Thanks to perfect weather, a thriving economy and an incredible pop culture cachet, families have considered California the best destination to achieve what is now called the “California Dream.” For most of the 20th century, many families could expect to find a well-paying job, own a house and see ample resources invested in their kids. Recently, though, as the cost of living has skyrocketed, this dream seems increasingly infeasible. Without significant policy changes, the “California Dream” will soon be ancient history.
As a father who just celebrated the birth of my second child, I have seen firsthand the decay of this California Dream. Even with two full-time salaries in upper-middle-class jobs, my wife and I are stretched to afford the mortgage on our 800-square-foot home. Accounting for childcare, we could pay over 60% of our take-home income on housing and childcare alone in 2023. And we aren’t outliers: in 2022, the median rent on a two-bedroom home plus the average cost of childcare for one infant and one preschooler in Los Angeles was $6,084 a month. Compare that to 2010, when equivalent rents and childcare prices would have cost $3,172 — rates have nearly doubled. With such inflated costs, it’s impossible to see California as a family-friendly state.
A quick look at California’s population decline proves this point. Since 2021, California has lost over 300,000 residents to migration — especially by working-class families — but even more concerning is the recent fall in the state’s birth rates. A study published last year shows California’s birth rate steadily declining to 1.5, down from 2.2 in 2007. Yet despite birth rates falling, research shows that the desired average family size of most women is 2.6 children, up from 2.3 in 2006. Among families who did not have as many kids as desired, the most common reason cited was that they simply couldn’t afford more children.
Despite what degrowth activists say, kids are a vital part of society. Children are huge drivers of long-run economic growth through their future orientation and entrepreneurial activity. The aging of California’s population would mean even larger labor shortages. School districts relying on enrollment for revenue will struggle to cover costs. California’s pension and tax system, which is already on the rocks financially, would become insolvent, leading to tax increases and cuts to benefits.
Although things look dire for the Golden State, a few simple bi-partisan policy changes could improve economic prospects for California families.
The first issue to address is the housing shortage causing such high prices. By most estimates, California is short 3 million homes, a shortage especially acute in single-family neighborhoods with the best jobs, transit, and schools. Research shows higher home prices delay marriage and family formation by three to four years, in addition to discouraging parents from having kids. California took significant steps toward addressing housing in 2022, but more policy reform is needed, especially to legalize building more townhouses and other family-sized housing at lower price points.
Second, California should ease licensing requirements to ease access to more jobs. A recent report by the Institute for Justice found that California had the second most burdensome licensing requirements in the nation, with 74% of middle-skill occupations requiring a license. In addition, many Californian professions require candidates to attend an unreasonable amount of graduate education before practicing. These requirements force workers to take on student debt loads and spend years of training outside the labor force, limiting their ability to start a family. California lawmakers could tackle this issue by undertaking a five-year process of reviewing all state-sanctioned professional licenses and streamlining those that cannot be justified by health and safety.
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Lastly, California needs to improve how our public benefits work. Investing public resources in children can pay for itself in the long run by ensuring low-income children are set up to achieve more in their adulthood. But while California’s safety net is generous, it’s incredibly complex, including over a dozen different benefit programs. This complexity creates a huge mental load for parents while also creating steep “benefit cliffs” that cut off parents who get ahead through work. In combination, these make upward mobility challenging. California should instead consolidate child benefits into a single cash benefit. This simpler child benefit would invest needed resources in kids, give parents flexibility, and incentivize parents to get ahead.
None of these policies by itself will be a silver bullet to promoting family growth in California but taken together, they have the opportunity to transform the experience of parents in our state. By reducing housing costs, making it easier to enter the labor market, and simplifying social benefits, we can restore hope to California’s families, one policy at a time.
Thomas Irwin works for a nonprofit in Los Angeles focused on economic development. He helped start Elevate Equity, a program for under-resourced entrepreneurs, and also is a lead organizer with Eastside Housing for All, a group advocating for economic opportunity through housing. He lives in East Los Angeles with his wife and two children.