In popular myth, California has been America’s land of opportunity since its founding. In 1849, California built its reputation around its rich vein of gold in Sierra Nevada. From precious metals, California pivoted its focus towards innovation, initially in agriculture, oil and later in the new business of motion pictures.
In the post-WWII era, California shifted its focus once again, this time leading the country, and the world, in aerospace innovation. More recently, the state’s reputation has been enhanced by its domination of information and digital technologies, becoming the home to four of the world’s seven most valued tech firms.
The supercharged economy attracted a steady flow of migrants, both from within the United States and from foreign countries. The state’s population grew from 92,597 in 1850 and 10 million in 1950 to 38,889,800 in 2024. But along with population growth has come over-crowded highways, unaffordable housing, and a highly regulated business climate. For the first time in the state’s history, as measured by the last census, California, after suffering a decade or more of domestic out-migration, actually lost population.
We conducted a study of the state’s economy identifying clear problems with the creation of high wage jobs, particularly outside of Silicon Valley. California’s economy is creating a highly bifurcated society, divided by wealth and region, that threatens the social fabric of our state, as our landmark study, Beyond Feudalism: A Strategy to Restore California’s Middle Class, has clearly shown.
Key questions we consider:
- Is the loss of population the “canary in the coal mine” for the decline of California’s economic dominance?
- Are we on the cusp of becoming the next “rust belt,” where jobs, growth and prosperity
move to other parts of the country or the world? - Is there a next “new thing” that California will pivot towards that will, once again
remake its identity? - Or is the state losing its repute for re-invention to other areas of the country?
Dr. Kenneth (Ken) Murphy is an Assistant Professor of Teaching at the Merage School of Business, University of California Irvine. He teaches predictive analytics, operations management, and management science courses in executive, MBA, MS, and undergraduate programs. He has published in scheduling, technology implementation, and organizational effectiveness, in leading operations and systems journals. Along with his colleagues, he created an innovation index, which measures the degree to which an economy is engaged in advanced industrial and service activity.
Marshall Toplansky is an award-winning Innovation Professor of Management Science at the Argyros School of Business and Economics at Chapman University. He is a widely published and award-winning marketing professional and successful entrepreneur. Marshall co-founded KPMG's data & analytics center of excellence and now teaches and consults corporations on their analytics strategies.
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