(The Center Square) – California’s economic growth has been in the top third of states for the last decade, but its outlook is dimming, according to a new report from the American Legislative Exchange Council.
“California remains a prime case study in how punitive tax policy and regulatory overreach can erode even the strongest geographic and cultural advantages,” wrote ALEC in a statement. “Despite its natural beauty, world-class institutions, and global economic footprint, the Golden State continues to suffer from policy choices that make it increasingly inhospitable to both residents and businesses.”
ALEC’s “Rich States, Poor States” Economic Competitiveness Index examined both recent economic performance and future economic outlook.
ALEC examined GDP growth, absolute domestic outmigration, and non-farm payroll employment growth between 2013 and 2023. The nonprofit found that while California ranked 12th in GDP growth and 13th in employment growth, the state was dead last in outmigration, with two million departures.
New data from other reports shows California employment may be worse than raw headline figures suggest. The California Center for Jobs and the Economy recently found the state has shed 171,000 private sector jobs, while gaining 181,100 government and government-supported jobs.
Of those new government and government-supported jobs, 38% were from elderly or disabled individuals using state funds to pay household members and others minimum wage for part-time care and assistance.
Looking toward the future, ALEC’s economic outlook examined tax policies, government employment and debt levels, court systems, and wage and labor laws to rank likely future growth.
California came out in the bottom 10 on most tax issues, but placed only 24th for sales tax burden and 27th for property tax burden. The state barely was in the bottom half for tort costs and debt service as a share of tax revenue, but ranked last or near last for wage and labor laws.
ALEC’s outlook ranking of California has remained largely steady, falling slightly from 47th in 2018 to 48th in 2022, before rising to 45th in 2023.
