Every decade or so, at the bottom of an economic cycle, breathless headlines trumpet that California’s best days are behind us. Then, as sure as the sun sets in the West, the economy recovers and anyone who bet against the Golden State kicks themselves, as facts outpace fiction and the state comes back even stronger.
It’s no secret that, like every other state in America, Californians suffered mightily during the COVID-induced recession. We can never overlook the millions of Californians who lost their jobs or their businesses, struggled to put food on their tables or worried about their futures.
This disruption led many out-of-state observers to jump to half-baked conclusions based on incomplete or erroneous data. One canard was that Californians were leaving the state in droves, despite the data showing that many Californians just moved to different parts of the state to ride out the pandemic.
In fact, only 3.7% of households and businesses that filed changes of address in 2020 left California. That is not an exodus.
Other self-anointed economic sages decided that California’s vaunted economic and technology engine was sputtering. In fact, California continues to be the most vibrant and exciting place in the world to do business. A few indicators:
● In 2020, 442,324 Californians filed applications for new business licenses — a 21.7% increase from the year before — as the state continues to lead the nation in new business starts.
● In 2020, more than 50% of the nation’s venture capital funding went to California.That was double what the next three states (New York, Massachusetts and Washington) Combined.
● To date, there have been 734 venture funding rounds made at a valuation of $1 billion (a so-called “unicorn”) or more — of those, 67.3% have been in California. San Francisco alone had more than Texas, Florida, North Carolina and Colorado Combined.
● Only 22 U.S. startups have ever been valued at $10 billion or more in a funding round; 17 of them are based in the Bay Area.
● Nearly a year ago, the 236 public companies based in Silicon Valley and surrounding regions had a combined market capitalization of $4.75 trillion. Now, the total value of those companies has grown 80% to nearly $8.57 trillion.
California is going to come out of this in better shape than most states, as was forecast by a recent report from the UCLA Anderson School of Management, which forecast that California’s recovery will outpace the rest of the country. Within just the last two months, California has significantly outpaced the rest of the country in job creation — adding 275,700 jobs in February and March, which represented 21% of all new jobs created throughout the country during that time.
Under Gov. Gavin Newsom’s fiscal leadership, the state recently announced that revenues continue to exceed forecasts, producing a $75.7 billion surplus. Our version of “California Capitalism” produces leaders who not only innovate through challenges but also reject the false choice between building successful businesses and delivering the best for workers, communities and shareholders. They do both.
Look no further than the First Partner’s recent announcement of more California companies signing her Equal Pay Pledge — another sign that our path to recovery and a better future for all will be through equity.
Yes, with great success comes great challenges. We need to build more homes to keep pace with the new jobs being created. We need to invest in our infrastructure, not the least of which to address climate change. And we need to continue to lead the country in finding ways to make health care more affordable and available. But in the end, my money is on the people of the Golden State.
And here’s why: What do you call a group of unicorns? A blessing. In California, we can and do count our blessings. Literally a new unicorn is born here every week. It’s sometimes hard to see them through all the dust kicked up by other states chasing them. Good luck with that. The businesses of tomorrow know the future continues to be made in California.
This state will come roaring back. You can bet on it.
Lenny Mendonca is the former chief economic and business adviser to Gov. Gavin Newsom and lecturer on inequality at the Stanford Business School. He wrote this for CalMatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.