State Regains Its Magnetism for Newcomers

Providing the first official evidence that California has regained its historical stature as a magnet state, the Department of Finance reported Thursday that 21,270 more people moved into California last year than left for other states.

The net gain in domestic migration from July 1996 to July 1997, although relatively small, contrasts sharply with a net loss of more than 200,000 people in the previous fiscal year and domestic outflows totaling 1.2 million people from July 1992 to July 1996, largely because of the recession.

Demographers and economists had suspected that California last year again began gaining more residents than it lost, but the Finance Department’s report surprised some analysts because it showed that the turnaround occurred even earlier than had been thought.

Economists said the new report, which also showed higher levels of foreign immigration into the state last year, was likely to boost confidence in the state’s economy, spurring retailers to venture into or expand in California and providing a boost to the resurging housing market.

“If they are correct, we should see really hefty building this year,” said Nancy Bolton, a UCLA demographer. Bolton said her research suggested that California’s net domestic migration had started turning positive only late last spring or early summer. But she and other analysts said the state’s new data, which are based on driver’s license and federal tax information, mean California’s robust and entrepreneurial economy has already begun to lure people into the state.

“California’s role in the country as the place people tend to go to is being restored,” said John Husing, a regional economist in San Bernardino.

With net domestic migration back in the positive, higher foreign immigration and a continued relatively high birth rate, California’s overall population last year rose to 32.96 million as of July 1997--a robust increase of 1.8% from July 1996, according to the Department of Finance. That compares with a growth rate of 1% from July 1995 to July 1996.

The department’s population figures are more than academic. They provide the basis for allocating, among other funds, money to local law enforcement agencies. People in some counties that did not show as strong population growth, such as Los Angeles and San Bernardino, questioned whether their areas were undercounted.

Some analysts say the domestic migration data that are based on driver’s licenses do not accurately reflect resettlements because some states do not return to California all of the licenses surrendered by former California residents when they apply for new licenses. As a result, the state Department of Finance adjusts the driver’s license data by taking into account federal tax information.

Los Angeles County, by far the state’s largest, had the biggest population gain, increasing by 128,200, to 9.52 million as of July 1997. However, that was a growth rate of just 1.4%. Los Angeles County’s population was bolstered by an 18% jump in net immigration. But the county’s domestic migration had still not turned the corner, though the net outflow of 73,199 last year was about half as much as the previous fiscal year. In this decade through July 1997, the number of residents leaving Los Angeles County has outnumbered out-of-county domestic arrivals by more than 1 million.

Jack Kyser, economist at the Los Angeles Economic Development Corp., said he expected Los Angeles County to show a gain in domestic migration next year. He said he was seeing signs that more young and better-educated people were once again flowing into Los Angeles County. Kyser added: “Firms like Home Depot have made commitments to expand here. You have other people looking for new growth opportunities. This [report] is going to be another spur for these folks.”

Orange County, one of the stars of the state’s economic resurgence, also turned the corner last year, posting a positive domestic migration of almost 2,000. Riverside County, which has had domestic migration gains throughout the decade, again added immigrants as well as domestic residents, its overall population growing by 2.2%, to 1.4 million as of July 1997.

Among large counties in the state, Alameda (1.40 million) and San Diego (2.76 million) led the population growth last year, each gaining by 2.5%. The state’s fastest-growing counties were generally in Northern California, led by Monterey County, where the population surged 4.9%, to 377,800.

Economists said the larger-than-expected gain in the state’s population raises questions about the availability of housing for all the newcomers. Although the state has been adding jobs robustly for three years, home building has only recently taken off. Analysts say that could present problems in the coming years. The shortage is already being felt in Northern California, where rents have climbed. Kyser said Southern California will soon confront some of the same issues.

“In a couple of years, we’re going to wake up and say, ‘We have a housing shortage,’ ” he said.

Hans Johnson, a research fellow at the San Francisco-based Public Policy Institute of California, said the 21,270 gain in domestic migrants to California was small, given that the state had net annual inflows of 100,000 domestic residents during the 1980s. Yet he viewed the latest figures as an important indicator.

When California witnessed the tremendous outflows of residents, Johnson recalled, “some were saying that this portends a permanent change for California.” But the state’s new figures, he said, “suggest that that’s not going to be California’s long-term future. I wouldn’t be surprised at all if we returned to the ‘80s.”