It’s hard to fathom that 25 years have passed since the world worried if computers would work after a year with two zeros began.
If you forgot, California’s tech-centric economy was booming in late 1999 even as “Y2K” fears swirled about what might happen to software that never considered the year 2000.
That tech glitch was solved, but it was quickly followed by another technology headache – the dot-com stock crash. This market debacle slashed the values of fledgling internet companies, a fast-growth slice of California’s economy.
It was the first of many blows the state’s business climate would suffer this past 25 years.
Next came the 9/11 terror attacks of 2001 that shook the world’s economy and fueled a mild recession. Novel mortgage making, pioneered in California, powered a swift economic revival, statewide and nationally.
Unfortunately, these unsound lending practices created a real estate bubble that soon exploded into 2008-09’s Great Recession. Its economic rebound ran to 2020, when coronavirus upended the global business scene.
Despite these calamities, California’s economy managed to remain a national powerhouse.
To judge California’s performance, my trusty spreadsheet examined 10 business yardsticks for the 50 states going back 25 years. It measured these metrics using percentage gains, so California’s size doesn’t alter much of the equation.
What it found was surprising resiliency.
Population: California ranked No. 28 for new residents, with 19% growth, but this was below the 25% increase seen nationwide. The state’s high cost of living clearly made living elsewhere look better.
Nevada saw the biggest population gains, up 81%, Utah, up 65% and Idaho, up 60%. Golden State rival Texas was No. 5, at 56%, and Florida was No. 6, at 55%.
Laggards were West Virginia, off 2%, Michigan, up 3%, and Illinois, up 5%.
Private-sector jobs: California – the nation’s largest job market – grew employment outside of government by 30% since 1999, the 14th largest increase and outpacing the nation’s 24% growth. Business leaders like to complain about the Golden State, but they still do plenty of business here.
The largest hiring sprees were in Utah, up 71%, Idaho, up 70%, and Nevada, up 63%. Texas was No. 4 at 59% and Florida was No. 6 at 51%.
Laggards were Michigan, off 1%, and West Virginia and Ohio, up 2%.
Government jobs: California added 19% to this staffing, the No. 13 gain. Nationwide, this work expanded by 14%.
Think what you want about government work, but California’s additions pale compared with Nevada’s 57%, Utah’s 53%, or Colorado’s 50%. Texas was No. 4 at 35% and Florida was No. 14 at 19%.
Laggards were Louisiana, off 14%, Michigan, off 7%, and Pennsylvania, off 3%.
Median household income: California’s 101% growth for family paychecks ranked No. 22 and was a smidgen better than the nation’s 98%. High-paying tech work is offset by the state’s numerous low-paying hospitality and agriculture jobs.
Income grew fastest in Colorado, up 159%, Wyoming, up 155%, and Iowa, up 147%. Texas was No. 20 at 106%. Florida was No. 33 at 91%.
Laggards were South Carolina, up 71%, New York, up 73%, and Wisconsin, up 75%.
Consumer spending: California’s increase in retail expenditures ranked No. 1 with 196% growth. The nation was up 159%. Those enviable paychecks buy lots of merchandise.
After California came New York, up 195%, and North Dakota. Texas was No. 22 at 161%. Florida was No. 25 at 160%.
Laggards were Delaware, up 137%, then Nevada and Minnesota, up 139%.
State taxes collected: California’s combined collection of all levies grew 275%, the No. 6 jump that topped the nation’s 200%.
This benchmark is about both tax policy and economic growth.
Biggest tax gains were in North Dakota, up 488%, Nevada, up 416%, and Vermont, up 337%. Texas was No. 10 at 258%. Florida was No. 34 at 166%.
Laggards were Michigan, up 82%, Ohio, up 92%, and Missouri, up 110%.
Home prices: California houses become 294% costlier, according to a federal index. That’s the fifth-biggest gain among the states and zero surprise – it’s far above the nation’s 200% appreciation.
Biggest gains were in Hawaii, up 325%, Florida, up 324%, and Idaho, up 305%. Texas was No. 15 at 238%.
Laggards were Illinois, up 119%, Michigan, up 123%, and Ohio, up 128%.
Building permits: California doesn’t build enough. Its residential construction plans ranked No. 29 best – down 23% from 1999. That’s double the nation’s 11% dip.
Residential construction boomed in Montana, up 92%, Idaho, up 59%, and South Dakota, up 53%. Texas was No. 5 at 49%. Florida was No. 12 at 14%.
Laggards were Illinois, off 66%, Michigan, off 63%, and Rhode Island, off 62%.
Gross domestic product: California’s business output was No. 8 for growth at 111% vs. nation’s 75% boost. Lots of expensive, value-added stuff is made in the Golden State.
Biggest gains? North Dakota, up 152%, Utah, up 147%, and Idaho, up 135%. Texas was No. 4 at 128%. Florida was No. 9 at 104%.
Laggards were Louisiana, up 19%, Michigan, up 29%, and West Virginia, up 31%.
Exports: California business shipments overseas ranked No. 43 with 95% growth vs. the nation’s 222% expansion.
The state’s business culture has long had an international flair. The rest of the nation’s finally discovered this niche.
Exports expanded fastest in Nevada, up 909%, North Dakota, up 596%, and Mississippi, up 550%. Texas was No. 5 at 487%. Florida was No. 28 at 196%.
Laggards were Vermont, off 55%, Hawaii, up 15%, Maine, up 46%.
Yes, this is just one snapshot of economic history. But it reveals the curious endurance within California’s business environment.
Look what we find when averaging these 10 grades of economic performance: California had the 10th best state economy over these 25 years.
The No. 1 economy was Utah, then Texas, Idaho, Montana, North Dakota. Florida tied for 10th. Worst was Michigan, followed by Ohio, Connecticut, Illinois, and Wisconsin.
For California, it’s not a bad score when recalling all the economic twists and turns.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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