The New California Reality:
How Demographic Trends and Economic Forces Will Be Reshaping Jewish Life in the Golden State

By Steven Windmueller, Ph.D.

Jewish communities are directly affected by external trends. While all of the data introduced here is generic to the future of California, these findings will significantly and directly impact the quality and well being of Golden State Jews.

Recent studies point to significant demographic, economic and social changes taking place within this state. As an outcome, we are likely to see an aging California Jewish community, with fewer younger families and singles to support the charitable interests of the community, its institutions and synagogues.

Over the next quarter century, these six areas of research will be of particular importance to California and its future:

1. Out-Migration
2. Aging
3. Decline of School Age Children
4. Housing Market
5. Tax Structure
6. Congestion and Traffic

Out–Migration:

The data here points to a sharp down turn in-migration to California and an uptake in out-migration.

According to data from the American Community Survey, from 2007 to 2016, about 5 million people moved to California from other states, while about 6 million left California. On net, the state lost 1 million residents to domestic migration – about 2.5 percent of its total population.[1]

By way of background, California’s “South Coast” (Santa Barbara to San Diego) is home to over 13 million people, more individuals live in this region than in the state of Illinois, America’s 5th largest state by population and the 13th least populous states combined.

Los Angeles County accounted for 91 percent of the net domestic migration losses. Rates of domestic out-migration in Orange and Ventura Counties were greater than those of the Bay Area and Central Coast. The study further sheds light on the top destination points for those leaving California. Texas, Arizona, Nevada, and Oregon represented the states benefiting from this out migration.

Aging:

There were 35 million Americans age 65 or older counted in the 2000 Census. One quarter of these elderly live in one of three states: California, Florida and New York.[2]

A Los Angeles Times story defines the aging of California in stark terms:

“Seniors will be California’s fastest-growing population. Between now and 2026, the number of Californians 65 and older is expected to climb by 2.1 million, according to projections by the state Department of Finance. By contrast, the number of 25- to 64-year-olds is projected to grow by just more than half a million; the number of Californians younger than 25 will grow by a mere 2,500.”[3]

The State of California itself has provided additional data in connection with this issue:

“The population over age 60 will have an overall increase of 166 percent during the period from 2010 to 2060. More than half the counties will have over a 100 percent increase in this age group. Twenty-four of these counties will have growth rates of over 150 percent. These counties are located throughout the central and southern areas of the State. The influence of the 60 and over age group on California is expected to emerge most strongly between 2010 to 2030.[4]

Decline of School–Age Children:

In light of both the shifting demographics and the exodus of young families, the total number of students enrolling in California schools will decline over the next two decades, while the percentage of lower-income and nonwhite students will increase.[5]

Educators have attributed the decline in enrollment to several factors, including the high cost of living that has forced many families out of California and to the presence of lower birth rates.

Housing:

Over the past quarter of a century, California’s population grew at 13.8%, whereas its total housing units expanded by 9.2%.[6] Singles, young families and even retirees report that California’s housing market discourages new buyers. There is growing evidence of the continuing economic divide between rich and poor within this state and the decline of the middle class as a key marker necessary for sustaining quality schools, mainstream social services and cultural resources.

“Housing in California has long been more expensive than most of the nation. In 1940, the average California home cost about 20 percent more than the average U.S. home. By the end of the 1940s, the state’s home prices were 30 percent higher than average. Over the next 20 years – 1950 through 1970 – California home prices increased about as quickly as the national average. Beginning in about 1970, however, home prices throughout the state began to accelerate. Prices were 80 percent above U.S. levels by 1980, and by 2010, the typical California home was twice as expensive as the typical U.S. home. As of 2015, average California home prices were two-and-a-half times higher than average national home prices.”[7]

Tax Structure:

The bottom line, California is a high-tax state, with some of this nation’s steepest sales tax, personal income tax and corporate tax rates.[8] California’s state level sales tax rate remains the highest in the nation at 7.25 percent… Combined with local sales taxes, the rate can reach as high as 10 percent in some California cities…[9]

“One reason that California spends and taxes more per capita than other states is that both incomes and the cost of living here are above the national average. As incomes rise, state and local governments spend more, partly because government employee salaries are higher in states with higher salaries in the private sector. …For every $10,000 in income, Californians pay about $70 more in state and local taxes than the average for all states.”[10]

The state’s tax structure becomes a non-incentive when launching new businesses. Construction costs have increased 20% over the past few years, further weakening the ability of cities in this state to compete for new business ventures and to attract homeowners.

