California Cities Win Economic Bottom Dweller Award

Governor and potential presidential candidate Jerry Brown traveled to Mexico this week, while a team of economists for the popular Wallet Hub (WH) social media website employed a group of university economists to evaluate the 150 largest U.S. cities for 18 key factors. 

The main factor was economic health, “including employment and unemployment data, personal income changes, real estate values, poverty rates, personal bankruptcies, personal debt and crime.” WH assists individuals in financial and career planning and found that the two bottom dweller communities are in California, and the two top communities are in Texas.

Wallet Hub surveys and publishes big data metrics regarding the economic environment, on a city versus city basis, for America’s 150 largest cities. They rated Stockton number 149 and San Bernardino number 150. Other than San Francisco — ranked 20th — California’s largest cities were given low scores. Los Angeles is 99th, San Diego is 103rd, and Sacramento 104th.

Unemployment in the United States has fallen to 6.3%, but there has been little recovery for Stockton, with an unemployment rate of 10.5%, and San Bernardino, with a rate of 8.4%. Both cities have filed for Chapter 9 municipal bankruptcy in the last couple of years after essentially missing payroll. Police and fire services have been slashed, and crime has flourished.

This compares to Laredo, Texas being the top rated city, with 6.3% unemployment, and Irving, Texas close behind as the number two city with an unemployment rate of 5.4%

According to Wallet Hub (WH) analysis, “Whenever a city is left behind in a recovery, collateral effects are bound to afflict already struggling economies.” 

WH points out that a bad economic environment drives collateral problems such as crime rising, low educational achievement, and often the collapse of public administration and services. “In the private sector, property values decline and businesses shut down. If and when that happens, skilled workers are forced to seek better opportunities in more thriving communities. And a town that had little hope remaining is completely crippled,” said the report.

The golden state used to mean gold for the residents in the form of great jobs and rising expectations. But as Governor Rick Perry of Texas said in an interview last year with the Washington Post:

Twenty years ago, California was considered to be the absolute economic center of America. You pointed to California and said, ‘Gee, wouldn’t you like to be like them?’ And I would suggest that’s not the case, and I will suggest to you that’s because of the burdensome tax environment, a regulatory climate that is very unpredictable and unstable, and public schools that are continuing on a downward trajectory.

Perry is considering a presidential run for 2016 based on the tax and regulatory structure of the Lone Star State as the engine that helped produce more new jobs in post-recession America than any other state. When he visits California to find companies interested in relocating, he says his motto is “Texas rising.”

If Governor Brown had a motto, it might be “California declining.” The Great Recession may have supposedly ended five-and-a- half-years ago for the rest of America, but it remains alive and well in California. The only top tier rankings that California “enjoys” today are: the fourth worst unemployment rate, highest income tax rates, highest welfare case load, and net emigration out of the state.  

The author welcomes feedback and will respond to reader comments. Chriss Street just returned from teaching “Entrepreneurship and Capitalist Business Strategy” at Ho Chi Minh University in Vietnam.