California was once the wonderland where dreams came true. From Disney and Hollywood to its lush landscape and powerful politics, it seemed a utopia of diversity, forward-thinking ideas and an image of economic health.
California's per capita income and gross domestic product skyrocketed thanks to a thriving agricultural industry, a booming technology sector and then-lower unemployment rates. In 2022, the state had the fifth largest economy in the world and boasted a higher GDP than most developed countries.
California is home to more millionaires than ever before, and data shows their number increased 66% from 2019 to 2021.
As California slowly adopted more progressive policies, even right-wing America had to acknowledge its thriving economy.
What went wrong with California's economy?
But California's booming economy has taken a hit recently, thanks to liberal policies taking hold. Things like tax increases, strict regulations and policies were progressive but did not produce positive results. According to The Economist, “The state faces three overlapping challenges: rising unemployment, increasing financial strains and population depopulation.”
The California Center for Jobs and the Economy found that California's economy could actually slip from fifth-best in the world. The state's GDP growth ranked 32nd in the nation last year, due in part to revenue declines due to rising unemployment.
There are some indicators of where the state's economy is headed. High gas and real estate prices are creating an affordability crisis. California now has the highest unemployment rate in the country. That's more than a million unemployed.
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How does California's economic policy compare to Texas?
As a comparison, we can look at how Texas, a Republican-led state, compares to California. The Texas economy is second only to California among U.S. states and eighth in the world.
Even as California's economy hummed, a 2021 Stanford University study comparing the economies of Texas and California pointed to stark differences between red and blue styles of government that foreshadowed California's slow decline.
In California, state and local government revenues and spending per capita were 60% higher than in Texas. California has the highest marginal individual income tax rate in the country, while Texas has no individual income tax (though property taxes are higher in Texas).
“State and local governments in California and Texas spent $638 billion and $291 billion, respectively, in fiscal year 2019, equivalent to $16,105 and $10,024 per resident, respectively,” the report said.
California believes that larger, taxpayer-subsidized government is the answer to its residents' problems; Texas wouldn't accept that.
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California's decision to increase the minimum wage has only made matters worse
The California legislature compounded the problems by passing a law raising the minimum wage.
Starting April 1, fast food restaurant employees must earn at least $20 an hour. Sounds good, right? Somehow eating burgers at McDonald's looks a little more appealing, doesn't it? Not so fast.
If an employer is required to increase employees' take-home pay by several dollars per hour, that money has to come from somewhere. Companies must either cut other salaries, raise prices so customers can compete on costs, or, in the worst case scenario, close.
Restaurants are already feeling the effects.
Industry experts have suggested that to offset increased costs to their bottom line, some business owners may choose to replace their workforce with kiosks or other technological advances.
The new minimum wage law is not a blessing for customers either. Several fast food chains in California have already indicated they will be forced to raise prices on menu items.
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California's new minimum wage law will also hurt small businesses.
Celebrity chef and “Restaurant: Impossible” host Robert Irvine told Fox News Digital, “We're going to lose more than 20 percent of our small family business because California has actually enabled other states to do the same thing.” (It) has opened the gates for other states to raise that minimum wage.”
Irvine is right: California is sometimes a leader when it comes to social, political and economic policies. The rest of the country should reject this, period.
In fact, there is evidence that residents believe life in their beloved Golden State is no longer sustainable. California residents are fleeing in droves, often to states with no income tax like Florida and Texas.
Voters have a chance to reject some of Newsom's liberal policies
A ballot initiative in November could stem the tide a bit and begin to balance California's economy. The Taxpayer Protection and Government Accountability Act would require voter approval for any new taxes or tax increases in California and therefore could limit upcoming tax increases at the state and local levels. The aim of the regulation is to curb tax increases, which often occur unsupervised.
Of course, Newsom doesn't support the initiative, which is why Californians should too.
Progressivism aside, Newsom shows promise as a Democratic presidential candidate. He's charming and adept at running a gigantic economy, and voters like him.
But behind the charisma is a leader who has helped derail California — even its once-untouchable economy — by implementing progressive policies that harm residents.
Newsom is a case study in how ideology and politics matter—socialist ideas can, or should, in practice harm even the most promising politicians. If he's serious, he needs to position himself more centrally and start listening to voters when they tell him they want control of state and local taxes.
Decades of progressive policies helped California become a socialist utopia. It was only a matter of time before the economy responded to tax increases, strict regulations and policies that sound progressive but fail to produce positive results.
The minimum wage increase is just the latest example of why California's economy is struggling and America shouldn't rely on Newsom to fix the problem. Because even California liberals can get out of a good economy and invest in an economy that is heavily taxed, heavily regulated, has the highest unemployment rate in the country, and is increasingly unaffordable.
Nicole Russell is an opinion columnist for USA TODAY. She lives in Texas with her four children.
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