economics) — “Unsurprisingly, the housing shortage is greatest in the Northeast, Coastal California, and Hawaii, consistent with higher home prices in these areas. Among counties with a population of at least 200,000 people, the counties with the largest housing shortages are San Mateo County, California (52 percent), Arlington County, Virginia (47 percent), San Francisco County, California (45 percent), and Los Angeles County, California (44 percent). The housing shortage is the largest in Hawaii (35 percent), the District of Columbia (35 percent), California (31 percent), and Massachusetts (30 percent). Our national housing shortage estimate is 13 times (larger than) the 1.5 million estimate cited by the White House.” (View the direct report here)

NFIB Jobs Report: Nearly Half of Small Business Owners Still Can’t Fill Job Openings (National Federation of Independent Business) — “Small businesses across the country continue to raise wages to keep employees and fill a historically high level of open positions. Seasonally adjusted, 49 percent of all owners reported job openings they could not fill in the current period, down one point from June and down two points from May’s 48-year record high. Of those trying to hire, 91 percent of business owners reported few or no qualified applicants for the positions they were trying to fill. Forty-two percent of owners have openings for skilled workers and 21 percent have openings for unskilled labor.” (View the direct report here)

Can a Hot but Smaller Labor Market Make Gains in Labor Force Participation? (Brookings Institution) — "The overall decline in labor force participation rate (LFPR) from the early 2000s has largely reflected the aging of the population and the movement away from work for young adults in school, which more than offset the increase in LFPR from increases in educational attainment (both high school and postsecondary) and from older workers staying in the labor market longer. Labor force participation has also been influenced by the business cycle, declining in the aftermath of the Great Recession and the COVID-19 recession and then recovering as conditions improved. Structural factors (such as aging, the trajectory of participation among certain demographic groups, and disability insurance takeup) could explain almost all of the decline in LFPR between 2007 and 2014."

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