Progressives praise California as the harbinger of the political future, the home of a new, enlightened, multicultural America. Missouri Senator Claire McCaskill has identified California Senator Kamala Harris as the party leader on issues of immigration and race. Harris wants a moratorium on construction of new immigration-detention facilities in favor of the old “catch and release” policy for illegal aliens, and has urged a shutdown of the government rather than compromise on mass amnesty.
Its political leaders and a credulous national media present California as the “woke” state, creating an economically just, post-racial reality. Yet in terms of opportunity, California is evolving into something more like apartheid South Africa or the pre-civil rights South. California simply does not measure up in delivering educational attainment, income growth, homeownership, and social mobility for traditionally disadvantaged minorities. All this bodes ill for a state already three-fifths non-white and trending further in that direction in the years ahead. In the past decade, the state has added 1.8 million Latinos, who will account by 2060 for almost half the state’s population. The black population has plateaued, while the number of white Californians is down some 700,000 over the past decade.
Minorities and immigrants have brought much entrepreneurial energy and a powerful work ethic to California. Yet, to a remarkable extent, their efforts have reaped only meager returns during California’s recent boom. California, suggests gubernatorial candidate and environmental activist Michael Shellenberger, is not “the most progressive state” but “the most racist” one. Chapman University reports that 28 percent of California’s blacks are impoverished, compared with 22 percent nationally. Fully one-third of California Latinos—now the state’s largest ethnic group—live in poverty, compared with 21 percent outside the state. Half of Latino households earn under $50,000 annually, which, in a high-cost state, means that they barely make enough to make ends meet. Over two-thirds of non-citizen Latinos, the group most loudly defended by the state’s progressive leadership, live at or below the poverty line, according to a recent United Way study.
This stagnation reflects the reality of the most recent California “miracle.” Historically, economic growth extended throughout the state, and produced many high-paying blue-collar jobs. In contrast, the post-2010 boom has been inordinately dependent on the high valuations of a handful of tech firms and coastal real estate speculation. Relatively few blacks or Latinos participate at the upper reaches of the tech economy—and a recent study suggests that their percentages in that sector are declining—and generally lack the family resources to compete in the real estate market. Instead, many are stuck with rents they can’t afford.
Even as incomes soared in the Silicon Valley and San Francisco after 2010, wages for African-Americans and Latinos in the Bay Area declined. The shift of employment from industrial to software industries, as well as the extraordinary presence—as much as 40 percent—of noncitizens in the tech industry, has meant fewer opportunities for assemblers and other blue-collar workers. Many nonwhite Americans labor in the service sector as security guards or janitors, making about $25,000 annually, working for contractors who offer no job security and only limited benefits. In high-priced Silicon Valley, these are essentially poverty wages. Some workers live in their cars, converted garages, or even on the streets, largely ignored by California’s famously enlightened oligarchs.
CityLab has described the Bay Area as “a region of segregated innovation.” The Giving Code, which reports on charitable trends among the ultra-rich, found that between 2006 and 2013, 93 percent of all private foundation-giving in Silicon Valley went to causes outside of Silicon Valley. Better to be a whale, or a distressed child in Africa or Central America, than a worker living in his car outside Google headquarters.
For generations, California’s racial minorities, like their Caucasian counterparts, embraced the notion of an American Dream that included owning a house. Unlike kids from wealthy families—primarily white—who can afford elite educations and can sometimes purchase houses with parental help, Latinos and blacks, usually without much in the way of family resources, are increasingly priced out of the market. In California, Hispanics and blacks face housing prices that are approximately twice the national average, relative to income. Unsurprisingly, African-American and Hispanic homeownership rates have dropped considerably more than those of Asians and whites—four times the rate in the rest of the country. California’s white homeownership rate remains above 62 percent, but just 42 percent of all Latino households, and only 33 percent of all black households, own their own homes.
In contrast, African-Americans do far better, in terms of income and homeownership, in places like Dallas-Fort Worth or greater Houston than in socially enlightened locales such as Los Angeles or San Francisco. Houston and Dallas boast black homeownership rates of 40 to 50 percent; in deep blue but much costlier Los Angeles and New York, the rate is about 10 percentage points lower.
Rather than achieving upward class mobility, many minorities in California have fallen down the class ladder. This can be seen in California’s overcrowding rate, the nation’s second-worst. Of the 331 zip codes making up the top 1 percent of overcrowded zip codes in the U.S., 134 are found in Southern California, primarily in greater Los Angeles and San Diego, mostly concentrated around heavily Latino areas such as Pico-Union, East Los Angeles, and Santa Ana, in Orange County.
The lack of affordable housing and the disappearance of upward mobility could create a toxic racial environment for California. By the 2030s, large swaths of the state, particularly along the coast, could evolve into a geriatric belt, with an affluent, older boomer population served by a largely minority service-worker class. As white and Asian boomers age, California increasingly will have to depend on children from mainly poorer families with fewer educational resources, living in crowded and even unsanitary conditions, often far from their place of employment, to work for low wages.
This was on display in June at the Unify Conference, “an industry forum on digital technology put on by Baker Hughes,” in Houston Texas. At this conference technology companies like Google and Microsoft pitched energy executives to purchase cloud and artificial intelligence deals. Darryl Willis of Google who presented at Unify said, “Energy companies have reams of data but only use 5% of it, a serious problem in the digital economy.”
Silicon Valley believes they can manage data better than E&P firms. Chevron signed a seven-year deal with Microsoft to, “capture and store the terabytes of data Chevron generates around the globe, “ said Bill Braun Chevron’s chief information officer. Other firms use the cloud to, “find more oil and predicting needed maintenance on equipment before it breaks down.” Inefficient and antiquated ways that kept US oil production lower is now being replace by complex but diversified approaches to new technologies to stay competitive in an ever-changing global environment.
Shale growth is increasing on a monthly basis but geopolitical tensions could dramatically lower this growth. Trade disputes with China where Trump has threatened over $500 billion in tariffs or a war with Iran could send oil prices into the $100 and above range. This would also lower oil demand and send countries and consumers into lower cost energy options like renewable energy and electric vehicles. In other words, only extreme geopolitical situations can lower US oil production, otherwise the future is positive based on growing demand, favorable governmental policies and embracing technology. California has an opportunity to grow the economy to unprecedented heights by embracing responsible and technological savvy E&P that could build new schools, infrastructure and ensure affordable scalable energy for decades.
Originally published at the City Journal. To read the entire column go here.
Cross-posted at New Geography.