California Policy Lab finds no evidence of ‘exodus’ from state

Infographic about residential exits in California by economic region in 2020
Quynh Truong/Staff

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With reports suggesting the COVID-19 pandemic is accelerating residential relocation out of California — a theory called “Cal Exodus” — a policy brief published Thursday by the California Policy Lab, or CPL, suggests that this may not be the case.

The brief found that people are not leaving California at a rate significantly higher than in previous years. This may come as a relief to those worried about the impact an exodus would have on state and local economies, according to the brief.

“Everyone knows someone who’s moving because of the pandemic. We wanted to take this new data set and put some numbers to that,” said Natalie Holmes, the author of the brief and a research fellow at CPL. “We have not seen a big spike in exits from California since the pandemic started, not something we can clearly distinguish from trends from the previous years.”

Holmes added the state has seen a significant number of departures from the Bay Area, specifically the San Francisco region.

The CPL found the number of people leaving the Bay Area increased by 9% in the last three quarters of 2020 while new entrances to the region dropped by 21%. The trend was most prominent in San Francisco, where the number of exits increased by 31% since last March.

Bay Area residents who moved last year primarily relocated to other places within the region, according to Jesse Rothstein, campus professor of public policy and economics and CPL faculty director.

“CPL will be looking more into the ‘why’ in future research with this data, so we can’t say for sure yet,” Rothstein said in an email. “Clearly COVID-19 is part of this, and it’s likely that high housing costs, a labor force that can work remotely, and even possibly concerns about things like wildfires and the impacts they have are all contributing factors.”

The brief also found no evidence that relocation among wealthy residents is occurring significantly faster than the typical rate, which addresses concerns about the potential impact a large exodus could have on the state’s income tax revenue.

Berkeley City Councilmember Sophie Hahn noted there has been an inflow of new residents coming to Alameda County from San Francisco, and when students return for in-person instruction, housing “will fill up quickly” in Berkeley.

However, according to Holmes, rental rates have decreased in San Francisco, which could draw residents back into the city. One factor that could lead to a longer-term relocation trend would be if companies extend remote work policies indefinitely, Holmes added.

“Of course we can’t predict the future,” Holmes said. “One thing I’m curious about and will be watching closely for is whether these population shifts prove more temporary or more permanent, and we just don’t know yet.”

Contact Emma Talia at [email protected] and follow her on Twitter at @emmataila.