Another example of these changing economic conditions is the state of California’s film industry, as an increasing number of films are being produced outside of the state, weakening the employment opportunities that were once based in Southern California.

“The trend has been mounting for high-profile films set in the Golden State to be filmed almost entirely outside California, due to lucrative tax breaks elsewhere that producers can’t turn down.”[11]

Congestion and Traffic:

As we have described in a previous article on Los Angeles, “traffic is impacting the lifestyle choices, affiliation numbers, and movement patterns…”[12] If we wish to understand how folks are making choices today concerning their leisure time options, one needs to consider the impact of the traffic challenges found across California.

As noted previously, the impact of congestion and traffic are changing “the circle of social contacts and connections.” Where once one could live in any part of Los Angeles, for example, while still experiencing an active set of social and membership commitments in other parts of the Southland, such patterns of cross-community relationships appear to be rapidly diminishing. “Today affiliation patterns are no longer being determined by family loyalty, the presence of longstanding friendships, or other traditional social factors. Geography is redefining communal patterns of participation and membership.” These same patterns are reflective of each of the major metropolitan areas within the state. Key institutional connections are being rewired on the basis of traffic patterns. The time one spends on freeways is directly proportional to one’s economic requirements and social priorities.

Some Generic Conclusions:

These most recent studies have not directly addressed California’s long-term tax situation. What appears to be evident, however, the number of workers generating income is projected to decline and the job creation picture for the state does not appear at this time to be producing the same level of well paying career opportunities. These indicators would suggest a significant downturn in the state’s economic fortunes.

Based on these demographic projections, a poorer population base will replace today’s middle class community. This will create significant pressures not only on governmental bodies but also on Jewish social service institutions in managing the needs of families, the elderly and the infirmed. Meeting these accelerated needs with fewer donors will represent a major challenge to many of our communities, our synagogues and schools.

With fewer income generating household units, the question emerges as to how this state will be able to manage its pension obligations to present and future retirees.

Let us be clear that the evolving demographic and economic crisis does not represent the first time that California has experienced a reversal of its fortune. Historians noted the significant financial impact of the 1929 Depression on the Golden State. In the early 1990s with the federal government decreasing defense spending, the fiscal impact would shrink the state’s expansive aerospace and military contracting industry. Along with the rest of the nation, the state began moving toward economic recovery in 1994.[13] Again in the 2008 recession, California would feel the full impact of this financial tsunami.

At the same time, California was plagued with a series of natural disasters – floods, fires, droughts, and earthquakes. While it should be noted that fires are natural in California, since the 1980s the size and ferocity of the fires that have impacted this state have trended upward. Fifteen of the 20 largest fires in California history have occurred since 2000.

Prescriptions for California’s Jewish Future:

As California Jewish communities plan for their future, it will be essential for our communal and religious leaders to consider these demographic patterns and the changing economic realities. Unless the State of California is able to generate different policies in connection with housing affordability, its tax structure, and job creation, the state will continue to experience a middle class exodus. Attracting young families and singles to California, while holding onto its own work force, will only happen if all three of these areas are addressed.

The impact of these changing economic realities is already impacting the Jewish community. The financial barriers have made it more difficult, for example, on the part of some prominent Jewish organizations to recruit top-level professionals. Let us be clear, it is not that people do not want to move to California rather they cannot afford to do so.”[15]

Since 2011, according to the 2018 Bay Area Jewish Population Study, some 25,000 Jewish adults have left San Francisco, with an additional 33% of the city’s Jewish residents indicating their intention to do so as well.[16] These numbers seem to confirm the more general patterns of out-migration.

The costs associated with “doing business in California” are reflected in the expensive character of Jewish life. The ability of our schools, synagogues and organizations to manage operating costs and personnel expenses, to hold down dues and tuition charges, or to be able to purchase additional facilities represent dramatic yet different aspects of the economic challenges faced by communal institutions.

Case in point, the Jewish News of Northern California reported this past week on the closing down of the East Bay Jewish Federation with its assets and operations being transferred to the San Francisco Jewish Community Federation and Endowment Fund.[17] Mergers and consolidation of schools, synagogues, and other services may well be required if this state’s vast Jewish infrastructure will be able to support and sustain vital services.

The Jewish community will likewise need to rethink its service delivery priorities when facing a significant rise in the need for senior services at all levels of care. Our congregations and schools will need to be realistic about the demographic picture with the forecast for declining numbers of new families and children.

As has been noted by demographic surveys of major Jewish communities across the country, the continued growth of Orthodox Jewish households will represent an important countervailing trend. Similarly, the rise of various start-up initiatives and the presence of Jewish entrepreneurial models of organizing will continue to expand and replace some of the legacy institutional structures.

None of these assessments is taking into account the possibility that younger Jews, many of whom are successful entreprenaurs, professionals and business people will “step up” to infuse California’s communal and religious institutions with the financial capital necessary to sustain and even grow these enterprises. This may be one of the unknown elements in calculating this scenario. The impact of various social forces, including the rise of anti-Semitism, a possible American religious revivalism, or a rebirth of communalism, can also alter the outcomes as represented in this discussion.

Certainly, an overhaul of this state’s tax system, an upgraded public transportation program and the introduction of incentives designed to change existing driving patterns, and the creation of new business opportunities, among other initiatives may alter some of these population trends and economic forecasts. The Jewish community will need to be an active voice in helping to chart new economic and social policies for the state.

California Jewish communities may wish to consider adopting strategies employed by some smaller mid-Western and Southern Jewish communities. One such approach has involved helping to recruit new families with the introduction of financial assistance packages.[18] Some communities, such as Birmingham (Alabama), have employed the use of an Outreach Coordinator to attract potential families to relocate.[19] Other communities have introduced ad campaigns with messages promoting the “quality of Jewish living.” Congregations in collaboration with Jewish social service organizations and JCC’s have generated creative financial packages and membership options designed to meet the needs of families and to attract new participants.

Cultural and racial diversity can be identified as another characteristic distinctive to the changing demographic picture of California’s Jewish community. The Bay Area Study, cited above, found that nearly 25 percent of local Jewish households include one non-white adult (Jewish or not) – Hispanic, Asian American, black, or of a mixed or ethnic or racial background.[20] The changing composition of the community further confirms the Americanization of California Jewry.

These current external factors are influencing and shaping the Jewish economy of California. How the Jewish community understands and prepares for its future will be directly aligned with these various emerging demographic and economic trends. In anticipating these changes, federations and its social service networks, synagogues and schools, and advocacy organizations will need to act in consort to re-envision the Jewish community, manage institutional transitions and mergers, and advocate for responsible state tax policies and economic innovation.

Dr. Steven Windmueller is the Rabbi Alfred Gottschalk Emeritus Professor of Jewish Communal Service at the Jack H. Skirball Campus of HUC-JIR, Los Angeles; his writings can be found on his website, www.thewindreport.com.

[1] https://lao.ca.gov/laoecontax/article/detail/265
[2] https://www.prb.org/whichusstatesaretheoldest/
[3] https://www.latimes.com/projects/la-pol-ca-next-california-demographics/
[4] https://www.aging.ca.gov/data_and_statistics/facts_about_elderly/
[5] https://hechingerreport.org
[6] https://www.ppic.org/content/pubs/cacounts/CC_502HJCC.pdf
[7] https://lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx
[8] https://www.caltax.org/resources/cataxfacts.html
[9] https://www.thebalance.com/california-state-taxes-amongst-the-highest-in-the-nation-3193244
[10] http://nextca.org/topics/entry/taxation-fiscal-policy
[11] https://variety.com/2014/film/news/even-films-set-in-california-are-shooting-elsewhere-to-save-money-1201125523/
[12] http://ejpprod.wpengine.com/how-external-factors-are-re-inventing-the-la-jewish-community-a-case-study/
[13] https://www.britannica.com/place/California-state/History
[14] https://www.britannica.com/place/California-state/History
[15] http://ejpprod.wpengine.com/how-external-factors-are-re-inventing-the-la-jewish-community-a-case-study/
[16] https://www.jweekly.com/2018/06/11/why-are-jews-abandoning-san-francisco-hint-its-a-ridiculously-expensive-town/
[17] https://www.jweekly.com/2019/05/16/east-bay-federation-to-fold-s-f-federation-to-take-over/
[18] https://www.washingtonpost.com/local/social-issues/a-millionaire-paid-jews-to-move-to-a-small-town-in-alabama-now-one-couple-struggles-with-their-choice/2018/12/26/19703dba-fd6e-11e8-83c0-b06139e540e5_story.html?utm_term=.6130adc99025
https://www.nytimes.com/2012/09/19/nyregion/jewish-groups-across-us-paying-families-to-relocate.html
[19] https://www.huffpost.com/entry/southern-jewish-recruit-population_n_1578825
[20] https://www.jweekly.com/2019/05/16/east-bay-federation-to-fold-s-f-federation-to-take-over/