Daniel Borenstein: California's population boom is over, plan accordingly
Published in Business News
California’s years of major population growth have ended, and a state forecast suggests that the numbers might peak by as early as 2030 and then start to decline.
At the turn of the century, when the population was about 34 million, state forecasters were predicting 45 million by 2020 and 59 million by 2040. That isn’t happening.
Instead, California’s population hit 39.5 million in 2020, dipped down to 39.0 million in the first two years of the pandemic and, according to data published by the California Department of Transportation, will max out at about 40.5 million by the end of the decade.
Whether it’s talk of a new BART transbay tube, keeping underutilized schools open or continuing to sink billions into high-speed rail, it’s time for local and state government officials to recalibrate. Projects that were conceived based on the assumption of an expanding California population will no longer make sense. We shouldn’t keep planning and budgeting as if the state’s numbers will continue to grow significantly.
The days of California’s population boom are over. The Caltrans forecast, prepared in 2021, shows the population holding at about 40.5 million through 2036 and then dropping to 39.0 million by 2050.
The state’s official projections from the Department of Finance continue to show slow population growth over the next two decades, reaching 43 million by 2040. But the department plans to revise those numbers by early next year. More important, even the department’s current projections fall way short of its boom forecast at the turn of the century.
While the pandemic applied pressure to the brakes, the slowing in California growth began long before, which raises the question of how forecasters two decades ago so badly missed the mark.
There are many reasons, says Hans Johnson, senior fellow and demographer at the Public Policy Institute of California. Birth rates have been lower than expected. Deaths have been higher. International migration into the state has not been as high as forecast.
And, most important, domestic migration out of the state has exceeded expectations. Simply put, people are leaving California for cheaper housing elsewhere, lower taxes or someplace less crowded.
The out-migration has gotten much attention since the start of the pandemic. But this is not a new trend. For each year of the past two decades, more Californians have left the state for other parts of the country than have done the reverse.
Like in the middle of the first decade of the century, the net out-migration number steadily increased from 2015-19. Then the pandemic hit. In the first year, 2020, net out-migration eased a bit but then accelerated rapidly the following two years, hitting a record 406,982 in 2022.
Coupled with other demographic trends, including increasing deaths, the pandemic years have produced the state’s first years of population decline.
Whether that continues will depend on disparate factors, such as: Will California build enough housing to balance supply and demand so more people can afford to live here? Will the sharp drop in life expectancy triggered by the pandemic — from about 81 in 2019 to about 79 in 2020 — subside? Preliminary estimates suggest that in 2021, California life expectancy dropped another half year, according to a January report by Johnson and his colleague Eric McGhee.
Nevertheless, California’s population is aging, which will increase the demand for health care and senior living facilities. And it’s becoming more racially diverse. At the same time the state is ceding political clout; it lost one seat in Congress in the last reapportionment and will likely lose more after the 2030 census.
While it’s uncertain whether the state will continue to lose population, the days of rapid-growth projections are over. Which means we shouldn’t keep spending money on projects that relied on the forecasts of the past.
We can’t continue to build more public projects without recognizing that the need for them and the population base that pays the required taxes will be flattening out. We’re in a new era, and it’s time we started planning accordingly.
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