Policy Brief
April 24, 2025
BESI Political Economy of California senior researcher Samuel Trachtman explains the red-blue state cost-of-living divide.
Affordability is having its moment in American politics. Earlier this month, Zohran Mamdani rode his affordability messaging to victory in the New York City mayoral race, while other Democrats campaigned heavily on improving affordability on their way to victories in races for governor in Virginia and New Jersey. The Trump administration has since countered with its own arguments and messaging around addressing the high cost of living.
California is ground zero for the unaffordability challenge in the U.S. Based on the Bureau of Economic Analysis’ Regional Price Parity data series, California has the highest cost of living in the country. High costs in California generate serious problems, including poverty and out-migration. Adjusted for its cost of living, California has the highest poverty rate in the country. Between 2020 and 2024, California had the second-highest domestic out-migration rate after New York. In a 2023 Public Policy Institute of California survey, 45% of Californians reported that they were seriously considering moving due to high housing costs.
Unaffordability is a core focus for BESI’s Political Economy of California program. Over the past year, we have been working on a white paper that analyzes how public policies exacerbate unaffordability in California, and examines the political structures and incentives that generate these policies and make them difficult to reform. On November 13, we convened 26 experts on California politics and policy to provide feedback on the white paper and discuss how to make California more affordable. Academics from UC Berkeley, UC Davis, and the UC Center Sacramento as well as practitioners from various organizations focused on California state policy attended the convening.
Bringing policy experts working in different policy areas together was enormously valuable. It highlighted the shared upstream political factors that contribute to unaffordability. For instance, across policy domains, California government agencies often focus on their own particular mandates, without considering how the policies they implement may add to costs. And the legislature too often lacks the capacity to provide needed oversight.
Drawing attention to the ways that California policies exacerbate unaffordability will be a major focus for our Political Economy of California program over the next year. In addition, we will be working with partners to explore potential political reforms that could prevent these policies from being adopted in the first place and position California for a more affordable future. One of the first steps will be publishing our white paper in early 2026.
Making California more affordable would have profound economic and political implications. A more affordable state will be one with less poverty, less homelessness, less inequality, and more opportunity. A more affordable state will be one that attracts Americans, increasing California’s political influence in Congress and in the Electoral College. And a more affordable California will send an important message to voters who are now deeply skeptical that governments can contribute to greater prosperity and security.
