State Issues

A dollar in California simply doesn’t go very far

Housing in California costs a lot more than shelter in other states.
Housing in California costs a lot more than shelter in other states.

Gov. Gavin Newsom’s inaugural address was a bit too long, but he did make some cogent points, including this one:

“Even in a booming economy, there is a disquieting sense that things are not as predictable as they once were, that we must now run faster just to stay in place. Stagnant wages. Costs that keep rising – rent, utilities, visiting the doctor – the basics are increasingly out of reach. We face a gulf between the rich and everyone else – and it’s not just inequality of wealth, it’s inequality of opportunity.”

While decrying economic inequality is not new for California politicians, they’ve only occasionally cited high living costs. In fact, those costs are the major reason we have the nation’s highest level of poverty, as measured by the Census Bureau. And those costs are not confined to housing.

Californians’ personal incomes, while not the nation’s highest, average well above the national average. But Californians’ incomes don’t stretch as far as those in most states.

Take gasoline, a necessity for most. The American Automobile Association’s latest survey pegs the national average at $2.24 per gallon with Missouri having the cheapest at $1.82. In California, it’s $3.32.

That $1.06 gap between California and the average translates into about $15 billion per year in additional costs for motorists, or $400 per 10,000 miles.

Utilities, another basic, are also expensive. California’s electric rates are among the nation’s highest and have climbed steeply in recent years, thanks to the shift from carbon to renewable sources.

The Tax Foundation calculates what $100 is worth, in terms of buying goods and services, state by state. Last year, in Mississippi a C-note was worth $115.74 compared to the national average; in Hawaii it $84.46, followed by New York $86.51 and California $87.41.

Bankrate, a financial website, published a “cost of living calculator” which allows users to see how moving from one metropolitan area to another changes living costs. Consider a move from the San Francisco Bay Area to Austin, Texas. Bankrate shows that someone with a $75,000 annual income in the Bay Area could maintain the same standard of living for $40,816 in Austin, where overall costs are 45.6 percent less – 74 percent less to buy the median home, 67 percent less for an apartment.

Bankrate covers dozens of other costs, including food, clothes, gasoline (31 percent less), cosmetics and medical services. The only expense even slightly (8 percent) higher in Austin are haircuts.

Those with high incomes, such as Newsom, can easily absorb the higher costs of California living, but the state is seeing an exodus of those who can’t; increasingly, we’re a society of haves and have-nots with the middle class declining.

Moreover, many of those costs – housing, gasoline and utilities – are directly attributable to political actions and inactions, which Newsom should also acknowledge.

He seems inclined to offset health care, housing and other high costs with state subsidies. But that approach would ultimately require big tax increases in a state whose residents already have one of the nation’s highest tax burdens, and that could encourage even more flight.

Dan Walters writes on matters of statewide significance for CALmatters, a public interest journalism organization. Email: