By David M. Greenwald
Davis, CA – Slow growthers have predictably jumped on revised demographic projects for California that show slow or even slightly declining growth over the next few decades in California to justify arguing that we don’t have a housing crisis.
I saw one argument recently that suggested that the updated state projections eliminates a need to focus on housing affordability through addressing housing shortfalls.
But there are a number of problems with interpreting the data in this way. Most surveys that look at outmigration place housing affordability as a top reason for the decline of population growth.
For instance, PPIC found, “Thirty-three percent of Californians say the cost of their housing makes them seriously consider moving out of the state, and an additional 10% consider moving elsewhere within California.”
Earlier this year, “Seven in ten Californians say housing affordability is a big problem in their part of California—the highest share saying this in our periodic surveys since 2017.”
PPIC added, “Record numbers of people have left California, according to recent data, and departures include groups who have traditionally stayed put, such as higher income earners. Many residents (45%) say housing costs have made them seriously consider moving from their part of the state—with three-quarters of this group saying they would move outside the state.”
This is just one example among many that shows basically the same phenomenon.
So even if you accept the data at face value, you end up with this weird circular reasoning. We don’t need additional housing because we are going to see declining population growth. But we are experiencing declining population growth—in large part because of the housing affordability crisis.
Thus the declining population projections are a symptom of, rather than a solution to, the housing crisis.
The are other factors cited including lower birth rates and aging boomers, but the biggest factor is still “high housing costs.”
But even if we ignore the causal implications of the housing crisis—how much stock should we even take in these projections?
Eric McGhee, a senior fellow at the Public Policy Institute of California, cautioned Bloomberg that “the long-term forecast is ‘more illustrative than it is predictive,’ because it’s hard to project that far ahead.”
The projections are “based on a combination of natural increase in population — births minus deaths — and net migration.” Birth rate is definitely an issue, as “demographers project that the number of deaths in California will exceed births by 2035.”
But we have known that for some time. What has changed is not birth rates, but rather in versus outmigration. And those numbers have changed dramatically over a very short period of time.
These same measures a decade ago saw population reaching 53 million by 2060. Three years ago that number was revised to 45 million. Now it’s 39.5 million.
Clearly this is not data driven by birth rates. This is data driven by migration patterns.
So what has happened over the last few years? The housing crisis has worsened. And COVID.
That illustrates exactly the problem here. 2020 to 2023 has been perhaps the most tumultuous period in the last century. We had a major disruption in a pandemic. And we have the ongoing housing crisis.
This is the same point I have been making with regard to evaluating crime—crime surged everywhere during the pandemic and now it is starting to go back down to pre-pandemic levels. That’s not a shocking result, but changing or blaming policies due to pandemic disruptions is not great public policy.
Thus I would argue: (A) housing is a driver of the population growth projections, and (B) the population growth projections are really too volatile to be helpful in directing housing policies at this time anyway.
It’s not just slow growthers in Davis who are overreacting to this data.
This weekend, veteran columnist Dan Walters rolled out his dystopic vision of California: “After decades of historic growth, California (is) switching to a period of chronic stagnation.”
He’s making the same mistake as the slow growthers, but coming about it from the opposite perspective.
He is worried about a stagnant population which he argues will create a “myriad” of “social, political and economic impacts – some already evident – such as not having enough workers to fill jobs and California’s loss of a congressional seat for the first time in its history.”
He argues “the old saying that demography is destiny comes into play.”
This is precisely the problem.
For a long time, Nate Silver has warned, “Demographics Are Not Destiny.”
He was speaking mainly of the impact of demographics on politics, but I tend to agree overall. Moreover, I would add a further caveat, projections are not destiny either, particularly projections that are as volatile as population growth.
The idea that we need to rely on population growth to continue to have economic growth, I think, is flawed in and of itself. We have already reached a post-industrial revolution in this country and we are about to embark on an AI revolution—and while we shouldn’t be blind to the downside potential of this technology, it also has some advantages including the potential at least to sustain growth in productivity that could compensate for a flatter population curve.
In any case, in terms of growth projections locally and statewide, I think we need to be very careful to understand what is driving those growth projections and also just how volatile they are, and how a sudden but dramatic event—like a pandemic—can create huge shifts in a very short period of time.