The economic secret Gavin Newsom doesn’t want you to know

Gavin Newsom likes to talk about how California keeps getting richer, as he campaigns around the country.

What he doesn’t want you to know is that Californians are poorer than other Americans, in terms of disposable income.

A recent Pacific Research Institute (PRI) study notes that Californians look like they are earning more because the median household income is 20% above the national average.

At the same time, the study notes, Californians have 35% less disposal income than the rest of the country because of the cost of household essentials.

Dr. Wayne Winegarden, a co-author of the study, says: “The data shows that California’s economic challenges are no longer theoretical — they are measurable and worsening.”

On “affordability,” the hottest topic in America, Californians are getting creamed.

While Newsom talks about a California “miracle,” and how the state is now the fourth-biggest economy in the world, the fact is that there is significant outflow of residents to other states because of California’s excessive cost of living.

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The state also leads the nation in poverty, with a poverty rate of 17.7%.

That is not a “miracle.” It is a crisis.

And the biggest factor contributing to this decline is plummeting job growth.

California, which used to be an engine of job creation, has had only 2% job growth over the past five years, beginning in 2020. That is meager compared to a national rate of 4.3% in the other 49 states.

The figures look even worse when you take out health care and social service jobs, which are largely government-funded. Jobs have shrunk 2.7% in the private sector in California, while growing 3.4% nationally.

That is why people are leaving.

The authors of the PRI study say California’s economic reversal is the result of expensive housing, high tax rates, expensive energy, and heavy regulation.

Yes, California is now the fourth-largest economy in the world (surpassing Japan), but that is not the full story.

Over the past four years, California’s economy has shrunk as a percentage of the overall U.S. economy, from 14.5% of the total economy to 13.8%.

That is a better indicator of performance than international comparisons. The other 49 states are California’s true competition, because that is where the outflow of jobs is going.

It wasn’t always this way.

Fom 2007 through 2020, for example, job growth in California was significantly stronger than in the rest of the country. The collapse has occurred since the onset of COVID in February 2020, and the policy decisions made by Newsom and his cohorts in the legislature.

Where California is really getting hurt is the tech industry. California’s share of tech-related jobs within the overall U.S. economy has fallen from nearly 20% before the pandemic to about 16%.

That share will continue to plummet, as many tech entrepreneurs have left the state. Some of the most well-known are leaving to avoid the proposed “billionaires’ tax,” which still has not qualified for the ballot. As they leave, other job creators follow them and start new tech centers in other states.

The authors of the PRI study note that there is an opportunity for change this November, with a closely-contested election.

“California stands at a policy crossroads,” they conclude. “Policymakers can continue down the current path of high costs and slow growth, or they can embrace reforms that restore opportunity, affordability, and economic dynamism.”

Residents can either elect new leaders who will correct course, or elect those who will continue the Newsom status quo of decline.

Without a shift, we could all be in for more challenging times. And we will only have ourselves to blame.

Bruce Bialosky, a two-time presidential appointee, is a certified public accountant specializing in taxes.